10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________

FORM 10-K

[Mark One]

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

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

For the transition period from __________to_________

Commission file number 0-17071

FIRST MERCHANTS CORPORATION

(Exact name of registrant as specified in its charter)

Indiana	35-1544218
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

200 East Jackson Muncie, Indiana	47305-2814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (765)747-1500

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of each exchange on which registered
Common Stock, $0.125 stated value per share	The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934  during  the  preceding  12 months  (or for such  shorter  period  that the registrant was required to file such reports),  and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes [X] No [ ]

Indicate  by check  mark if disclosure of delinquent filers  pursuant to Item 405 of Regulation S-K is not contained  herein,  and will not be contained, to the best of  registrant’s  knowledge,  in  definitive  proxy  or  information statements  incorporated  by  reference  in Part  III of this  Form  10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer [X] Accelerated filer[ ] Non-accelerated filer [  ] Small Reporting Company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No[X]

The aggregate market value (not necessarily a reliable indication of the price at which more than a limited number of shares would trade) of the voting stock held by non-affiliates of the registrant was $934,269,000 as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2015).

As of February 23, 2016 there were 40,671,228 outstanding common shares, without par value, of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Documents	Part of Form 10-K into which incorporated
Portions of the Registrant’s Definitive	Part III (Items 10 through 14)
Proxy Statement for Annual Meeting of
Shareholders to be held May 2, 2016

TABLE OF CONTENTS

FIRST MERCHANTS CORPORATION

Statement Regarding Forward-Looking Statements			3
PART I
	Item 1.	Business	4
	Item 1A.	Risk Factors	21
	Item 1B.	Unresolved Staff Comments	24
	Item 2.	Properties	25
	Item 3.	Legal Proceedings	25
	Item 4.	Mine Safety Disclosures	25
		Supplemental Information - Executive Officers of the Registrant	26
PART II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
	Item 6.	Selected Financial Data	29
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 7A.	Quantitative and Qualitative Disclosure about Market Risk	46
	Item 8.	Financial Statements and Supplementary Data	47
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	102
	Item 9A.	Controls and Procedures	102
	Item 9B.	Other Information	103
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	104
	Item 11.	Executive Compensation	104
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	104
	Item 13.	Certain Relationships, Related Transactions and Director Independence	104
	Item 14.	Principal Accountant Fees and Services	104
PART IV
	Item 15.	Exhibits and Financial Statement Schedules	105

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FORWARD-LOOKING STATEMENTS

First Merchants Corporation (the “Corporation”) from time to time includes forward-looking statements in its oral and written communication. The Corporation may include forward-looking statements in filings with The Securities and Exchange Commission (“SEC”), such as its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q, in other written materials and oral statements made by senior management to analysts, investors, representatives of the media and others. The Corporation intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and the Corporation is including this statement for purposes of these safe harbor provisions. Forward-looking statements can often be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may” or similar expressions. These forward-looking statements include:

• statements of the Corporation’s goals, intentions and expectations;

• statements regarding the Corporation’s business plan and growth strategies;

• statements regarding the asset quality of the Corporation’s loan and investment portfolios; and

• estimates of the Corporation’s risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, those discussed in Item 1A, “RISK FACTORS”.

Because of these and other uncertainties, the Corporation’s actual future results may be materially different from the results indicated by these forward-looking statements. In addition, the Corporation’s past results of operations do not necessarily indicate its future results.

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PART I: ITEM 1. BUSINESS

PART I

ITEM 1. BUSINESS

GENERAL

First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982. The Corporation’s Common Stock is traded on NASDAQ’s Global Select Market System under the symbol FRME. The Corporation has one full-service bank charter, First Merchants Bank, National Association (the “Bank”), which opened for business in Muncie, Indiana, in March 1893. The Bank also operates Lafayette Bank and Trust, Ameriana Bank, Ameriana Financial Services and First Merchants Trust Company as divisions of First Merchants Bank, N.A.  The Bank includes 116 banking locations in twenty-seven Indiana, two Illinois and two Ohio counties. In addition to its branch network, the Corporation’s delivery channels include ATMs, check cards, remote deposit capture, interactive voice response systems and internet technology. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.

Through the Bank, the Corporation offers a broad range of financial services, including accepting time deposits, savings and demand deposits; making consumer, commercial, agri-business and real estate mortgage loans; renting safe deposit facilities; providing personal and corporate trust services; providing full-service brokerage; and providing other corporate services, letters of credit and repurchase agreements.

The Corporation operated First Merchants Insurance Services, Inc., operating as First Merchants Insurance Group, a full-service property, casualty, personal lines, and employee benefit insurance agency headquartered in Muncie, Indiana. On June 12, 2015, the Corporation sold all of its stock in First Merchants Insurance Services, Inc. to USI Insurance Services LLC.

All inter-company transactions are eliminated during the preparation of consolidated financial statements.

As of December 31, 2015, the Corporation had consolidated assets of $6.8 billion, consolidated deposits of $5.3 billion and stockholders’ equity of $851 million.  As of December 31, 2015, the Corporation and its subsidiaries had 1,529 full-time equivalent employees.

AVAILABLE INFORMATION

The Corporation makes its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, available on its website at https://www.firstmerchants.com without charge, as soon as reasonably practicable, after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission. These documents can also be read and copied at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference room. SEC filings are also available to the public at the Securities and Exchange Commission’s website at http://www.sec.gov.  Additionally, the Corporation will also provide without charge, a copy of its Annual Report on Form 10-K to any shareholder by mail. Requests should be sent to Cynthia Holaday, Shareholder Relations, First Merchants Corporation, P.O. Box 792, Muncie, IN 47308-0792.

ACQUISITION AND DIVESTITURE POLICY

The Corporation anticipates that it will continue its policy of geographic expansion of its banking business through the acquisition of banks whose operations are consistent with its banking philosophy.  Management routinely explores opportunities to acquire financial institutions and other financial services-related businesses and to enter into strategic alliances to expand the scope of its services and its customer base.

On December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp ("Ameriana"). Ameriana was headquartered in New Castle, Indiana and had 13 full service banking centers in east central and central Indiana. Pursuant to the merger agreement, shareholders of Ameriana received .9037 shares of the Corporation's common stock for each share of Ameriana Bancorp common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

On June 12, 2015, the Corporation sold all of its stock in First Merchants Insurance Services, Inc., an Indiana corporation ("FMIG"), to USI Insurance Services LLC, a Delaware limited liability company ("USI"). The sale price was $18.0 million, of which $16.0 million was paid at closing with the remaining $2.0 million paid through a two-year promissory note. The sale of FMIG generated a gain on sale of $8.3 million.

On April 17, 2015, the Corporation acquired 100 percent of C Financial Corporation ("C Financial"). C Financial was headquartered in Columbus, Ohio and had 6 full service banking centers serving the Columbus, Ohio market. Pursuant to the merger agreement, shareholders of C Financial received $6.738 in cash for each share of C Financial stock held, resulting in a total purchase price of $14.5 million.

On November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Community was headquartered in Noblesville, Indiana and had 10 full-service banking centers serving central Indiana. Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of the Corporation's common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

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PART I: ITEM 1. BUSINESS

Effective November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp ("CFS") in an all stock transaction. CFS was headquartered in Munster, Indiana and had 20 banking centers in northwestern Indiana and northeastern Illinois. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS Bancorp common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million.

Effective February 10, 2012, the Bank assumed substantially all of the deposits and certain other liabilities and acquired certain assets of SCB Bank ("SCB"), a federal savings bank headquartered in Shelbyville, Indiana, from the Federal Deposit Insurance Corporation ("FDIC"), as receiver for SCB, pursuant to the terms of the Purchase and Assumption Agreement - Modified Whole Bank; All Deposits, entered into by the Bank, the FDIC as receiver of SCB and the FDIC.

Details of the acquisitions can be found in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

COMPETITION

The Bank is located in Indiana, Ohio and Illinois counties where other financial services companies provide similar banking services. In addition to the competition provided by the lending and deposit gathering subsidiaries of national manufacturers, retailers, insurance companies and investment brokers, the Bank competes vigorously with other banks, thrift institutions, credit unions and finance companies located within its service areas.

REGULATION AND SUPERVISION OF FIRST MERCHANTS CORPORATION AND SUBSIDIARIES

Bank Holding Company Regulation

The Corporation is registered as a bank holding company and has elected to be a financial holding company. It is subject to the supervision of, and regulation by the Board of Governors of the Federal Reserve System (“Federal Reserve”) under the Bank Holding Company Act of 1956 (the “BHC Act”), as amended. Bank holding companies are required to file periodic reports with and are subject to periodic examination by the Federal Reserve. The Federal Reserve has issued regulations under the BHC Act requiring a bank holding company to serve as a source of financial and managerial strength to the Bank. Thus, it is the policy of the Federal Reserve that a bank holding company should stand ready to use its resources to provide adequate capital funds to the Bank during periods of financial stress or adversity. Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” (as defined in the FDICIA section of this Form 10-K) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency. Under the BHC Act, the Federal Reserve has the authority to require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the determination that such activity constitutes a serious risk to the financial stability of any bank subsidiary.

The BHC Act requires the Corporation to obtain the prior approval of the Federal Reserve before:

• acquiring direct or indirect control or ownership of any voting shares of any bank or bank holding company if, after such acquisition, the bank holding company will directly or indirectly own or control more than 5 percent of the voting shares of the bank or bank holding company;

• merging or consolidating with another bank holding company; or

• acquiring substantially all of the assets of any bank.

The BHC Act generally prohibits bank holding companies that have not become financial holding companies from (i) engaging in activities other than banking or managing or controlling banks or other permissible subsidiaries, and (ii) acquiring or retaining direct or indirect control of any company engaged in the activities other than those activities determined by the Federal Reserve to be closely related to banking or managing or controlling banks.

Capital Adequacy Guidelines for Bank Holding Companies

In July 2013, the United States banking regulators adopted new capital rules which modified the risk-based capital and leverage capital requirements applicable to bank holding companies and depository institutions. These rules are commonly known as "Basel III". Basel III was effective for the Corporation on January 1, 2015. Basel III addresses the components of capital and other issues affecting the numerator in banking institutions' regulatory capital ratios. Basel III also implements the requirements of Section 939A of the Dodd-Frank Act to remove references to credit ratings from the federal banking agencies' rules. Certain of the Basel III rules came into effect for the Corporation and the Bank on January 1, 2015, and the balance of the rules are subject to a phase-in period which will continue through 2019.

Basel III introduced a new capital measure "Common Equity Tier 1" ("CET1"). Basel III specifies that Tier 1 capital consists of CET1 and "Additional Tier 1 Capital" instruments meeting specified requirements. CET1 capital consists of common stock instruments that meet the eligibility criteria, retained earnings, accumulated other comprehensive income and common equity Tier 1 minority interest. Basel III also defines CET1 narrowly by requiring that most adjustments to regulatory capital measures be made to CET1, and not to the other components of capital.

Basel III requires the Corporation to maintain minimum amounts and ratio of common equity tier 1 capital to risk weighted assets, as defined in the regulation. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer above the adequately capitalized common equity tier 1 capital to risk-weighted assets ratio. The capital conservation buffer is being phased in from zero percent to 2.50 percent by 2019.

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PART I: ITEM 1. BUSINESS

When fully phased-in on January 1, 2019, Basel III will require banking organizations to maintain:

• a minimum ratio of CET1 to risk-weighted assets of a least 4.5 percent, plus a 2.5 percent "capital conservation buffer" (which is added to the 4.5 percent CET1 as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7.0 percent upon full implementation)

• a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0 percent, plus the 2.5 percent capital conservation buffer (which is added to the 6.0 percent Tier 1 capital ratio as that buffer is phased-in, effectively resulting in a minimum Tier 1 capital ratio of 8.5 percent upon full implementation);

• a minimum ratio of total capital (Tier 1 plus Tier 2 capital) to risk-weighted assets of at least 8.0 percent, plus the 2.5 percent capital conservation buffer (which is added to the 8.0 percent total capital ratio as that buffer is phased-in, effectively resulting in a minimum total capital ratio of 10.5 percent upon full implementation); and

• a minimum leverage ratio of 4.0 percent, calculated as the ratio of Tier 1 capital to adjusted average consolidated assets.

Basel III also provides for a “countercyclical capital buffer” that is applicable to only certain covered institutions and is not expected to have any current applicability to the Corporation or the Bank.

The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer will face limitations on the payment of dividends, common stock repurchases and discretionary cash payments to executive officers based on the amount of the shortfall.

Basel III provides for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10 percent of CET1 or all such categories in the aggregate exceed 15 percent of CET1. Under Basel III, the Corporation and the Bank were given a one-time election (the “Opt-out Election”) to filter out certain accumulated other comprehensive income (“AOCI”) components. The AOCI Opt-out Election was made on the March 31, 2015 Call Report and FR Y-9C for the Bank and the Corporation, respectively.

Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and will be phased-in over a five-year period (20 percent per year). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625 percent level and be phased-in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5 percent on January 1, 2019).

Basel III permits banks with less than $15 billion in assets to continue to treat trust preferred securities as Tier 1 capital. This treatment is permanently grandfathered as Tier 1 capital even if the Corporation should ever exceed $15 billion in assets due to organic growth. Should the Corporation exceed $15 billion in assets as the result of a merger or acquisition, then the Tier 1 treatment of its outstanding trust preferred securities will be phased out, but those securities will still be treated as Tier 2 capital. Basel III permits banks with less than $250 billion in assets to choose to continue excluding unrealized gains and losses on certain securities holdings for purposes of calculating regulatory capital. The rules limit a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of a specified amount of CET1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements.

Historically, the regulation and monitoring of a bank and bank holding company's liquidity has been addressed as a supervisory matter, without minimum required formulaic measures. The Basel III liquidity framework requires banks and bank holding companies to measure their liquidity against specific liquidity tests that, although similar in some respects to liquidity measures historically applied by banks and regulators for management and supervisory purposes, is now required by regulation. One test, referred to as the liquidity coverage ratio (“LCR”), is designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario. The other test, referred to as the net stable funding ratio (“NSFR”), is designed to promote more medium- and long-term funding of the assets and activities of banking entities over a one-year time horizon. These requirements are expected to incent banking entities to increase their holdings of U.S. Treasury securities and other sovereign debt as a component of assets and increase the use of long-term debt as a funding source. The NSFR will be subject to an observation period through mid-2016 and, subject to any revisions resulting from the analyses conducted and data collected during the observation period, implemented as a minimum standard by January 1, 2018. These new standards are subject to further rulemaking and their terms may well change before implementation. The federal banking agencies have not proposed rules implementing the Basel III liquidity framework and have not determined to what extent they will apply to U.S. banks that are not large, internationally active banks.

The following are the Corporation’s regulatory capital ratios as of December 31, 2015:

	Corporation		Regulatory Minimum Requirement
Total risk-based capital to risk-weighted assets	14.94	%	8.00	%
Tier 1 capital to risk-weighted assets	12.51	%	6.00	%
Common equity tier 1 capital to risk-weighted assets	11.49	%	4.50	%
Tier 1 capital to average assets	10.85	%	4.00	%

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PART I: ITEM 1. BUSINESS

Bank Regulation

The Bank is supervised, regulated and examined by the Office of the Comptroller of the Currency (the “OCC”). The OCC has the authority to issue cease-and-desist orders if it determines that activities of the Bank regularly represent an unsafe and unsound banking practice or a violation of law. Federal law extensively regulates various aspects of the banking business such as reserve requirements, truth-in-lending and truth-in-savings disclosures, equal credit opportunity, fair credit reporting, trading in securities and other aspects of banking operations. Current federal law also requires banks, among other things, to make deposited funds available within specified time periods.

Bank Capital Requirements

Capital adequacy is an important indicator of financial stability and performance.  The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category.  The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 capital, and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity.  The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.  

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.  Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels.  The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.  Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III was effective for the Bank on January 1, 2015. Basel III requires the Bank to maintain minimum amounts and ratio of common equity tier 1 capital to risk weighted assets, as defined in the regulation. Under Basel III, the Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized.

FDIC Improvement Act of 1991

The FDICIA requires, among other things, federal bank regulatory authorities to take “prompt corrective action” with respect to banks, which do not meet minimum capital requirements. For these purposes, FDICIA establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The Federal Deposit Insurance Corporation (“FDIC”) has adopted regulations to implement the prompt corrective action provisions of FDICIA.

Basel III revised the "prompt corrective action" regulations by:

• introducing CET1 ratio requirement at each level (other than critically undercapitalized), with the required CET1 ratio being 6.5 percent for well-capitalized status;

• increasing the minimum Tier 1 capital ratio requirement for each category, with the minimum Tier 1 risk-based capital ratio for well-capitalized status being 8.0 percent; and

• eliminating a provision that provides that a bank with a composite supervisory rating of 1 may have a 3.0 percent leverage ratio and still be well-capitalized.

The FDICIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” banks are subject to growth limitations and are required to submit a capital restoration plan. A bank’s compliance with such plan is required to be guaranteed by the bank’s parent holding company. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized. “Significantly undercapitalized” banks are subject to one or more restrictions, including an order by the FDIC to sell sufficient voting stock to become "adequately capitalized", requirements to reduce total assets and cease receipt of deposits from correspondent banks, and restrictions on compensation of executive officers. “Critically undercapitalized” institutions may not, beginning 60 days after becoming “critically undercapitalized,” make any payment of principal or interest on certain subordinated debt or extend credit for a highly leveraged transaction or enter into any transaction outside the ordinary course of business. In addition, “critically undercapitalized” institutions are subject to appointment of a receiver or conservator.

As of December 31, 2015, the Bank was “well capitalized” based on the “prompt corrective action” ratios described above. It should be noted that a bank’s capital category is determined solely for the purpose of applying the OCC’s “prompt corrective action” regulations and that the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects.

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PART I: ITEM 1. BUSINESS

Volcker Rule

In December 2013, United States banking regulators adopted final rules implementing the Volcker Rule under the Dodd-Frank Act. The Volcker Rule places certain limitations on the trading activity of insured depository institutions and their affiliates subject to certain exceptions. The restricted trading activity includes purchasing or selling certain types of securities or instruments in order to benefit from short-term price movements or to realize short-term profits. Exceptions to the Volcker Rule include trading in certain U.S. Government or other municipal securities and trading conducted in certain capacities as a broker or other agent, as a fiduciary on behalf of customers, to satisfy a debt previously contracted, repurchase and securities lending agreements and risk-mitigating hedging activities. The Volcker Rule also prohibits banking institutions from having an ownership interest in a hedge fund or private equity fund. The implementation of the new Volcker Rule did not have a material impact on the Corporation or the Bank.

LEGISLATIVE AND REGULATORY INITIATIVES TO ADDRESS FINANCIAL AND ECONOMIC CRISES

Small Business Lending Program

In 2010, Congress established the Small Business Lending Fund (“SBLF”) under the Small Business Jobs Act of 2010 encouraging lending to small business by providing capital to qualified community banks with assets of less than $10 billion. On September 22, 2011, the Corporation became a participant in SBLF by entering into a Securities Purchase Agreement (the “Purchase Agreement”) with the U.S. Department of Treasury ("Treasury"), pursuant to which the Corporation issued 90,782.94 shares of the Corporation’s Senior Non-Cumulative Perpetual

Preferred Stock, Series B (the “Series B Preferred Stock”), having a liquidation amount per share equal to $1,000, for a total purchase price of $90,782,940.

The Series B Preferred Stock was entitled to receive non-cumulative dividends, payable quarterly, on each January 1, April 1, July 1 and October 1, beginning October 1, 2011. The dividend rate was based on the level of the Bank's lending to small businesses. The Series B Preferred Stock was non-voting, except in limited circumstances, and was issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

On January 3, 2013, the Corporation redeemed 22,695.94 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $22,695,940 plus accrued but unpaid dividends. On July 2, 2013, the Corporation redeemed an additional 34,044 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,044,000 plus accrued but unpaid dividends. On November 22, 2013, the Corporation redeemed the final 34,043 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,043,000 plus accrued but unpaid dividends. This redemption resulted in all of the outstanding shares of Series B Preferred Stock having been redeemed and the Corporation ending its participation in the SBLF program.

Dodd-Frank Wall Street Reform and Consumer Protection Act

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) into law. The Dodd-Frank Act has had a broad impact on the financial services industry, including significant regulatory and compliance changes. Many of the requirements called for in the Dodd-Frank Act are being implemented over time and continue to be subject to various federal agencies implementing regulations over the course of several years. Although many of the required regulations have been promulgated, there are additional regulations yet to be finalized. The changes resulting from the Dodd-Frank Act may materially impact the profitability of the Corporation’s business activities, require changes to certain business practices, impose more stringent capital, liquidity and leverage requirements or otherwise adversely affect the business. At a minimum, the Dodd-Frank Act is likely to:

• increase the cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, including higher deposit insurance premiums;

• limit the Corporation’s ability to raise additional capital through the use of trust preferred securities as new issuances of these securities may no longer be included as Tier 1 capital;

• reduce the flexibility to generate or originate certain revenue-producing assets based on increased regulatory capital standards; and

• limit the ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations.

The Corporation’s management is currently taking steps to best prepare for the implementation and to minimize the adverse impact on the business, financial condition and results of operation.

Deposit Insurance

The Bank is insured up to regulatory limits by the FDIC; and, accordingly, is subject to deposit insurance assessments to maintain the Deposit Insurance Fund administered by the FDIC.  The FDIC has adopted regulations establishing a permanent risk-related deposit insurance assessment system. Under this system, the FDIC places each insured bank in one of four risk categories based on (i) the bank’s capital evaluation, and (ii) supervisory evaluations provided to the FDIC by the bank’s primary federal regulator. Each insured bank’s annual assessment rate is then determined by the risk category in which it is classified by the FDIC.

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PART I: ITEM 1. BUSINESS

When Dodd-Frank became effective, it permanently raised the previous Standard Maximum Deposit Insurance Amount (“SMDIA") to $250,000. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

As of January 1, 2013, noninterest-bearing transaction deposit accounts are no longer insured separately from other accounts at the same FDIC-insured institution. Instead, noninterest-bearing transaction accounts will be added to other accounts, and the aggregate balance insured up to at least the Standard Maximum Deposit Insurance Amount of $250,000, at each institution.

DIVIDEND LIMITATIONS

National banking laws restrict the amount of dividends that an affiliate bank may declare in a year without obtaining prior regulatory approval. National banks are limited to the bank’s retained net income (as defined) for the current year plus those for the previous two years. At December 31, 2015, the Corporation’s affiliates (including the Bank and other affiliates) had a total of $29,812,000 retained net profits available for 2016 dividends to the Corporation without prior regulatory approval.

BROKERED DEPOSITS

Under FDIC regulations, no FDIC-insured depository institution can accept brokered deposits unless it (i) is well capitalized, or (ii) is adequately capitalized and received a waiver from the FDIC. In addition, these regulations prohibit any depository institution that is not well capitalized from (a) paying an interest rate on deposits in excess of 76 basis points over certain prevailing market rates or (b) offering “pass through” deposit insurance on certain employee benefit plan accounts unless it provides certain notice to affected depositors.

INTERSTATE BANKING AND BRANCHING

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Riegle-Neal”), subject to certain concentration limits, required regulatory approvals and other requirements, (i) financial holding companies such as the Corporation are permitted to acquire banks and bank holding companies located in any state; (ii) any bank that is a subsidiary of a bank holding company is permitted to receive deposits, renew time deposits, close loans, service loans and receive loan payments as an agent for any other bank subsidiary of that holding company; and (iii) banks are permitted to acquire branch offices outside their home states by merging with out-of-state  banks, purchasing  branches in other states, and establishing de novo branch offices in other states.

FINANCIAL SERVICES MODERNIZATION ACT

The Gramm-Leach-Bliley Act of 1999 (the “Financial Services Modernization Act”) establishes a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial service providers by revising and expanding the existing BHC Act. Under this legislation, bank holding companies would be permitted to conduct essentially unlimited securities and insurance activities as well as other activities determined by the Federal Reserve Board to be financial in nature or related to financial services. As a result, the Corporation is able to provide securities and insurance services. Furthermore, under this legislation, the Corporation is able to acquire, or be acquired, by brokerage and securities firms and insurance underwriters. In addition, the Financial Services Modernization Act broadens the activities that may be conducted by national banks through the formation of financial subsidiaries. Finally, the Financial Services Modernization

Act modifies the laws governing the implementation of the Community Reinvestment Act and addresses a variety of other legal and regulatory issues affecting both day-to-day operations and long-term activities of financial institutions.

A bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized, is well managed and has at least a satisfactory rating under the Community Reinvestment Act, by filing a declaration that the bank holding company wishes to become a financial holding company. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board. The Federal Reserve Bank of Chicago approved the Corporation’s application to become a Financial Holding Company effective September 13, 2000.

USA PATRIOT ACT

As part of the USA Patriot Act, signed into law on October 26, 2001, Congress adopted the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 (the “Act”). The Act authorizes the Secretary of the Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to financial institutions such as banks, bank holding companies, broker-dealers and insurance companies. Among its other provisions, the Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls that are reasonably designed to detect and report instances of money laundering in United States private banking accounts and correspondent accounts maintained for non-United States persons or their representatives; and (iii) to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a foreign shell bank that does not have a physical presence in any country. In addition, the Act expands the circumstances under which funds in a bank account may be forfeited and requires covered financial institutions to respond under certain circumstances to requests for information from federal banking agencies within 120 hours.

Treasury regulations implementing the due diligence requirements were issued in 2002. These regulations required minimum standards to verify customer identity, encouraged cooperation among financial institutions, federal banking agencies, and law enforcement authorities regarding possible money laundering or terrorist activities, prohibited the anonymous use of “concentration accounts,” and required all covered financial institutions to have in place an anti-money laundering compliance program.

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PART I: ITEM 1. BUSINESS

The Act also amended the Bank Holding Company Act and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution’s anti-money laundering activities when reviewing an application under these acts.

THE SARBANES-OXLEY ACT

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), which became law on July 30, 2002, added new legal requirements for public companies affecting corporate governance, accounting and corporate reporting. The Sarbanes-Oxley Act provides for, among other things:

• a prohibition on personal loans made or arranged by the issuer to its directors and executive officers (except for loans made by a bank subject to Regulation O);

• independence requirements for audit committee members;

• independence requirements for company auditors;

• certification of financial statements on Forms 10-K and 10-Q reports by the chief executive officer and the chief financial officer;

• the forfeiture by the chief executive officer and chief financial officer of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by such officers in the twelve-month period following initial publication of any financial statements that later require restatement due to corporate misconduct;

• disclosure of off-balance sheet transactions;

• two-business day filing requirements for insiders filing Form 4s;

• disclosure of a code of ethics for financial officers and filing a Form 8-K for a change in or waiver of such code;

• the reporting of securities violations “up the ladder” by both in-house and outside attorneys;

• restrictions on the use of non-GAAP financial measures in press releases and SEC filings;

• the formation of a public accounting oversight board; and

• various increased criminal penalties for violations of securities laws.

The SEC was delegated the task of enacting rules to implement various provisions. In addition, each of the national stock exchanges developed new corporate governance rules, including rules strengthening director independence requirements for boards, the adoption of corporate governance codes and charters for the nominating, corporate governance and audit committees.

ADDITIONAL MATTERS

The Corporation and the Bank are subject to the Federal Reserve Act, which restricts financial transactions between banks and affiliated companies. The statute limits credit transactions between banks, affiliated companies and its executive officers and its affiliates. The statute prescribes terms and conditions for bank affiliate transactions deemed to be consistent with safe and sound banking practices. It also restricts the types of collateral security permitted in connection with the bank’s extension of credit to an affiliate. Additionally, all transactions with an affiliate must be on terms substantially the same or at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated parties.

In addition to the matters discussed above, the Bank is subject to additional regulation of its activities, including a variety of consumer protection regulations affecting its lending, deposit and collection activities and regulations affecting secondary mortgage market activities.

The earnings of financial institutions are also affected by general economic conditions and prevailing interest rates, both domestic and foreign, and by the monetary and fiscal policies of the United States Government and its various agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of credit in order to influence general economic conditions, primarily through open market operations in United States Government obligations, varying the discount rate on financial institution borrowings, varying reserve requirements against financial institution deposits, and restricting certain borrowings by financial institutions and their subsidiaries. The monetary policies of the Federal Reserve have had a significant effect on the operating results of the Bank in the past and are expected to continue to do so in the future.

Additional legislation and administrative actions affecting the banking industry may be considered by the United States Congress, state legislatures and various regulatory agencies, including those referred to above. It cannot be predicted with certainty whether such legislation or administrative action will be enacted or the extent to which the banking industry, the Corporation or the Bank would be affected.

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PART I: ITEM 1. BUSINESS

STATISTICAL DATA

The following tables set forth statistical data on the Corporation and its subsidiaries.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL

The daily average balance sheet amounts, the related interest income or interest expense, and average rates earned or paid are presented in the following table:

	Average Balance			Interest  Income / Expense		Average Rate		Average Balance			Interest  Income / Expense		Average Rate		Average Balance			Interest  Income / Expense		Average Rate
(Dollars in Thousands)	2015							2014							2013
Assets:
Interest-bearing deposits	$	61,373		$	160	0.26	%	$	53,231		$	124	0.23	%	$	74,964		$	158	0.21	%
Federal reserve and federal home loan bank stock	37,495			1,967		5.25		42,142			2,124		5.04		33,620			1,488		4.43
Investment securities: (1)
Taxable	703,019			17,885		2.54		763,450			19,882		2.60		617,524			15,214		2.46
Tax-Exempt (2)	483,103			26,034		5.39		396,435			22,127		5.58		282,584			16,660		5.90
Total investment securities	1,186,122			43,919		3.70		1,159,885			42,009		3.62		900,108			31,874		3.54
Loans held for sale	3,725			475		12.75		6,681			485		7.26		16,137			770		4.77
Loans: (3)
Commercial	3,187,239			142,696		4.48		2,919,020			133,567		4.58		2,391,221			113,613		4.75
Real estate mortgage	457,013			19,457		4.26		429,384			19,812		4.61		277,520			12,375		4.46
Installment	406,163			18,177		4.48		361,484			18,175		5.03		308,233			15,994		5.19
Tax-Exempt (2)	125,699			5,322		4.23		13,511			504		3.73		15,444			605		3.92
Total loans	4,179,839			186,127		4.45		3,730,080			172,543		4.63		3,008,555			143,357		4.76
Total earning assets	5,464,829			232,173		4.25	%	4,985,338			216,800		4.35	%	4,017,247			176,877		4.40	%
Net unrealized gain on securities available for sale	11,800							8,921							4,521
Allowance for loan losses	(62,975		)					(67,969		)					(68,806		)
Cash and cash equivalents	98,051							87,068							73,161
Premises and equipment	82,710							75,202							57,228
Other assets	491,272							482,794							372,060
Total assets	$	6,085,687						$	5,571,354						$	4,455,411
Liabilities:
Interest-bearing deposits:
NOW accounts	$	1,109,829		$	1,374	0.12	%	$	1,066,402		$	1,110	0.10	%	$	880,323		$	941	0.11	%
Money market deposit accounts	840,084			1,768		0.21		776,712			1,572		0.20		603,012			1,287		0.21
Savings  deposits	614,675			672		0.11		533,080			619		0.12		377,106			421		0.11
Certificates and other time deposits	1,121,651			11,041		0.98		1,042,539			8,377		0.80		807,764			7,404		0.92
Total interest-bearing deposits	3,686,239			14,855		0.40		3,418,733			11,678		0.34		2,668,205			10,053		0.38
Borrowings	480,794			9,939		2.07		492,128			10,164		2.07		400,580			6,516		1.63
Total interest-bearing liabilities	4,167,033			24,794		0.60		3,910,861			21,842		0.56		3,068,785			16,569		0.54
Noninterest-bearing deposits	1,120,264							945,222							797,435
Other liabilities	44,666							39,976							48,936
Total liabilities	5,331,963							4,896,059							3,915,156
Stockholders' Equity	753,724							675,295							540,255
Total Liabilities and Stockholders' Equity	$	6,085,687		24,794		0.45		$	5,571,354		21,842		0.44		$	4,455,411		16,569		0.41
Net Interest Income				$	207,379						$	194,958						$	160,308
Net Interest Margin						3.80	%						3.91	%						3.99	%

______________________________

⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustment.

⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2015, 2014 and 2013. These totals equal $10,975, $7,921 and $6,043,

respectively.

⁽³⁾ Non-accruing loans have been included in the average balances.

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ANALYSIS OF CHANGES IN NET INTEREST INCOME

The following table presents net interest income components on a tax-equivalent basis and reflects changes between periods attributable to movement in either the average balance or average interest rate for both earning assets and interest-bearing liabilities. The volume differences were computed as the difference in volume between the current and prior year multiplied by the interest rate from the prior year. The interest rate changes were computed as the difference in rate between the current and prior year multiplied by the volume from the prior year.  Volume/rate variances have been allocated on the basis of the absolute relationship between volume variances and rate variances.

	2015 Compared to 2014 Increase (Decrease) Due To									2014 Compared to 2013 Increase (Decrease) Due To									2013 Compared to 2012 Increase (Decrease) Due To
(Dollars in Thousands, Fully Taxable Equivalent Basis)	Volume			Rate			Total			Volume			Rate			Total			Volume			Rate			Total
Interest Income:
Interest-bearing deposits	$	20		$	16		$	36		$	(49	)	$	15		$	(34	)	$	33		$	25		$	58
Federal Reserve and Federal Home Loan Bank stock	(241		)	84			(157		)	411			225			636			35			45			80
Investment securities	961			949			1,910			9,393			742			10,135			(800		)	(28		)	(828		)
Loans held for sale	(274		)	264			(10		)	(576		)	291			(285		)	(216		)	(38		)	(254		)
Loans	20,315			(6,721		)	13,594			33,894			(4,423		)	29,471			9,718			(13,591		)	(3,873		)
Totals	20,781			(5,408		)	15,373			43,073			(3,150		)	39,923			8,770			(13,587		)	(4,817		)
Interest Expense:
NOW accounts	47			217			264			194			(25		)	169			77			(143		)	(66		)
Money market deposit accounts	132			64			196			354			(69		)	285			248			(331		)	(83		)
Savings deposits	91			(38		)	53			180			18			198			72			(179		)	(107		)
Certificates and other time deposits	672			1,992			2,664			1,966			(993		)	973			(1,477		)	(3,014		)	(4,491		)
Borrowings	(234		)	9			(225		)	1,673			1,975			3,648			(237		)	(2,060		)	(2,297		)
Totals	708			2,244			2,952			4,367			906			5,273			(1,317		)	(5,727		)	(7,044		)
Change in net interest income (fully taxable equivalent basis)	$	20,073		$	(7,652	)	12,421			$	38,706		$	(4,056	)	34,650			$	10,087		$	(7,860	)	2,227
Tax equivalent adjustment using marginal rate of 35% for 2015, 2014, and 2013							(3,054		)							(1,878		)							(298		)
Change in net interest income							$	9,367								$	32,772								$	1,929

INVESTMENT SECURITIES

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under Accounting Standards Codification (“ASC”) 320, Investments – Debt and Equity Securities. However, certain purchased beneficial interest, including certain non-agency government-sponsored mortgage-backed securities, asset-backed securities and collateralized debt obligations are evaluated using the model outlined in ASC 325-10, Investments - Other.

In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Corporation has the intent to sell the debt security or more likely than not, will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of OTTI recognized in the income statement depends on whether the Corporation intends to sell the security or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis, less any recognized credit loss. If the intent is to sell, or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis, less any recognized credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis, less any recognized credit loss, and its fair value at the balance sheet date. If the intent is not to sell the security and it is not more likely than not that the Corporation will be required to sell the security before the recovery of its amortized cost basis less any recognized credit loss, the OTTI has been separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable income taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

The Corporation’s management has evaluated all securities with unrealized losses for OTTI as of December 31, 2015.  The evaluations are based on the nature of the securities, the extent and duration of the loss and the intent and ability of the Corporation to hold these securities either to maturity or through the expected recovery period.

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In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level I and Level II in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy were determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

The Corporation continues to evaluate the portfolio for OTTI on an ongoing basis. In 2015, the Corporation sold its remaining trust preferred security which had no remaining book value as a result of OTTI of approximately $500,000 taken in 2009.

The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the investment securities at the dates indicated were:

(Dollars in Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2015
U.S. Government-sponsored agency securities	$	100	$	4			$	104
State and municipal	291,730		14,241		$	60	305,911
U.S. Government-sponsored mortgage-backed securities	342,550		4,234		518		346,266
Corporate obligations	31						31
Equity securities	3,912						3,912
Certificates of deposit	2,176						2,176
Total available for sale	640,499		18,479		578		658,400
Held to maturity at December 31, 2015
State and municipal	219,767		6,982		15		226,734
U.S. Government-sponsored mortgage-backed securities	398,832		7,601		787		405,646
Total held to maturity	618,599		14,583		802		632,380
Total Investment Securities	$	1,259,098	$	33,062	$	1,380	$	1,290,780

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2014
U.S. Government-sponsored agency securities	$	100	$	9			$	109
State and municipal	216,915		11,801		$	123	228,593
U.S. Government-sponsored mortgage-backed securities	310,460		8,771		127		319,104
Corporate obligations	31						31
Equity securities	1,706						1,706
Total available for sale	529,212		20,581		250		549,543
Held to maturity at December 31, 2014
State and municipal	204,443		5,716		96		210,063
U.S. Government-sponsored mortgage-backed securities	426,645		11,527		512		437,660
Total held to maturity	631,088		17,243		608		647,723
Total Investment Securities	$	1,160,300	$	37,824	$	858	$	1,197,266

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2013
U.S. Treasury	$	15,914	$	80	$	21	$	15,973
U.S. Government-sponsored agency securities	3,550		12		17		3,545
State and municipal	231,005		3,878		3,896		230,987
U.S. Government-sponsored mortgage-backed securities	279,299		3,926		1,973		281,252
Corporate obligations	6,374				3,636		2,738
Equity securities	1,706						1,706
Total available for sale	537,848		7,896		9,543		536,201
Held to maturity at December 31, 2013
State and municipal	145,941		62		91		145,912
U.S. Government-sponsored mortgage-backed securities	413,437		5,220		3,722		414,935
Total held to maturity	559,378		5,282		3,813		560,847
Total Investment Securities	$	1,097,226	$	13,178	$	13,356	$	1,097,048

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PART I: ITEM 1. BUSINESS

The cost and yields for Federal Reserve and Federal Home Loan Bank stock are included in the table below.

	2015				2014				2013
(Dollars in Thousands)	Cost		Yield		Cost		Yield		Cost		Yield
Federal Reserve and Federal Home Loan Bank stock at December 31:
Federal Reserve Bank stock	$	19,456	6.0	%	$	18,949	6.0	%	$	13,287	6.0	%
Federal Home Loan Bank stock	18,177		5.3	%	22,404		5.1	%	25,703		2.0	%
Total	$	37,633	5.7	%	$	41,353	5.5	%	$	38,990	3.4	%

Federal Reserve and Federal Home Loan Bank stock have been reviewed for impairment and the analysis reflected no impairment.  The Corporation’s Federal Home Loan Bank stock is primarily in the Federal Home Loan Bank of Indianapolis and it continued to produce sufficient financial results to pay dividends.

There were no issuers included in the investment security portfolio at December 31, 2015, 2014 or 2013 where the aggregate carrying value of any one issuer exceeded 10 percent of the Corporation's stockholders' equity at those dates. The term "issuer" excludes the U.S. Government and its sponsored agencies and corporations.

The maturity distribution and average yields for the securities portfolio at December 31, 2015 were:

	Within 1 Year				1-5 Years				5-10 Years
(Dollars in Thousands)	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
Securities available for sale December 31, 2015
U.S. Government-sponsored agency securities	$	104	4.9	%
State and municipal	4,600		6.0	%	$	14,295	5.1	%	$	55,344	5.5	%
Corporate obligations									31		—	%
	$	4,704	6.0	%	$	14,295	5.1	%	$	55,375	5.5	%

	Due After Ten Years				Equity, Certificates of Deposits, and U.S. Government- SponsoredMortgage - Backed Securities				Total
	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
U.S. Government-sponsored agency securities									$	104	4.9	%
State and municipal	$	231,672	5.0	%					305,911		5.1	%
Equity securities					$	3,912	1.9	%	3,912		1.9	%
Corporate obligations									31		—	%
U.S. Government-sponsored mortgage-backed securities					346,266		2.8	%	346,266		2.8	%
Certificates of deposit					2,176		—	%	2,176		—	%
	$	231,672	5.0	%	$	352,354	2.8	%	$	658,400	4.0	%

	Within 1 Year				1-5 Years				5-10 Years
	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
Securities held to maturity at December 31, 2015
State and municipal	$	4,144	2.4	%	$	28,054	5.8	%	$	81,483	6.1	%
U.S. Government-sponsored mortgage-backed securities
	$	4,144	2.4	%	$	28,054	5.8	%	$	81,483	6.1	%

	Due After Ten Years				Equity, Certificates of Deposits, and U.S. Government- SponsoredMortgage - Backed Securities				Total
	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
State and municipal	$	106,086	4.8	%					$	219,767	5.4	%
U.S. Government-sponsored mortgage-backed securities					$	398,832	2.9	%	398,832		2.9	%
	$	106,086	4.8	%	$	398,832	2.9	%	$	618,599	3.7	%

_______________________________

(1) Interest yields are presented on a fully taxable equivalent basis using a 35 percent tax rate.

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The following tables show the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2015 and 2014:

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2015
State and municipal	$	7,558	$	60					$	7,558	$	60
U.S. Government-sponsored mortgage-backed securities	83,396		445		$	2,101	$	73	85,497		518
Total Temporarily Impaired Available for Sale Securities	90,954		505		2,101		73		93,055		578
Temporarily Impaired Held to Maturity Securities at December 31, 2015
State and municipal					1,982		15		1,982		15
U.S. Government-sponsored mortgage-backed securities	69,641		519		12,906		268		82,547		787
Total Temporarily Impaired Held to Maturity Securities	69,641		519		14,888		283		84,529		802
Total Temporarily Impaired Investment Securities	$	160,595	$	1,024	$	16,989	$	356	$	177,584	$	1,380

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2014
State and municipal	$	1,256	$	7	$	9,850	$	116	$	11,106	$	123
U.S. Government-sponsored mortgage-backed securities	2,186		13		5,447		114		7,633		127
Total Temporarily Impaired Available for Sale Securities	3,442		20		15,297		230		18,739		250
Temporarily Impaired Held to Maturity Securities at December 31, 2014
State and municipal	5,119		96		250				5,369		96
U.S. Government-sponsored mortgage-backed securities	9,791		82		38,491		430		48,282		512
Total Temporarily Impaired Held to Maturity Securities	14,910		178		38,741		430		53,651		608
Total Temporarily Impaired Investment Securities	$	18,352	$	198	$	54,038	$	660	$	72,390	$	858

LOAN PORTFOLIO

The following table shows the composition of the Corporation’s loan portfolio, including purchased credit impaired loans, for the years indicated:

	2015					2014					2013					2012					2011
(Dollars in Thousands)	Amount			%		Amount			%		Amount			%		Amount			%		Amount			%
Loans at December 31:
Commercial and industrial loans	$	1,057,075		22.5	%	$	896,688		22.8	%	$	761,705		21.0	%	$	622,579		21.5	%	$	532,523		19.6	%
Agricultural production financing and other loans to farmers	97,711			2.1		104,927			2.7		114,348			3.1		112,527			3.9		104,526			3.9
Real estate loans:
Construction	366,704			7.8		207,221			5.3		177,082			4.9		98,639			3.4		81,780			3.0
Commercial and farmland	1,802,921			38.5		1,672,661			42.6		1,611,809			44.4		1,266,682			43.6		1,194,230			44.0
Residential	786,105			16.7		647,315			16.5		616,385			17.0		473,537			16.3		481,493			17.7
Home equity	348,613			7.4		286,529			7.3		255,223			7.0		203,406			7.0		191,631			7.1
Individuals' loans for household and other personal expenditures	74,717			1.6		73,400			1.9		69,783			1.9		75,748			2.6		84,172			3.1
Lease financing receivables, net of unearned income	588					1,106					1,545					2,590			0.1		3,555			0.1
Other loans	159,388			3.4		35,018			0.9		24,529			0.7		46,501			1.6		39,505			1.5
Loans	4,693,822			100.0	%	3,924,865			100.0	%	3,632,409			100.0	%	2,902,209			100.0	%	2,713,415			100.0	%
Allowance for loan losses	(62,453		)			(63,964		)			(67,870		)			(69,366		)			(70,898		)
Net Loans	$	4,631,369				$	3,860,901				$	3,564,539				$	2,832,843				$	2,642,517

Residential Real Estate Loans Held for Sale at December 31, 2015, 2014, 2013, 2012, and 2011 were $9,894,000, $7,235,000, $5,331,000, $22,300,000, and $17,864,000, respectively.

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PART I: ITEM 1. BUSINESS

At December 31, 2015, loans of $331.0 million with an estimated fair value discount of $11.3 million were acquired in the Ameriana transaction. The April 17, 2015 acquisition of C Financial included loans of $113.2 million with a fair value discount of $2.6 million. The assets acquired in the November 7, 2014 Community transaction included $153.9 million in loans which were acquired at a fair value discount of $8.8 million. The November 12, 2013 CFS acquisition included loans of $639.6 million and a fair value discount of $36.5 million. In 2012, the Bank acquired $113.0 million of loans at a fair value discount of $19.2 million as part of the SCB transaction.

The majority of the portfolio is comprised of loans secured by commercial and farmland real estate, commercial and industrial loans and loans secured by residential real estate. Commercial and farmland real estate loans made up 38.5 percent and 42.6 percent of loans at December 31, 2015 and 2014, respectively. Commercial and industrial loans made up 22.5 percent and 22.8 percent of loans and residential real estate loans, including home equity, made up 24.1 percent and 23.8 percent of loans at December 31, 2015 and 2014, respectively. Loans are generated from customers primarily in central and northwest Indiana, northeast Illinois and central Ohio and are typically secured by specific items of collateral, including real property, consumer assets, and business assets. 

LOAN MATURITIES

Presented in the table below are the maturities of loans (excluding residential real estate, home equity, individuals’ loans for household and other personal expenditures and lease financing) outstanding as of December 31, 2015. Also presented are the amounts due after one year, classified according to the sensitivity to changes in interest rates.

(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	815,885	$	165,483	$	75,707	$	1,057,075
Agriculture production financing and other loans to farmers	89,342		7,497		872		97,711
Real estate loans:
Construction	329,872		24,470		12,362		366,704
Commercial and farmland	764,768		813,561		224,592		1,802,921
Other loans	4,434		5,727		149,227		159,388
Total	$	2,004,301	$	1,016,738	$	462,760	$	3,483,799

(Dollars in Thousands)	Maturing 1-5 Years		Maturing Over 5 Years
Loans maturing after one year with:
Fixed rate	$	679,528	$	399,426
Variable rate	337,210		63,334
Total	$	1,016,738	$	462,760

NON-PERFORMING ASSETS

The table below summarizes non-performing assets and impaired loans for the years indicated:

	December 31,		December 31,		December 31,		December 31,		December 31,
(Dollars in Thousands)	2015		2014		2013		2012		2011
Non-performing assets:
Non-accrual loans	$	31,389	$	48,789	$	56,402	$	53,399	$	69,592
Renegotiated loans	1,923		1,992		3,048		12,681		14,308
Non-performing loans (NPL)	33,312		50,781		59,450		66,080		83,900
Other real estate owned	17,257		19,293		22,246		13,263		16,289
Non-performing assets (NPA)	50,569		70,074		81,696		79,343		100,189
90+ days delinquent and still accruing	907		4,663		1,350		2,037		580
NPAs & 90+ days delinquent	$	51,476	$	74,737	$	83,046	$	81,380	$	100,769
Impaired loans	$	97,527	$	116,223	$	119,755	$	79,179	$	79,775

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. Interest previously recorded, but not deemed collectible, is reversed and charged against current income. Payments subsequently received on non-accrual loans are applied to principal.

At December 31, 2015, non-accrual loans and other real estate owned of $31,389,000 and $17,257,000 include assets acquired from Ameriana of $2,229,000 and $5,719,000, respectively. At December 31, 2014, non-accrual loans and other real estate owned of $48,789,000 and $19,293,000 included assets acquired from Community of $5,674,000 and $6,662,000, respectively. At December 31, 2013, non-accrual loans and other real estate owned of $56,402,000 and $22,246,000 include assets acquired from CFS of $22,703,000 and $12,899,000, respectively. At December 31, 2012, non-accrual loans and other real estate owned of $53,399,000 and $13,263,000 include assets acquired from SCB of $4,219,000 and $160,000, respectively.

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PART I: ITEM 1. BUSINESS

Renegotiated loans are loans for which concessions are granted to the borrower due to deterioration in the financial condition of the borrower, resulting in the inability of the borrower to meet the original contractual terms of the loans. These concessions may include interest rate reductions, principal forgiveness, extensions of maturity date or other actions intended to minimize losses.  Certain loans restructured may be excluded from restructured loan disclosures in years subsequent to the restructuring if the loans are in compliance with their modified terms. A non-accrual loan that is restructured may remain non-accrual for a period of approximately six months until the borrower can demonstrate their ability to meet the restructured terms. A borrower's performance prior to the restructuring, as well as after, will be considered in assessing whether the borrower can meet the new terms resulting in the loan being returned to accruing status in a shorter or longer period of time than the standard six months. If the borrower’s performance under the modified terms is not reasonably assured, the loan will remain non-accrual.

For the year ended December 31, 2015, interest income of $648,000 was recognized on the non-accruing and renegotiated loans listed in the table above, whereas interest income of $2,057,000 would have been recognized under their original loan terms.

At December 31, 2015, the commercial impaired loan total of $97,527,000 included $11,365,000 and $1,841,000 in loans acquired from Ameriana and C Financial, respectively. At December 31, 2014, the commercial impaired loan total of $116,223,000 included $17,027,000 in loans acquired from Community. At December 31, 2013, the commercial impaired loan total of $119,755,000 included $69,448,000 in loans acquired from CFS. At December 31, 2012, the commercial impaired loan total of $79,179,000 included $17,334,000 in loans acquired from SCB. Commercial impaired loans include non-accrual loans, loans accounted for under ASC 310-30, and loans risk graded as substandard, doubtful and loss that were still accruing but deemed impaired according to the guidance set forth in ASC 310. Also included in impaired loans are accruing loans that are contractually past due 90 days or more and troubled debt restructurings. A loan is deemed impaired under ASC 310 when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected.  A specific allowance for losses was not deemed necessary for a subset of the impaired loans totaling $90,975,000, but a specific allowance of $1,842,000 was recorded for the remaining balance of $6,552,000 and is included in the Corporation’s allowance for loan losses at December 31, 2015. Specific reserves totaling $153,000 were recorded on loans acquired from CFS and Community. No specific allowance was recorded on loans acquired in SCB, C Financial or Ameriana transactions. The average balance of the aforementioned total impaired loans for 2015 was $103,368,000.

An allowable method for determining impairment is estimating the fair value of collateral on collateral dependent loans.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a discounted cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings andor customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

In addition to the impaired loans discussed above, management also identified loans totaling $240,948,000 as of December 31, 2015 that were deemed to be criticized, but not impaired.  These loans are not included in the table above, or the impaired loan table in the footnotes to the consolidated financial statements.  A criticized loan is a loan in which there are concerns regarding the borrower’s ability to comply with the repayment terms.

See additional information regarding loan credit quality in Note 5. LOANS AND ALLOWANCE, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

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PART I: ITEM 1. BUSINESS

SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes the loan loss experience for the years indicated:

(Dollars in Thousands)	2015			2014			2013			2012			2011
Allowance for loans losses:
Balances, January 1	$	63,964		$	67,870		$	69,366		$	70,898		$	82,977
Charge offs:
Commercial (1)	2,356			7,246			6,117			8,311			9,818
Commercial real estate (2)	1,437			6,608			7,493			12,322			29,807
Consumer	620			657			623			1,130			1,441
Residential	3,859			2,869			3,886			5,475			7,407
Finance leases				2			15			34
Total Charge Offs	8,272			17,382			18,134			27,272			48,473
Recoveries:
Commercial (3)	1,911			5,435			4,586			1,744			8,828
Commercial real estate (4)	2,545			3,297			3,552			3,652			2,811
Consumer	352			377			556			695			942
Residential	1,536			1,783			1,292			1,113			1,176
Finance leases				24			4			2			7
Total Recoveries	6,344			10,916			9,990			7,206			13,764
Net charge offs	1,928			6,466			8,144			20,066			34,709
Provisions for loan losses	417			2,560			6,648			18,534			22,630
Balance at December 31	$	62,453		$	63,964		$	67,870		$	69,366		$	70,898
Ratio of net charge offs during the period to average loans outstanding during the period	0.05		%	0.17		%	0.27		%	0.71		%	1.26		%

See the information regarding the analysis of loan loss experience in the “Provision and Allowance for Loan Losses” section

of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

_______________________________

(1) Category includes the charge offs for commercial and industrial, agricultural production financing and other loans to farmers and other non-consumer loans.

(2) Category includes the charge offs for construction, commercial and farmland.

(3) Category includes the recoveries for commercial and industrial, agricultural production financing and other loans to farmers and other non-consumer loans.

(4) Category includes the recoveries for construction, commercial and farmland.

18

PART I: ITEM 1. BUSINESS

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

Presented below is an analysis of the composition of the allowance for loan losses and percent of loans in each category to total loans as of December 31, 2015, 2014, 2013, 2012, and 2011.

	2015				2014				2013				2012				2011
(Dollars in Thousands)	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Balance at December 31:
Commercial	$	26,478	28.0	%	$	28,824	26.4	%	$	27,176	24.8	%	$	25,913	26.9	%	$	17,731	24.9	%
Commercial real estate	22,145		46.2		19,327		47.9		23,102		49.3		26,703		47.1		37,919		47.1
Consumer	2,689		1.6		2,658		1.9		2,515		1.9		2,593		2.6		2,902		3.1
Residential	11,139		24.2		13,152		23.8		15,077		24.0		14,157		23.3		12,343		24.8
Finance leases	2				3										0.1		3		0.1
Totals	$	62,453	100.0	%	$	63,964	100.0	%	$	67,870	100.0	%	$	69,366	100.0	%	$	70,898	100.0	%

Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities, which would cause them to be similarly impacted by economic or other conditions.  As of December 31, 2015, the only concentrations of commercial loans within a single industry (as segregated by North American Industry Classification System “NAICS code”) in excess of 10 percent of loans were Lessors of Nonresidential Buildings and Lessors of Residential Buildings and Dwellings.

LOAN LOSS CHARGE OFF PROCEDURES

The Corporation maintains an allowance to cover probable credit losses in its loan portfolio. The allowance is increased by the provision for loan losses and decreased by charge offs less recoveries. All charge offs are approved by the senior loan officers or loan committees, depending on the amount of the charge off, and are reported to the Board of Directors. Loans are charged off when a determination is made that all or a portion of a loan is uncollectible.

PROVISION FOR LOAN LOSSES

In banking, loan losses are a cost of doing business. Although management emphasizes the early detection and charge off of loan losses, it is inevitable that certain losses, which have not been specifically identified, exist in the portfolio. Accordingly, the provision for loan losses is charged to earnings on an anticipatory basis, and recognized loan losses net of recoveries are deducted from the established allowance. Over time, all net loan losses are charged to earnings. During the year, an estimate of the expected losses for the year serves as a starting point in determining the appropriate level of the provision for loan losses. Based on management’s judgment as to the appropriate level of the allowance for loan losses, the amount provided in any period may be greater or less than net loan losses for the same period. The determination of the provision for loan losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The evaluation by management includes consideration of past loan loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding. See additional information in the “Provision and Allowance For Loan Losses” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

DEPOSITS

The average balances, interest expense and average rates on deposits for the years ended December 2015, 2014 and 2013 are presented in the Part I. Item I. Business section titled "DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY, INTEREST RATES AND INTEREST DIFFERENTIAL" of this Annual Report on Form 10-K.

As of December 31, 2015, certificates of deposit and other time deposits of $100,000 or more mature as follows:

(Dollars in Thousands)	Maturing 3 Months or Less			Maturing 3-6 Months			Maturing 6-12  Months			Maturing Over 12 Months			Total
Certificates of deposit and other time deposits	$	90,182		$	46,117		$	75,925		$	111,474		$	323,698
Percent	28		%	14		%	24		%	34		%	100		%

RETURN ON EQUITY AND ASSETS

See the information regarding return on equity and assets presented within Part II: Item 6. SELECTED FINANCIAL DATA of this Annual Report on Form 10-K.

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PART I: ITEM 1. BUSINESS

SHORT-TERM BORROWINGS

Borrowings maturing in one year or less are included in the following table:

(Dollars in Thousands)	2015		2014		2013
Balance at December 31:
Federal funds purchased	$	49,721	$	15,381	$	125,645
Securities sold under repurchase agreements (short-term portion)	155,325		124,539		148,672
Federal Home Loan Bank advances  (short-term portion)	91,441		30,701		26,272
Subordinated debentures and term loans (short-term portion)	183		108		105
Total short-term borrowings	$	296,670	$	170,729	$	300,694

Securities sold under repurchase agreements are categorized as borrowings maturing within one year and are secured by U.S. Treasury and U.S. Government-Sponsored Enterprise obligations, certain municipal securities and mortgage loans.

Pertinent information with respect to short-term borrowings is summarized below:

(Dollars in Thousands)	2015			2014			2013
Weighted Average Interest Rate on Outstanding Balance at December 31:
Federal funds purchased	0.5		%	0.3		%	0.3		%
Securities sold under repurchase agreements (short-term portion)	0.3		%	0.3		%	0.5		%
Federal Home Loan Bank advances (short-term portion)	1.1		%	2.0		%	1.1		%
Subordinated debentures and term loans (short-term portion)
Total short-term borrowings	0.6		%	0.6		%	0.5		%
Weighted Average Interest Rate During the Year:
Federal funds purchased	0.4		%	0.4		%	0.4		%
Securities sold under repurchase agreements (short-term portion)	0.3		%	0.4		%	0.6		%
Federal Home Loan Bank advances (short-term portion)	1.1		%	0.9		%	0.8		%
Subordinated debentures and term loans (short-term portion)
Total short-term borrowings	0.5		%	0.6		%	0.6		%
Highest Amount Outstanding at Any Month End During the Year:
Federal funds purchased	$	101,249		$	121,192		$	125,645
Securities sold under repurchase agreements (short-term portion)	163,128			155,941			151,813
Federal Home Loan Bank advances (short-term portion)	128,557			190,709			76,272
Subordinated debentures and term loans (short-term portion)	234			470			459
Total short-term borrowings	$	393,168		$	468,312		$	354,189
Average Amount Outstanding During the year:
Federal funds purchased	$	20,767		$	44,674		$	26,789
Securities sold under repurchase agreements (short-term portion)	143,491			130,910			140,126
Federal Home Loan Bank advances (short-term portion)	62,471			96,284			22,807
Subordinated debentures and term loans (short-term portion)	174			232			187
Total short-term borrowings	$	226,903		$	272,100		$	189,909

20

PART I: ITEM 1A. AND ITEM 1B.

ITEM 1A. RISK FACTORS

RISK FACTORS

There are a number of factors, including those specified below, that may adversely affect the Corporation’s business, financial results or stock price. Additional risks that the Corporation currently does not know about or currently views as immaterial may also impair the Corporation’s business or adversely impact its financial results or stock price.

INDUSTRY AND CORPORATE RISK FACTORS

The Corporation’s business and financial results are significantly affected by general business and economic conditions.

The Corporation’s business activities and earnings are affected by general business conditions in the United States and abroad. These conditions include short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, and the strength of the United States economy and the state and local economies in which the Corporation operates. For example, a prolonged economic downturn, continued increase in unemployment, or other events that affect household and/or corporate incomes could result in deterioration of credit quality, an increase in the allowance for loan losses, or reduced demand for loan or fee-based products and services. Changes in the financial performance and condition of the Corporation’s borrowers could negatively affect repayment of those borrowers’ loans. In addition, changes in securities market conditions and monetary fluctuations could adversely affect the availability and terms of funding necessary to meet the Corporation’s liquidity needs.

• Changes in the domestic interest rate environment could reduce the Corporation’s net interest income.

The operations of financial institutions, such as the Corporation, are dependent to a large degree on net interest income, which is the difference between interest income from loans and investments and interest expense on deposits and borrowings. An institution’s net interest income is significantly affected by market rates of interest, which in turn are affected by prevailing economic conditions, by the fiscal and monetary policies of the federal government and by the policies of various regulatory agencies. Like all financial institutions, the Corporation’s balance sheet is affected by fluctuations in interest rates. Volatility in interest rates can also result in the flow of funds away from financial institutions into direct investments. Direct investments, such as U.S. Government and corporate securities and other investment vehicles, including mutual funds, generally pay higher rates of return than financial institutions, because of the absence of federal insurance premiums and reserve requirements.

• Changes in the laws, regulations and policies governing banks and financial services companies could alter the Corporation’s business environment and adversely affect operations.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its fiscal and monetary policies determine in a large part the Corporation’s cost of funds for lending and investing and the return that can be earned on those loans and investments, both of which affect the Corporation’s net interest margin. Federal Reserve Board policies can also materially affect the value of financial instruments that the Corporation holds, such as debt securities. The Corporation and the Bank are heavily regulated at the federal and state levels. This regulation is to protect depositors, federal deposit insurance funds and the banking system as a whole. Congress and state legislatures and federal and state agencies continually review banking laws, regulations and policies for possible changes. Changes in statutes, regulations or policies could affect the Corporation in substantial and unpredictable ways, including limiting the types of financial services and products that the Corporation offers and/or increasing the ability of non-banks to offer competing financial services and products. See a description of recent legislation in the “REGULATION AND SUPERVISION OF FIRST MERCHANTS CORPORATION AND SUBSIDIARIES” section of Item 1: Business of this Annual Report on Form 10-K.

• The banking and financial services industry is highly competitive, and competitive pressures could intensify and adversely affect the Corporation’s financial results.

The Corporation operates in a highly competitive industry that could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. The Corporation competes with other banks, savings and loan associations, mutual savings banks, finance companies, mortgage banking companies, credit unions and investment companies. In addition, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks. Many of the Corporation’s competitors have fewer regulatory constraints and some have lower cost structures. Also, the potential need to adapt to industry changes in information technology systems, on which the Corporation and financial services industry are highly dependent, could present operational issues and require capital spending.

• Acts or threats of terrorism and political or military actions taken by the United States or other governments could adversely affect general economic or industry conditions.

Geopolitical conditions may also affect the Corporation’s earnings. Acts or threats of terrorism and political or military actions taken by the United States or other governments in response to terrorism, or similar activity, could adversely affect general economic or industry conditions.

21

PART I: ITEM 1A. AND ITEM 1B.

• The Corporation’s allowance for loan losses may not be adequate to cover actual losses.

The Corporation maintains an allowance for loan losses to provide for loan defaults and non-performance.  The allowance for loan losses represents management’s estimate of probable losses inherent in the Corporation’s loan portfolio. The Corporation’s allowance consists of three components:  probable losses estimated from individual reviews of specific loans, probable losses estimated from historical loss rates, and probable losses resulting from economic, environmental, qualitative or other deterioration above and beyond what is reflected in the first two components of the allowance. The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results. It requires management to make difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are uncertain.  Therefore, the allowance for loan losses, considering current factors at the time, including economic conditions and ongoing internal and external examination processes, will increase or decrease as deemed necessary to ensure the allowance for loan losses remains adequate. In addition, the allowance as a percentage of charge offs and nonperforming loans will change at different points in time based on credit performance, loan mix and collateral values.

The Corporation may suffer losses in its loan portfolio despite its underwriting practices.

The Corporation seeks to mitigate the risks inherent in its loan portfolio by adhering to specific underwriting practices. The Corporation’s strategy for credit risk management includes conservative credit policies and underwriting criteria for all loans, as well as an overall credit limit for each customer significantly below legal lending limits. The strategy also emphasizes diversification on a regional geographic, industry and customer level, regular credit quality reviews and management reviews of large credit exposures and loans experiencing deterioration of credit quality. There is a continuous review of the loan portfolio, including an internally administered loan “watch” list and an independent loan review. The evaluation takes into consideration identified credit problems, as well as the possibility of losses inherent in the loan portfolio that are not specifically identified. Although the Corporation believes that its underwriting criteria are appropriate for the various kinds of loans it makes, the Corporation may incur losses on loans due to the factors previously discussed.

• The Corporation faces operational risks because the nature of the financial services business involves a high volume of transactions.

The Corporation operates in diverse markets and relies on the ability of its employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from the Corporation’s operations, including, but not limited to, the risk of fraud by employees or persons outside of the Corporation, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system and compliance requirements and business continuation and disaster recovery. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, the Corporation could suffer financial loss, face regulatory action and suffer damage to its reputation.

• A natural disaster could harm the Corporation’s business.

Natural disasters could harm the Corporation’s operations directly through interference with communications, as well as through the destruction of facilities and operational, financial and management information systems. These events could prevent the Corporation from gathering deposits, originating loans and processing and controlling its flow of business.

• The Corporation faces systems failure risks as well as security risks, including “hacking” and “identity theft”.

The computer systems and network infrastructure the Corporation uses could be vulnerable to unforeseen problems. The Corporation’s operations are dependent upon the ability to protect computer equipment against damage from fire, power loss or telecommunication failure. Any damage or failure that causes an interruption in operations could adversely affect the business and financial results. In addition, computer systems and network infrastructure present security risks, and could be susceptible to hacking or identity theft which could cause significant damage and cost to the Corporation, the severity of which is difficult to predict.

• The Corporation relies on dividends from its subsidiaries for its liquidity needs.

The Corporation is a separate and distinct legal entity from its bank and non-bank subsidiaries. The Corporation receives substantially all of its cash from dividends paid by its subsidiaries. These dividends are the principal source of funds to pay dividends on the Corporation’s stock and interest and principal on its debt. Various federal and state laws and regulations limit the amount of dividends that the bank subsidiaries may pay to the Corporation.

22

PART I: ITEM 1A. AND ITEM 1B.

• The Corporation’s reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

The Corporation’s accounting policies and methods are fundamental to how it records and reports its financial condition and results of operations. The Corporation’s management must exercise judgment in selecting and applying many of these accounting policies and methods, so they comply with Generally Accepted Accounting Principles and reflect management’s judgment of the most appropriate manner to report the Corporation’s financial condition and results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances yet might result in the Corporation reporting materially different results than would have been reported under a different alternative. Certain accounting policies are critical to presenting the Corporation’s financial condition and results, and require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. These critical accounting policies include:  the allowance for loan losses; the valuation of investment securities; the valuation of goodwill and intangible assets; and pension accounting. Because of the uncertainty of estimates involved in these matters, the Corporation may be required to do one or more of the following:  significantly increase the allowance for loan losses and/or sustain loan losses that are significantly higher than the reserve provided; recognize significant provision for impairment of its investment securities; recognize significant impairment on its goodwill and intangible assets; or significantly increase its pension liability. As part of its function of assisting the Corporation’s Board of Directors in discharging its responsibility of ensuring all types of risk to the organization are properly being managed, mitigated and monitored by management, the Audit Committee of the Board of Directors oversees management’s accounting policies and methods.  For more information, refer to Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, in the Notes to Consolidated Financial Statements included as item 8 of this Annual Report on Form 10-K.

• A write-down of all or part of the Corporation’s goodwill could materially reduce its net income and net worth.

At December 31, 2015, the Corporation had goodwill of $243,129,000 recorded on its consolidated balance sheet. Under ASC 340-20, Other Assets and Deferred Costs, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired. An impairment loss must be recognized for any excess of carrying value over the fair value of goodwill.  The fair value is determined based on internal valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors. The resulting estimated fair value could result in material write-downs of goodwill and recording of impairment losses. Such a write-down could materially reduce the Corporation’s net income and overall net worth. The Corporation also cannot predict the occurrence of certain future events that might adversely affect the fair value of goodwill. Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the effect of the economic environment on the Corporation’s customer base, or a material negative change in its relationship with significant customers.

• Changes in accounting standards could materially impact the Corporation’s financial statements.

From time to time, the Financial Accounting Standards Board changes the financial accounting and reporting standards that govern the preparation of the Corporation’s financial statements. These changes can be hard to predict and can materially impact how the Corporation records and reports its financial condition and results of operations. In some cases, the Corporation could be required to apply a new or revised standard retroactively; resulting in the restating of prior period financial statements.

• Significant legal actions could subject the Corporation to substantial uninsured liabilities.

The Corporation is from time to time subject to claims related to its operations. These claims and legal actions, including supervisory actions by the Corporation’s regulators, could involve large monetary claims and significant defense costs. To protect itself from the cost of these claims, the Corporation maintains insurance coverage in amounts and with deductibles that it believes are appropriate for its operations. However, the Corporation’s insurance coverage may not cover all claims against the Corporation or continue to be available to the Corporation at a reasonable cost. As a result, the Corporation may be exposed to substantial uninsured liabilities, which could adversely affect the Corporation’s results of operations and financial condition

• Negative publicity could damage the Corporation’s reputation and adversely impact its business and financial results.

Reputation risk, or the risk to the Corporation’s earnings and capital from negative publicity, is inherent in the Corporation’s business.  Negative publicity can result from the Corporation’s actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, and actions taken by government regulators and community organizations in response to those activities. Negative publicity can adversely affect the Corporation’s ability to keep and attract customers and can expose the Corporation to litigation and regulatory action. Although the Corporation takes steps to minimize reputation risk in dealing with customers and other constituencies, the Corporation is inherently exposed to this risk.

• Acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties.

The Corporation regularly explores opportunities to acquire banks, financial institutions, or other financial services businesses or assets. The Corporation cannot predict the number, size or timing of acquisitions. Difficulty in integrating an acquired business or company may cause the Corporation not to realize expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from the acquisition. The integration could result in higher than expected deposit attrition (run-off), loss of key employees, disruption of the Corporation’s business or the business of the acquired company, or otherwise adversely affect the Corporation’s ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition. Also, the negative effect of any divestitures required by regulatory authorities in acquisitions or business combinations may be greater than expected.

23

PART I: ITEM 1A. AND ITEM 1B.

• The Corporation may not be able to pay dividends in the future in accordance with past practice.

The Corporation has traditionally paid a quarterly dividend to common stockholders. The payment of dividends is subject to legal and regulatory restrictions. Any payment of dividends in the future will depend, in large part, on the Corporation’s earnings, capital requirements, financial condition and other factors considered relevant by the Corporation’s Board of Directors.

• The Corporation’s stock price can be volatile.

The Corporation’s stock price can fluctuate widely in response to a variety of factors, including:  actual or anticipated variations in the Corporation’s quarterly operating results; recommendations by securities analysts; significant acquisitions or business combinations; strategic partnerships, joint ventures or capital commitments; operating and stock price performance of other companies that investors deem comparable to the Corporation; new technology used or services offered by the Corporation’s competitors; news reports relating to trends, concerns and other issues in the banking and financial services industry, and changes in government regulations. General market fluctuations, industry factors and general economic and political conditions and events, including terrorist attacks, economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, could also cause the Corporation’s stock price to decrease, regardless of the Corporation’s operating results.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

24

PART I: ITEM 2., ITEM 3. AND ITEM 4.

ITEM 2.  PROPERTIES.

The headquarters of the Corporation and the Bank is located at 200 East Jackson Street, Muncie, Indiana. The building is owned by the Bank.

The Bank conducts business through numerous facilities owned and leased.  Of the 116 banking offices operated by the Bank, 91 are owned and 25 are leased from non-affiliated third parties.

None of the properties owned by the Corporation are subject to any major encumbrances.  The net investment of the Corporation and subsidiaries in real estate and equipment at December 31, 2015 was $97,648,000.

ITEM 3. LEGAL PROCEEDINGS.

There is no pending legal proceeding, other than ordinary routine litigation incidental to the business of the Corporation or its subsidiaries, of a material nature to which the Corporation or its subsidiaries is a party or of which any of their properties are subject. Further, there is no material legal proceeding in which any director, officer, principal shareholder, or affiliate of the Corporation, or any associate of any such director, officer or principal shareholder, is a party, or has a material interest, adverse to the Corporation or any of its subsidiaries.

None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial position or the results of operations of the Corporation.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

25

SUPPLEMENTAL INFORMATION

SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages, and positions with the Corporation and the Bank of all executive officers of the Corporation and all persons chosen to become executive officers are listed below. The officers are elected by the Board of Directors of the Corporation for a term of one year or until the election of their successors. There are no arrangements between any officer and any other person pursuant to which he or she was selected as an officer.

Michael C. Rechin, 57, President and Chief Executive Officer, Corporation

President and Chief Executive Officer of the Corporation since April 2007; Chief Operating Officer of the Corporation from November 2005 to April 2007; Executive Vice President, Corporate Banking National City Bank from 1995 to November 2005.

Mark K. Hardwick, 45, Executive Vice President and Chief Financial Officer, Corporation

Executive Vice President and Chief Financial Officer of the Corporation since December 2005; Senior Vice President and Chief Financial Officer of the Corporation from April 2002 to December 2005; Corporate Controller of the Corporation from November 1997 to April 2002.

Michael J. Stewart, 50, Executive Vice President and Chief Banking Officer, Corporation

Executive Vice President and Chief Banking Officer of the Corporation since February 2008; Executive Vice President from December 2006 to February 2008 of National City Corp;  Executive Vice President and Chief Credit Officer of National City Bank of Indiana from December 2002 to December 2006.

John J. Martin, 49, Executive Vice President and Chief Credit Officer, Corporation

Executive Vice President and Chief Credit Officer of the Corporation since March 2013; Senior Vice President and Chief Credit Officer of the Corporation from June 2009 to March 2013; First Vice President and Deputy Chief Credit Officer of the Corporation from July 2008 to June 2009; First Vice President and Senior Manager of Lending Process of the Corporation from January 2008 to July 2008; Senior Vice President and Regional Senior Credit Officer of National City Bank from May 2000 to December 2007.

Stephan H. Fluhler, 47, Senior Vice President, Chief Information Officer, Corporation

Senior Vice President and Chief Information Officer of the Corporation since May 2014; Chief Technology Officer of the Corporation from 2004 to May 2014; Director of Technology Services and Change Management of the Corporation from December 2003 to 2004.

Kimberly J. Ellington, 56, Senior Vice President and Director of Human Resources, Corporation

Senior Vice President and Director of Human Resources of the Corporation since 2004; Vice President and Director of Human Resources of the Corporation from 1999 to 2004.

Jeffrey B. Lorentson, 52, Senior Vice President and Chief Risk Officer, Corporation

Senior Vice President and Chief Risk Officer of the Corporation since June 2007; Corporate Controller of First Indiana Bank from June 2006 to June 2007; First Vice President and Corporate Controller of the Corporation from 2003 to 2006; Vice President and Corporate Controller of the Corporation from 2002 to 2003.

Michele Kawiecki, 43, Senior Vice President and Director of Finance, Corporation

Senior Vice President and Director of Finance of the Corporation since March 2015; Senior Vice President of Capital Management and Assistant Treasurer of UMB Financial Corporation from May 2011 to March 2015; Director of Corporate Development and Enterprise Project Management at UMB Financial Corporation from May 2008 to May 2011; Chief Risk Officer at UMB Financial Corporation from February 2004 to May 2008.

26

PART II: ITEM 5. AND ITEM 6.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

PERFORMANCE GRAPH

The following graph compares the cumulative 5-year total return to shareholders on First Merchants Corporation’s common stock relative to the cumulative total returns of the Russell 2000 index, the SNL Bank $1B - $5B index, and the SNL Bank $5B - $10B index. The graph assumes that the value of the investment in the Corporation’s common stock and in each of the indexes (including reinvestment of dividends) was $100 on December 31, 2010 and tracks it through December 31, 2015.

			Period Ending
Index	12/31/2010		12/31/2011		12/31/2012		12/31/2013		12/31/2014		12/31/2015
First Merchants Corporation	$	100.00	$	96.07	$	169.64	$	262.43	$	266.42	$	302.62
Russell 2000	100.00		95.82		111.49		154.78		162.35		155.18
SNL Bank $1B-$5B	100.00		91.20		112.45		163.52		170.98		191.39
SNL Bank $5B-$10B	100.00		99.24		116.73		180.10		185.52		211.33

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

27

PART II: ITEM 5. AND ITEM 6.

STOCK INFORMATION

	Price Per Share
	HIGH				LOW				Dividends Declared (1)
Quarter	2015		2014		2015		2014		2015		2014
First quarter	$	23.95	$	22.66	$	21.37	$	19.74	$	0.08	$	0.05
Second quarter	25.38		22.80		22.09		19.38		0.11		0.08
Third quarter	26.77		22.10		24.61		19.46		0.11		0.08
Fourth quarter	27.60		23.39		24.74		19.94		0.11		0.08

Numbers rounded to nearest cent when applicable.

The table above lists per share prices and dividend payments during 2015 and 2014. Prices are as reported by the National Association of Securities Dealers Automated Quotation – Global Select Market System.

COMMON STOCK LISTING

First Merchants Corporation common stock is traded over-the-counter on the NASDAQ Global Select Market System. Quotations are carried in many daily papers. The NASDAQ symbol is FRME (Cusip #320817-10-9). At the close of business on February 23, 2016, the number of shares outstanding was 40,671,228. There were 3,841 stockholders of record on that date.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES

The following table presents information relating to our purchases of equity securities during the three months ended December 31, 2015, as follows

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as part of Publicly announced Plans or Programs	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
October, 2015	184	$25.88
November, 2015
December, 2015

The shares were purchased in connection with the exercise of certain outstanding stock options or restricted stock.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information about the Corporation’s common stock that may be issued under equity compensation plans as of December 31, 2015. 

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercised price of outstanding options warrants and rights		Number of securities remaining available for future issuance under equity compensations plans (excluding securities reflected in first column)
Equity compensation plans approved by stockholders	442,373	$	19.98	654,150
Total	442,373	$	19.98	654,150

_______________________________

(1) The “DIVIDEND LIMITATIONS” section of “BUSINESS” included as Item 1 of this Annual Report on Form 10-K, the “CAPITAL” and “LIQUIDITY” sections of “Management's Discussion & Analysis of Financial Condition and Results of Operations” included as Item 7 of this Annual Report on Form 10-K and Note 16. STOCKHOLDERS’ EQUITY  to the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K include discussions regarding dividend restrictions.

28

PART II: ITEM 5. AND ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.

(Dollars in Thousands, Except Share Data)	2015			2014			2013			2012			2011
Operations (1) (2) (3) (4) (5)
Net interest income fully taxable equivalent (FTE) basis	$	207,379		$	194,958		$	160,308		$	158,081		$	149,114
Less tax equivalent adjustment	10,975			7,921			6,043			5,745			5,759
Net interest income	196,404			187,037			154,265			152,336			143,355
Provision for loan losses	417			2,560			6,648			18,534			22,630
Net interest income after provision for loan losses	195,987			184,477			147,617			133,802			120,725
Total other income	72,531			66,400			56,016			64,507			49,301
Total other expenses	177,469			168,592			143,219			137,115			135,938
Income before income tax expense (benefit)	91,049			82,285			60,414			61,194			34,088
Income tax expense (benefit)	25,665			22,123			15,884			16,072			8,836
Net income	65,384			60,162			44,530			45,122			25,252
Loss on Capital Purchase Program unamortized discount													(1,401		)
Loss on extinguishment of trust preferred securities													(10,857		)
Preferred stock dividends and discount accretion							(2,380		)	(4,539		)	(3,981		)
Net income available to common stockholders	$	65,384		$	60,162		$	42,150		$	40,583		$	9,013
Per Share Data
Basic net income available to common stockholders	$	1.73		$	1.66		$	1.42		$	1.42		$	0.34
Diluted net income available to common stockholders	1.72			1.65			1.41			1.41			0.34
Cash dividends paid - common	0.41			0.29			0.18			0.10			0.04
December 31 book value - common	20.91			19.29			17.67			16.08			14.83
December 31 tangible book value - common	14.68			13.65			12.17			10.95			9.64
December 31 market value (bid price) - common	25.42			22.75			22.72			14.84			8.47
Average Balances (1) (2) (3) (4) (5)
Total assets	$	6,085,687		$	5,571,354		$	4,455,411		$	4,245,996		$	4,143,850
Total loans (6)	4,179,839			3,730,080			3,008,555			2,819,816			2,748,684
Earning assets	5,464,829			4,985,338			4,017,247			3,833,174			3,744,027
Total deposits	4,806,503			4,363,955			3,465,640			3,263,020			3,175,762
Total stockholders' equity	753,724			675,295			540,255			535,497			478,440
Year-End Balances (1) (2) (3) (4) (5)
Total assets	$	6,761,003		$	5,824,127		$	5,437,262		$	4,304,821		$	4,173,076
Total loans (6)	4,703,716			3,932,100			3,637,740			2,924,509			2,731,279
Allowance for loan losses	62,453			63,964			67,870			69,366			70,898
Total deposits	5,289,647			4,640,694			4,231,468			3,346,383			3,134,655
Total stockholders' equity	850,509			726,827			634,923			552,236			514,467
Financial Ratios (1) (2) (3) (4) (5)
Return on average assets	1.07		%	1.08		%	0.95		%	0.96		%	0.22		%
Return on average stockholders' equity	8.67			8.91			7.80			7.58			1.88
Average earning assets to total assets	89.80			89.48			90.17			90.28			90.35
Allowance for loan losses as % of total loans	1.33			1.63			1.87			2.37			2.60
Dividend payout ratio	23.84			17.58			12.77			7.09			11.76
Average stockholders' equity to average assets	12.39			12.12			12.13			12.61			11.55
Tax equivalent yield on earning assets	4.25			4.35			4.40			4.74			4.99
Cost of supporting liabilities	0.45			0.44			0.41			0.62			1.01
Net interest margin on earning assets	3.80			3.91			3.99			4.12			3.98

⁽¹⁾ Effective February 10, 2012, the Bank assumed substantially all of the deposits and certain other liabilities and acquired certain assets of SCB Bank, a federal savings bank headquartered in Shelbyville, Indiana, from the Federal Deposit Insurance Corporation ("FDIC"), as receiver for SCB Bank, pursuant to the terms of the Purchase and Assumption Agreement - Modified Whole Bank; All Deposits (the “Agreement”), entered into by the Bank, the FDIC as receiver of SCB Bank and the FDIC. Under the terms of the Agreement, the Bank acquired $147.7 million in assets, including approximately $11.9 million of cash and cash equivalents, $18.9 million of marketable securities, $1.8 million in Federal Home Loan Bank stock, $113.0 million in loans and $2.1 million of premises and other assets. The asset balances are book balances and do not reflect the fair value discount of $29.0 million from book value. The Bank assumed approximately $135.7 million of liabilities, including $125.9 million in customer deposits, $9.6 million of other borrowings and $402,000 in other liabilities. The bid accepted by the FDIC included no deposit premium.

⁽²⁾ Effective November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp, Inc. ("CFS") in an all stock transaction. CFS was headquartered in Munster, Indiana and had 20 banking centers in northwestern Indiana and northeastern Illinois. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million. The Corporation acquired approximately $1.1 billion of assets, including $603 million of loans. Additionally, the Corporation assumed approximately $997 million of liabilities, including $955 million of deposits.

⁽³⁾ Effective November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Community was headquartered in Noblesville, IN and had 10 banking centers serving central Indiana. Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of First Merchants' common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at $35.0 million, for a total purchase price of approximately $49.2 million. The details of the acquisition can be found in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

⁽⁴⁾ Effective April 17, 2015, the Corporation acquired 100 percent of C Financial Corporation ("C Financial"). C Financial was headquartered in Columbus, Ohio and had 6 full service banking centers serving the Columbus, Ohio market. Pursuant to the merger agreement, shareholders of C Financial received $6.738 in cash for each share of C Financial stock held, resulting in a total purchase price of $14.5 million. The details of the acquisition can be found in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

⁽⁵⁾ Effective December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp, Inc. ("Ameriana"). Ameriana was headquartered in New Castle, Indiana and had 13 full service banking centers in east central and central Indiana. Pursuant to the merger agreement, shareholders of Ameriana received .9037 shares of the Corporation's common stock for each share of Ameriana Bancorp common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million. The details of the acquisition can be found in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

⁽⁶⁾ Includes loans held for sale.

29

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CRITICAL ACCOUNTING POLICIES

Generally accepted accounting principles require management to apply significant judgment to certain accounting, reporting and disclosure matters. Management must use assumptions and estimates to apply those principles where actual measurement is not possible or practical. For a complete discussion of the Corporation’s significant accounting policies, see Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K for additional detail.

RESULTS OF OPERATIONS – 2015

Net income available to stockholders was $65.4 million, or $1.72 per fully diluted common share, an increase of $5.2 million, compared to $60.2 million, or $1.65 per fully diluted common share in 2014. Included in the 2015 results were $9.8 million, or $0.17 per share, of non-recurring acquisition, merger and system conversion expenses related to our 2014 and 2015 acquisitions and our on-line banking system conversion. Details of the December 31, 2015 Ameriana acquisition, the April 17, 2015 C Financial acquisition and the November 7, 2014 Community acquisition are included in Note 2. ACQUISITIONS AND DIVESTITURES, included within the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

As of December 31, 2015, total assets equaled $6.8 billion, an increase of $936.9 million from December 31, 2014.  Loans and investments, the Corporation’s primary earning assets, totaled $6.0 billion, an increase of $868.0 million from the prior year’s total of $5.1 billion.  Investments increased $96.4 million and loans increased $769.0 million.  Of the increase in loans, organic growth accounted for $338.7 million, or 8.6 percent. The Corporation acquired $110.6 million in loans as a result of the C Financial acquisition and $319.7 million in loans as a result of the Ameriana acquisition. Additional details of these changes are included within the "Earning Assets" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

The Corporation’s allowance for loan losses totaled $62.5 million as of December 31, 2015. The allowance provides 199.0 percent coverage of all non-accrual loans and 1.33 percent of total loans.  Details of the Allowance for Loan Losses and non-performing loans are discussed within the “Loan Quality” and “Provision and Allowance for Loan Losses” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

The Corporation recognized increases in premises and equipment and cash surrender value of life insurance of $20.0 million and $31.1 million, respectively, primarily as a result of the C Financial and Ameriana acquisitions. In addition, the excess of purchase price over net tangible assets acquired was allocated to core deposit intangibles of $4.2 million and goodwill of $48.9 million. These increases were offset by a decrease in core deposit intangibles and goodwill of $742,000 and $8.5 million, respectively, triggered by the Corporation's sale of FMIG.

At December 31, 2015, other real estate owned totaled $17.3 million, a decrease of $2.0 million, or 10.6 percent, from the December 31, 2014 balance of $19.3 million. Included in the December 31, 2015 balance was $5.7 million acquired in the Ameriana acquisition on December 31, 2015.

Taxes, both current and deferred, increased in 2015 by $5.0 million. Details related to the change in taxes are discussed within the “Income Taxes” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K and in Note 22. INCOME TAX of the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

Deposits increased $649.0 million from December 31, 2014, and borrowings increased $156.6 million during the same period. Deposits increased from the C Financial and Ameriana acquisitions by $105.3 million and $382.5 million, respectively. As part of the Ameriana acquisition, the Corporation assumed approximately $24.9 million of Federal Home Loan Bank Advances. The C Financial acquisition resulted in an additional $19.0 million of Federal Home Loan Bank advances at acquisition, of which, approximately $7.4 million matured during 2015 and $11.6 million remained at December 31, 2015. Additional details related to the change are discussed within the “Deposits and Borrowings” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

The Corporation was able to maintain all regulatory capital ratios in excess of the regulatory definition of “well-capitalized” as discussed in the “CAPITAL” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

RESULTS OF OPERATIONS – 2014

Net income available to stockholders was $60.2 million, or $1.65 per fully diluted common share, an increase of $18.0 million compared to $42.2 million, or $1.41 per fully diluted common share in 2013. On November 12, 2013, the Corporation acquired CFS Bancorp, Inc. ("CFS"), and on November 7, 2014, the Corporation acquired Community Bancshares, Inc. ("Community").

As of December 31, 2014, total assets equaled $5.8 billion, an increase of $386.9 million from December 31, 2013.  Loans and investments, the Corporation’s primary earning assets, totaled $5.1 billion, an increase of $379.4 million from the prior year’s total of $4.7 billion.  Investments increased $85.1 million and total loans increased $294.3 million.  The Corporation acquired $145.1 million in loans as a result of the Community acquisition.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation’s allowance for loan losses totaled $64.0 million as of December 31, 2014. The allowance provides 131.1 percent coverage of all non-accrual loans and 1.63 percent of total loans.  Details of the Allowance for Loan Losses and non-performing loans are discussed within the “Loan Quality” and “Provision and Allowance for Loan Losses” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

The Corporation recognized increases in goodwill and core deposit intangible of $13.8 million and $4.7 million, respectively, as a result of the Community acquisition.

At December 31, 2014, other real estate owned totaled $19.3 million, a decrease of $2.9 million from the December 31, 2013 balance of $22.2 million. Included in the December 31, 2014 balance was $6.7 million acquired in the Community acquisition.

Taxes, both current and deferred, decreased in 2014 by $14.7 million. Details related to the change in taxes are discussed within the “Income Taxes” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K and in Note 22. INCOME TAX of the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

Other assets of $20.8 million at December 31, 2014, decreased $8.2 million from December 31, 2013. Included in the decrease was an $11.1 million decrease in prepaid pension expense. Additional details related to the prepaid pension expense are discussed in Note 21. PENSION AND OTHER POST RETIREMENT BENEFIT PLANS, of the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

Deposits increased $409.2 million from December 31, 2013, while borrowings decreased $111.3 million during the same period. As part of the Community acquisition, the Bank acquired deposits of $228.4 million.

As part of the Community acquisition, the Corporation issued approximately 1.6 million shares of common stock valued at $35.0 million. Additional details of this transaction are discussed in Note 16. STOCKHOLDERS' EQUITY of the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The Corporation was able to maintain all regulatory capital ratios in excess of the regulatory definition of “well-capitalized” as discussed in the “CAPITAL” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the primary source of the Corporation’s earnings.  Net interest margin is a function of net interest income and the level of average earning assets.  The following table presents the Corporation’s interest income, interest expense, and net interest income as a percent of average earning assets for the three-year period ending in 2015.

	Average Balance			Interest  Income / Expense		Average Rate		Average Balance			Interest  Income / Expense		Average Rate		Average Balance			Interest  Income / Expense		Average Rate
(Dollars in Thousands)	2015							2014							2013
Assets:
Interest-bearing deposits	$	61,373		$	160	0.26	%	$	53,231		$	124	0.23	%	74,964			158		0.21	%
Federal reserve and federal home loan bank stock	37,495			1,967		5.25		42,142			2,124		5.04		33,620			1,488		4.43
Investment securities: (1)
Taxable	703,019			17,885		2.54		763,450			19,882		2.60		617,524			15,214		2.46
Tax-Exempt (2)	483,103			26,034		5.39		396,435			22,127		5.58		282,584			16,660		5.90
Total investment securities	1,186,122			43,919		3.70		1,159,885			42,009		3.62		900,108			31,874		3.54
Loans held for sale	3,725			475		12.75		6,681			485		7.26		16,137			770		4.77
Loans: (3)
Commercial	3,187,239			142,696		4.48		2,919,020			133,567		4.58		2,391,221			113,613		4.75
Real estate mortgage	457,013			19,457		4.26		429,384			19,812		4.61		277,520			12,375		4.46
Installment	406,163			18,177		4.48		361,484			18,175		5.03		308,233			15,994		5.19
Tax-Exempt (2)	125,699			5,322		4.23		13,511			504		3.73		15,444			605		3.92
Total loans	4,179,839			186,127		4.45		3,730,080			172,543		4.63		3,008,555			143,357		4.76
Total earning assets	5,464,829			232,173		4.25	%	4,985,338			216,800		4.35	%	4,017,247			176,877		4.40	%
Net unrealized gain on securities available for sale	11,800							8,921							4,521
Allowance for loan losses	(62,975		)					(67,969		)					(68,806		)
Cash and cash equivalents	98,051							87,068							73,161
Premises and equipment	82,710							75,202							57,228
Other assets	491,272							482,794							372,060
Total assets	$	6,085,687						$	5,571,354						$	4,455,411
Liabilities:
Interest-bearing deposits:
NOW accounts	$	1,109,829		$	1,374	0.12	%	$	1,066,402		$	1,110	0.10	%	$	880,323		$	941	0.11	%
Money market deposit accounts	840,084			1,768		0.21		776,712			1,572		0.20		603,012			1,287		0.21
Savings  deposits	614,675			672		0.11		533,080			619		0.12		377,106			421		0.11
Certificates and other time deposits	1,121,651			11,041		0.98		1,042,539			8,377		0.80		807,764			7,404		0.92
Total interest-bearing deposits	3,686,239			14,855		0.40		3,418,733			11,678		0.34		2,668,205			10,053		0.38
Borrowings	480,794			9,939		2.07		492,128			10,164		2.07		400,580			6,516		1.63
Total interest-bearing liabilities	4,167,033			24,794		0.60		3,910,861			21,842		0.56		3,068,785			16,569		0.54
Noninterest-bearing deposits	1,120,264							945,222							797,435
Other liabilities	44,666							39,976							48,936
Total liabilities	5,331,963							4,896,059							3,915,156
Stockholders' Equity	753,724							675,295							540,255
Total Liabilities and Stockholders' Equity	$	6,085,687		24,794		0.45		$	5,571,354		21,842		0.44		$	4,455,411		16,569		0.41
Net Interest Income				$	207,379						$	194,958						$	160,308
Net Interest Margin						3.80	%						3.91	%						3.99	%

⁽¹⁾ Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustment.

⁽²⁾ Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2015, 2014 and 2013. These totals equal $10,975, $7,921 and $6,043,

respectively.

⁽³⁾ Non-accruing loans have been included in the average balances.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In 2015, asset yields decreased 10 basis points on a fully taxable equivalent basis (FTE). Interest costs increased 1 basis point, resulting in a net decrease in net interest margin of 11 basis points when compared to 2014. Average earning assets increased $479,491,000 primarily due to a larger loan portfolio. In November 2014, the Corporation acquired Community and average earning assets only included approximately six weeks of averages related to the acquisition, but an entire year in 2015. In addition, the Corporation acquired C Financial in April 2015. Additional details of these acquisitions are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, included within the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

In 2014, asset yields decreased 5 basis points FTE and interest cost increased 3 basis points, resulting in an 8 basis points decrease in net interest margin compared to 2013. In 2013, average earning assets only included approximately six weeks of averages related to assets acquired from CFS; however, 2014 included an entire year of averages. Average earning assets increased $968,091,000 and were a result of larger loan and investment portfolios, which has positive volume variances of $33,894,000 and $9,393,000, respectively. In addition, a low interest rate environment produced a negative rate variance of $5,934,000 (FTE), resulting in a net increase of $32,772,000 (FTE) in net interest income.

Average earning assets include the average balance of securities classified as available for sale, computed based on the average of the historical amortized cost balances without the effects of the fair value adjustment.  In addition, annualized amounts are computed utilizing a 30/360 day basis.

Non-Interest Income

Non-interest income increased $6.1 million, or 9.2 percent, in 2015 compared to 2014. The June 12, 2015 sale of FMIG resulted in an $8.3 million pre-tax gain, but also a $3.3 million decrease in insurance commissions when compared to 2014. Additionally, the acquisitions of Community on November 7, 2014 and C Financial on April 17, 2015 resulted in a larger customer base that contributed to increases in gains on sale of mortgage loans and electronic card interchange fees of $1.6 million and $1.3 million, respectively. Additional details related to the sale of FMIG and the acquisition of Community and C Financial can be found in Note 2. ACQUISITIONS AND DIVESTITURES, included within the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. Finally, as detailed in Note 12. BORROWINGS, included within the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K, the Corporation completed the cancellation of $5 million of subordinated debentures at a gain of $1.3 million.

Offsetting these increases were decreases from 2014 to 2015 in gains on the sale of other real estate owned, gains on the sale of investment securities, and earnings on cash surrender value of life insurance of $2.4 million, $911,000 and $740,000, respectively. The decreases in gains on the sales of other real estate owned and investment securities were volume driven while the decrease in earnings on cash surrender value of life insurance was a result of 2014 including an $846,000 death benefit from Bank Owned Life Insurance.

In 2014, non-interest income increased $10.4 million, or 18.5 percent in comparison to 2013. The November 12, 2013 acquisition of CFS was the largest contributing factor to the year-over-year increase.

Significant increases realized during 2014 when compared to 2013 included service charge income, other customer fees (primarily electronic card interchange fees and investment brokerage fees) and other income, including gains on sale of other real estate owned, totaling $3.3 million, $3.8 million and $1.5 million, respectively. Additionally, gains on the sale of investment securities increased $3.1 million from 2013 to 2014. Additional details on investment securities can be found in Note 4. INVESTMENT SECURITIES, included within the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. Finally, 2014 earnings on cash surrender value of life insurance increased $1.0 million from the previous year, primarily due to receipt of an $846,000 death benefit from Bank Owned Life Insurance during the period.

Partially offsetting the year-over-year increases from 2013 to 2014 was a $2.6 million decrease in net gains recognized on the sale of mortgage loans. Mortgage origination and refinance volumes decreased from 2013 levels as a result of interest rate and economic factors.

The Community acquisition resulted in $201,000 of non-interest income during the last seven weeks of 2014.

Non-Interest Expenses

Non-interest expenses increased $8.9 million, or 5.3 percent, in 2015 compared to 2014. The Community and C Financial acquisitions along with the December 31, 2015 acquisition of Ameriana were the most significant factors in the year-over-year increase. During 2015, the Corporation recorded $9.8 million of one-time expenses that were primarily merger, integration and system conversion related.

Additionally in 2015, salaries and employee benefits increased $5.4 million, or 5.6 percent, over 2014. The increase was driven by the addition of Community and C Financial employees as well as severance expenses associated with the Ameriana acquisition. Also, as a result of the increased franchise size resulting from the acquisitions, the Corporation experienced increases in equipment and net occupancy expenses of $1.5 million and $837,000, respectively. Finally, as a result of one-time merger and integration expenses, professional and other outside services and other expenses increased by $1.7 million and $1.4 million, respectively.

Offsetting these increases was a $1.9 million decrease, from 2014 to 2015, in other real estate owned and foreclosure expenses as a result of continued improvement in asset quality trends.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In 2014, non-interest expenses increased $25.4 million, or 17.7 percent, compared to 2013. As with non-interest income, the CFS acquisition was the most significant factor in the year-over-year increase.

Salaries and employee benefits increased $11.1 million, or 13.0 percent, in 2014 compared to 2013 due to the addition of CFS employees since the acquisition. The Corporation also experienced a $3.5 million increase in net occupancy expense, as 20 banking center locations were added as a result of the CFS acquisition. In addition to the non-interest expense increases associated with operating a larger organization, 2014 included $1.5 million of non-recurring expenses associated with the CFS acquisition.

The Community acquisition resulted in $2.2 million of one-time expenses in 2014 and also added $646,000 of non-interest expense in the last seven weeks of 2014.

Income Tax Expense

Income tax expense in 2015 was $25,665,000 on pre-tax income of $91,049,000, or 28.2 percent. For the same period in 2014, income tax expense was $22,123,000 on pre-tax income of $82,285,000, or 26.9 percent. The increase in the effective tax rate in 2015 when compared to 2014 was primarily a result of a permanent book-to-tax basis difference associated with the gain on sale of FMIG. Details of the FMIG sale are included in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

Additional income tax expense details are discussed within the “INCOME TAXES” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K and in Note 22. INCOME TAX, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

CAPITAL

Capital adequacy is an important indicator of financial stability and performance.  The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category.  The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 capital, and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity.  The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.  

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.  Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels.  The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.  Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III was effective for the Corporation on January 1, 2015. Basel III requires the Corporation and the Bank to maintain minimum amounts and ratio of common equity tier 1 capital to risk weighted assets, as defined in the regulation. Under the new Basel III rules, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer above the adequately capitalized common equity tier 1 capital to risk-weighted assets ratio. The capital conservation buffer is being phased in from zero percent to 2.50 percent by 2019. Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. Regulatory capital ratios at December 31, 2015, were calculated under Basel III while regulatory capital ratios at December 31, 2014, were calculated under Basel I.

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PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As of December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized. There is no threshold for well capitalized status for bank holding companies. The Corporation's and Bank's actual and required capital ratios as of December 31, 2015 and December 31, 2014 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	783,776	14.94	%	$	419,809	8.00	%	N/A		N/A
First Merchants Bank	739,793		13.98		423,242		8.00		$	529,052	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	656,323	12.51	%	$	314,857	6.00	%	N/A		N/A
First Merchants Bank	677,340		12.80		317,431		6.00		$	423,242	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	603,063	11.49	%	$	236,143	4.50	%	N/A		N/A
First Merchants Bank	677,340		12.80		238,074		4.50		$	343,884	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	656,323	10.85	%	$	242,001	4.00	%	N/A		N/A
First Merchants Bank	677,340		11.22		241,423		4.00		$	301,779	5.00	%

					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	685,507	15.34	%	$	357,581	8.00	%	N/A		N/A
First Merchants Bank	653,169		14.64		356,884		8.00		$	446,105	10.00	%
Tier 1 capital to risk weighted assets
First Merchants Corporation	$	564,535	12.63	%	$	178,791	4.00	%	N/A		N/A
First Merchants Bank	597,305		13.39		178,442		4.00		$	267,663	6.00	%
Tier 1 capital to average assets
First Merchants Corporation	$	564,535	10.15	%	$	222,533	4.00	%	N/A		N/A
First Merchants Bank	597,305		10.56		226,339		4.00		$	282,953	5.00	%

Tier I regulatory capital consists primarily of total stockholders’ equity and subordinated debentures issued to business trusts categorized as qualifying borrowings, less non-qualifying intangible assets and unrealized net securities gains or losses.

On November 7, 2014, the Corporation acquired 100 percent of Community and pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of First Merchants' common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

On December 31, 2015, the Corporation acquired 100 percent of Ameriana and pursuant to the merger agreement, each Ameriana shareholder received 0.9037 of a share of First Merchants common stock for each outstanding share of Ameriana Bancorp common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

Management believes that all of the above capital ratios are meaningful measurements for evaluating the safety and soundness of the Corporation. Additionally, management believes the following tables are also meaningful when considering performance measures of the Corporation.

35

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation had a strong capital position as evidenced by the tangible common equity to tangible assets ratio of 9.17% percent at December 31, 2015, and 9.16% percent at December 31, 2014.

	Tangible Common Equity to Tangible Assets (non-GAAP)
(Dollars in Thousands, Except Per Share Amounts)	December 31, 2015			December 31, 2014
Total Stockholders' Equity (GAAP)	$	850,509		$	726,827
Less: Cumulative preferred stock (GAAP)	(125		)	(125		)
Less: Intangible assets, net of tax (GAAP)	(253,486		)	(212,669		)
Tangible common equity (non-GAAP)	$	596,898		$	514,033
Total assets (GAAP)	$	6,761,003		$	5,824,127
Less: Intangible assets, net of tax (GAAP)	(253,486		)	(212,669		)
Tangible assets (non-GAAP)	6,507,517			5,611,458
Tangible common equity to tangible assets (non-GAAP)	9.17		%	9.16		%

The following table details and reconciles tangible earnings per share, return on tangible capital and tangible assets to traditional GAAP measures for the periods ended December 31, 2015 and 2014.

(Dollars in Thousands, Except Per Share Amounts)	December 31, 2015			December 31, 2014
Average goodwill (GAAP)	$	206,032		$	191,033
Average core deposit intangible (GAAP)	14,859			13,323
Average deferred tax on CDI (GAAP)	(5,610		)	(5,002		)
Intangible adjustment (non-GAAP)	$	215,281		$	199,354
Average stockholders' equity (GAAP)	$	753,724		$	675,295
Average cumulative preferred stock (GAAP)	(125		)	(125		)
Intangible adjustment (non-GAAP)	(215,281		)	(199,354		)
Average tangible capital (non-GAAP)	$	538,318		$	475,816
Average assets (GAAP)	$	6,085,687		$	5,571,354
Intangible adjustment (non-GAAP)	(215,281		)	(199,354		)
Average tangible assets (non-GAAP)	$	5,870,406		$	5,372,000
Net income available to common stockholders (GAAP)	$	65,384		$	60,162
CDI amortization, net of tax (GAAP)	1,720			1,395
Tangible net income available to common stockholders (non-GAAP)	$	67,104		$	61,557
Per Share Data:
Diluted net income available to common stockholders (GAAP)	$	1.72		$	1.65
Diluted tangible net income available to common stockholders (non-GAAP)	$	1.76		$	1.68
Ratios:
Return on average GAAP capital (ROE)	8.67		%	8.91		%
Return on average tangible capital	12.47		%	12.94		%
Return on average assets (ROA)	1.07		%	1.08		%
Return on average tangible assets	1.14		%	1.15		%

Return on average tangible capital is tangible net income available to common stockholders (annualized) expressed as a percentage of average tangible capital. Return on average tangible assets is tangible net income available to common stockholders (annualized) expressed as a percentage of average tangible assets.

36

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LOAN QUALITY/PROVISION AND ALLOWANCE FOR LOAN LOSSES

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, residential real estate and consumer, which results in portfolio diversification.  Commercial loans are individually underwritten and judgmentally risk rated.  They are periodically monitored and prompt corrective actions are taken on deteriorating loans.  Retail loans are typically underwritten with statistical decision-making tools and are managed throughout their life cycle on a portfolio basis.

Loan Quality

The quality and amount of non-performing loans may increase or decrease going forward as a result of acquisitions, organic portfolio growth, problem loan recognition and resolution through collections, sales or charge offs. The performance of any loan can be affected by external factors such as economic conditions, or internal factors specific to a particular borrower, such as the actions of a customer's management.

At December 31, 2015, non-performing loans totaled $33,312,000 and included $2,229,000 of non-accrual loans acquired in the Ameriana transaction. The acquired non-accruals were offset by a $19,629,000 decrease in non-accruals in the existing portfolio, contributing to a $17,469,000 decrease in non-performing loans from December 31, 2014. Non-accrual loans totaled $31,389,000 at December 31, 2015. The Corporation’s coverage ratio of allowance for loan losses to non-accrual loans increased from 131.1 percent at December 31, 2014 to 199.0 percent at December 31, 2015.  See additional information in the “Provision and Allowance for Loan Losses” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

Other real estate owned totaling $17,257,000 at December 31, 2015, declined $2,036,000 during the twelve month period despite the addition of $5,719,000 of real estate assets acquired in the Ameriana acquisition.  For other real estate owned, current appraisals are obtained to determine fair value as management continues to aggressively market these real estate assets.

Accruing loans delinquent 90+ days at December 31, 2015 decreased $3,756,000 to $907,000 from the December 31, 2014 balance of $4,663,000. Commercial and industrial loans 90+ days delinquent and accruing decreased to zero at December 31, 2015 from the December 31, 2014 balance of $2,985,000. Renegotiated loans decreased $69,000 as the amount of new troubled debt restructurings during the period was outpaced by the continued performance of troubled debt restructurings from prior periods.

Commercial impaired loans include all non-accrual loans, loans accounted for under ASC 310 as well as substandard, doubtful and loss grade loans that were still accruing but deemed impaired according to guidance set forth in ASC 310.  Also included in impaired loans are accruing loans that are contractually past due 90 days or more and troubled debt restructurings.

A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected substantially within the contractual terms of the note.  At December 31, 2015, commercial impaired loans totaled $97,527,000, a decrease of $18,696,000 from December 31, 2014. Included in the December 31, 2015 balance of commercial impaired loans was $13,206,000 in loans acquired in the Ameriana and C Financial transactions. At December 31, 2015, a specific allowance for losses was not deemed necessary for commercial impaired loans totaling $90,975,000 as there was no identified loss on these credits. An allowance of $1,842,000 was recorded for the remaining balance of these impaired loans totaling $6,552,000 and is included in the Corporation’s allowance for loan losses.

At December 31, 2015, non-performing assets, which includes non-accrual loans, renegotiated loans, and other real estate owned, plus loans 90-days delinquent, totaled $51,476,000; a decrease of $23,261,000 from December 31, 2014 as noted in the table below.

	December 31,		December 31,
(Dollars in Thousands)	2015		2014
Non-performing assets:
Non-accrual loans	$	31,389	$	48,789
Renegotiated loans	1,923		1,992
Non-performing loans (NPL)	33,312		50,781
Other real estate owned	17,257		19,293
Non-performing assets (NPA)	50,569		70,074
90+ days delinquent and still accruing	907		4,663
NPAs & 90+ days delinquent	$	51,476	$	74,737
Impaired loans (includes substandard, doubtful and loss)	$	97,527	$	116,223

37

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The composition of non-performing assets and 90-day delinquent loans is reflected in the following table.

	December 31,		December 31,
(Dollars in Thousands)	2015		2014
Non-performing assets and 90+ days delinquent:
Commercial and industrial loans	$	5,544	$	10,033
Agricultural production financing and other loans to farmers	827		5,800
Real estate loans
Construction	9,345		8,363
Commercial and farmland	18,243		30,400
Residential	14,528		17,079
Home equity	2,665		2,802
Individual's loans for household and other personal expenditures	324		260
Other commercial loans
Non-performing assets plus 90+ days delinquent	$	51,476	$	74,737

Although the Corporation believes its underwriting and loan review procedures are appropriate for the various kinds of loans it makes, its results of operations and financial condition could be adversely affected in the event the quality of its loan portfolio declines.  Deterioration in the economic environment including residential and commercial real estate values may result in increased levels of loan delinquencies and credit losses.

Commercial construction and land development loans were $366,704,000 at December 31, 2015, an increase of $159,483,000 from December 31, 2014. At December 31, 2015, construction and land development loans represent 7.8 percent of loans compared to 5.3 percent at December 31, 2014.  Management continues to closely monitor this segment of the portfolio, as well as being selective with additional exposure to this industry.

In 2015, total net charge offs were $1,928,000, a decrease of $4,538,000 from 2014 and $6,216,000 from 2013.  The Corporation incurred two commercial loan charge offs over $500,000 in 2015 totaling $1,635,000.  Two recoveries over $500,000, totaling $1,640,000, were recognized during the year.  Residential real estate accounted for $1,298,000, or 67.3 percent of total net charge offs, compared to $633,000, or 9.8 percent, in 2014. 

The table below represents loan loss experience for the years indicated.

(Dollars in Thousands)	2015			2014			2013
Allowance for loan losses:
Balance at January 1	$	63,964		$	67,870		$	69,366
Charge offs	8,272			17,382			18,134
Recoveries	6,344			10,916			9,990
Net charge offs	1,928			6,466			8,144
Provision for loan losses	417			2,560			6,648
Balance at December 31	$	62,453		$	63,964		$	67,870
Ratio of net charge offs during the period to average loans outstanding during the period	0.05		%	0.17		%	0.27		%
Ratio of allowance to non-accrual loans	199.00		%	131.10		%	120.30		%

The distribution of the net charge offs for the years indicated is provided in the following table.

(Dollars in Thousands)	December 31, 2015			December 31, 2014			December 31, 2013
Net charge offs:
Commercial and industrial loans	$	(302	)	$	865		$	1,932
Agricultural production financing and other farm loans	757			970			(317		)
Real estate loans
Construction	101			(509		)	6
Commercial and farmland	(1,209		)	3,820			3,935
Residential	1,298			633			1,347
Home equity	1,025			453			1,247
Individuals loans for household and other personal expenditures	268			280			67
Lease financing receivables, net of unearned income				(22		)	11
Other commercial loans	(10		)	(24		)	(84		)
Total net charge offs	$	1,928		$	6,466		$	8,144

38

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Provision and Allowance for Loan Losses

The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings.  The provision for loan losses in 2015, 2014 and 2013 were $417,000, $2,560,000 and $6,648,000, respectively, showing significant year-over-year declines.

Based on management’s judgment as to the appropriate level of the allowance for loan losses, the amount provided in any period may be greater or less than net loan losses for the same period. The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and an independent review. The evaluation takes into consideration identified credit problems, management's judgment as to the impact of current economic conditions on the portfolio and the possibility of losses inherent in the loan portfolio that are not specifically identified.  Additional details are discussed in Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, in the Notes to Consolidated Financial Statements included as item 8 of this Annual Report on Form 10-K.

Management believes that the allowance for loan losses is adequate to cover probable incurred losses inherent in the loan portfolio at December 31, 2015.  The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results.  It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters.  The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examination processes and will increase or decrease as deemed necessary to ensure the allowance remains adequate.  In addition, the allowance as a percentage of charge offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values. Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on non-performing loans, past and anticipated loan loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding.

In conformance with ASC 805 and ASC 820, loans purchased after December 31, 2008 are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan. An allowance may also be necessary if the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceed the fair value adjustment on the portion of the purchased portfolio not deemed impaired.

At December 31, 2015, the allowance for loan losses was $62,453,000, a decrease of $1,511,000 from December 31, 2014. As a percent of loans, the allowance decreased to 1.3 percent at December 31, 2015 from 1.6 percent at December 31, 2014.  The decrease in the ratio of allowance to loans was due in part to a $430,289,000 net increase in loans, net of fair value adjustments, resulting from the acquisition of Ameriana and C Financial. During 2015, the specific reserves against impaired loans decreased by $927,000, and the allowance for loans not deemed impaired decreased by $584,000. Not included in the allowance for loan losses is the remaining fair value discount on acquired loans of $47,057,000 and $43,250,000 as of December 31, 2015 and 2014, respectively.  

Loans are generally secured by specific items of collateral, including real property and business assets.  Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. The fair value of real estate is determined based on appraisals by qualified licensed appraisers. The appraisers determine the value of the real estate by utilizing an income or market valuation approach. Updated “as is” or “liquidation value” appraisals are obtained as individual circumstances and/or market conditions warrant. Partially charged off loans measured for impairment based on their collateral value are generally not returned to performing status subsequent to receiving updated appraisals or restructure of the loan. If an appraisal is not available, the fair value may be determined by using a discounted cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements.  Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

Loans deemed impaired according to guidance set forth in ASC 310 are evaluated during problem loan meetings held within each reporting period by a special assets management team.  Loan collateral and customer financial information are reviewed and the level of impairment is assessed to determine appropriate reserve and/or charge off amounts. Loans or portions of loans are charged off when they are considered uncollectible.  It is the Corporation’s policy to recognize losses promptly to prevent overstatement of assets, earnings and capital.

39

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table summarizes loan loss reserves by loan segment for the periods ended December 31, 2015 and 2014.

	December 31, 2015
(Dollars in Thousands)	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,277	$	243			$	169			$	1,689
Collectively evaluated for impairment	25,201		21,753		$	2,689	10,966		$	2	60,611
Loans acquired with deteriorated credit quality			149				4				153
Total allowance for loan losses	$	26,478	$	22,145	$	2,689	$	11,139	$	2	$	62,453

	December 31, 2014
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,455	$	470			$	194			$	2,119
Collectively evaluated for impairment	27,369		18,207		$	2,658	12,958		$	3	61,195
Loans acquired with deteriorated credit quality			650								650
Total allowance for loan losses	$	28,824	$	19,327	$	2,658	$	13,152	$	3	$	63,964

The historical loss allocation for loans not deemed impaired according to ASC 450 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment.  The historical loss factors are based upon actual loss experience within each risk and call code classification.  The historical look back period for non-criticized loans is the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans.  This look back period includes all charge offs from the most recent seven quarters and is reflective of current conditions.  The loss factor computation for this allocation includes a segmented historical loss migration analysis of non-impaired loans, by risk grade, to charge off.  The decrease in the allowance as a percent of originated loans reflected the impact of the stabilizing economic environment on the Corporation’s loan portfolio, resulting in improved credit quality and fewer charge offs.

In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to help ensure that losses inherent in the portfolio are reflected in the allowance for loan losses.  The environmental component adjusts the historical loss allocations for commercial and consumer loans to reflect relevant current conditions that have an impact on loss recognition.  Environmental factors that management reviews in the analysis include: National and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes.  Each environmental factor receives an individual qualitative allocation that reflects losses inherent in the portfolio that are not reflected in the historical loss components of the allowance.  As the economic environment has seen improvement during recent periods, management believes losses inherent in the portfolio may not be immediately apparent for specific identification.

The Corporation’s primary market areas for lending are central Indiana, northwestern Indiana, northeastern Illinois, and central Ohio. When evaluating the adequacy of the allowance, consideration is given to this regional geographic concentration and the closely associated effect changing economic conditions have on the Corporation’s customers. The allowance for loan losses at December 31, 2015 is reflective of both the banking environment within the Corporation’s footprint and the Corporation’s recent loan and loss trends.

GOODWILL

Goodwill is reviewed annually for impairment. The Corporation completed its most recent annual goodwill impairment test as of October 1, 2015 and concluded, based on current events and circumstances, goodwill is not impaired. The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in goodwill of $37,753,000 and $11,126,000, respectively. On June 12, 2015, the sale of FMIG resulted in a goodwill reduction of $8,474,000. Additionally, on November 7, 2014, the Community acquisition resulted in goodwill of $13,776,000. Details regarding the acquisitions and sale are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

40

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY

Liquidity management is the process by which the Corporation ensures that adequate liquid funds are available for the holding company and its subsidiaries. These funds are necessary in order to meet financial commitments on a timely basis. These commitments include withdrawals by depositors, funding credit obligations to borrowers, paying dividends to stockholders, paying operating expenses, funding capital expenditures, and maintaining deposit reserve requirements. Liquidity is monitored and closely managed by the asset/liability committee.

The Corporation’s liquidity is dependent upon the receipt of dividends from the Bank, which are subject to certain regulatory limitations and access to other funding sources. Liquidity of the Bank is derived primarily from core deposit growth, principal payments received on loans, the sale and maturity of investment securities, net cash provided by operating activities, and access to other funding sources.

The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled$658,400,000 at December 31, 2015, an increase of $108,857,000, or 19.8 percent, from December 31, 2014. Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity. Securities classified as held to maturity and that are maturing in one year or less totaled $4,144,000 at December 31, 2015. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.

The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base. Federal funds purchased and securities sold under agreements to repurchase are also considered a source of liquidity. In addition, Federal Home Loan Bank ("FHLB") advances are utilized as a funding source. At December 31, 2015, total borrowings from the FHLB were $235,652,000. The Bank has pledged certain mortgage loans and investments to the FHLB. The total available remaining borrowing capacity from the FHLB at December 31, 2015 was $388,176,000.

On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the “Subordinated Debt”). The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants.

Additionally, on April 11, 2014, the Corporation entered into a line of credit agreement with U.S. Bank, N.A. with a maximum borrowing capacity of $20 million. As of December 31, 2015, there was no outstanding balance on the line of credit. Interest is payable quarterly based on one-month LIBOR plus 2.00 percent. The line of credit has a quarterly facility fee of 0.25 percent on the unused balance. The line of credit agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants. The line of credit was scheduled to mature on April 10, 2015; however, on April 9, 2015 the agreement was renewed with a maturity date of April 8, 2016.

On August 10, 2015, the Corporation completed the cancellation of $5 million of subordinated debentures at a gain of $1.3 million. As of December 31, 2015, $51.7 million of subordinated debentures remain outstanding with a maturity date of September 15, 2037.

Additionally, on December 31, 2015 the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. The subordinated debentures of Ameriana Capital Trust I were entered into in March 2007 for $10,310,000 and have a maturity of March 2036. The interest rate is equal to the three-month LIBOR plus 1.50 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2015 was 2.0 percent. The Corporation holds all of the outstanding common securities of Ameriana Capital Trust I.

For further details related to the Corporation's borrowings, see Note 12. BORROWINGS, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

In the normal course of business, the Bank is a party to a number of other off-balance sheet activities that contain credit, market and operational risk that are not reflected in whole or in part in the consolidated financial statements. Such activities include: traditional off-balance sheet credit-related financial instruments, commitments under operating leases and long-term debt.

The Bank provides customers with off-balance sheet credit support through loan commitments and standby letters of credit. Summarized credit-related financial instruments at December 31, 2015 are as follows:

	December 31,
(Dollars in Thousands)	2015
Amounts of Commitments:
Loan commitments to extend credit	$	1,547,048
Standby letters of credit	46,734
	$	1,593,782

41

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Since many of the commitments are expected to expire unused or be only partially used, the total amount of unused commitments in the preceding table does not necessarily represent future cash requirements.

In addition to owned banking facilities, the Corporation has entered into a number of long-term leasing arrangements to support ongoing activities. The required payments under such commitments and borrowings at December 31, 2015 are as follows:

(Dollars in Thousands)	2016		2017		2018		2019		2020		2021 and after		ASC 805 fair value adjustments at acquisition			Total
Operating leases	$	3,076	$	2,353	$	1,419	$	1,222	$	1,060	$	6,629				$	15,759
Federal funds purchased	49,721															49,721
Securities sold under repurchase agreements	155,325															155,325
Federal Home Loan Bank advances	91,441		37,222		26,851		13,828		31,310		35,000					235,652
Subordinated debentures and term loans	183										132,012		$	(4,349	)	127,846
Total	$	299,746	$	39,575	$	28,270	$	15,050	$	32,370	$	173,641	$	(4,349	)	$	584,303

INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK

Asset and liability management has been an important factor in the Corporation's ability to record consistent earnings growth through periods of interest rate volatility and product deregulation. Management and the Board of Directors monitor the Corporation's liquidity and interest sensitivity positions at regular meetings to review how changes in interest rates may affect earnings.  Decisions regarding investment and the pricing of loan and deposit products are made after analysis of reports designed to measure liquidity, rate sensitivity, the Corporation’s exposure to changes in net interest income given various rate scenarios and the economic and competitive environments.

It is the objective of the Corporation to monitor and manage risk exposure to net interest income caused by changes in interest rates.  It is the goal of the Corporation’s asset and liability management function to provide optimum and stable net interest income. To accomplish this, management uses two asset liability tools. GAP/Interest rate sensitivity reports and net interest income simulation modeling are constructed, presented and monitored quarterly. Management believes that the Corporation's liquidity and interest sensitivity position at December 31, 2015, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk.

The following table presents the Corporation’s interest rate sensitivity analysis as of December 31, 2015.

	December 31, 2015
(Dollars in Thousands)	1-180 Days			181-365 Days			1-5 Years			Beyond 5 Years			Total
Rate-Sensitive Assets:
Interest-bearing deposits	$	32,315											$	32,315
Investment securities	66,345			$	97,411		$	335,830		$	777,413		1,276,999
Loans	2,543,191			370,283			1,015,545			702,350			4,631,369
Federal Reserve and Federal Home Loan Bank stock							37,633						37,633
Total rate-sensitive assets	$	2,641,851		$	467,694		$	1,389,008		$	1,479,763		$	5,978,316
Rate-Sensitive Liabilities:
Interest-bearing deposits	$	3,187,389		$	180,345		$	413,992		$	241,894		$	4,023,620
Federal funds purchased	49,721												49,721
Securities sold under repurchase agreements	155,325												155,325
Federal Home Loan Bank advances	74,245			74,423			65,506			21,478			235,652
Subordinated debentures and term loans	51,702									76,144			127,846
Total rate-sensitive liabilities	$	3,518,382		$	254,768		$	479,498		$	339,516		$	4,592,164
Interest rate sensitivity gap by period	$	(876,531	)	$	212,926		$	909,510		$	1,140,247
Cumulative rate sensitivity gap	$	(876,531	)	$	(663,605	)	$	245,905		$	1,386,152
Cumulative rate sensitivity gap ratio
at December 31, 2015	75.1		%	82.4		%	105.8		%	130.2		%
at December 31, 2014	75.8		%	84.9		%	111.2		%	130.5		%

The Corporation had a cumulative positive gap of $663,605,000 in the one-year horizon at December 31, 2015 or 9.82 percent of total assets.

42

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net interest income simulation modeling, or earnings-at-risk, measures the sensitivity of net interest income to various interest rate movements. The Corporation's asset liability process monitors simulated net interest income under three separate interest rate scenarios; base, rising and falling. Estimated net interest income for each scenario is calculated over a twelve-month horizon. The immediate and parallel changes to the base case scenario used in the model are presented below. The interest rate scenarios are used for analytical purposes and do not necessarily represent management's view of future market movements. Rather, these are intended to provide a measure of the degree of volatility interest rate movements may introduce into the earnings of the Corporation.

The base scenario is highly dependent on numerous assumptions embedded in the model, including assumptions related to future interest rates. While the base sensitivity analysis incorporates management's best estimate of interest rate and balance sheet dynamics under various market rate movements, the actual behavior and resulting earnings impact will likely differ from that projected. For certain assets, the base simulation model captures the expected prepayment behavior under changing interest rate environments. Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity products, such as savings, money market, NOW and demand deposits, reflect management's best estimate of expected future behavior.

The comparative rising 200 basis points and falling 100 basis points scenarios below, as of December 31, 2015, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario. In the current rate environment, many driver rates are at or near historical lows, thus total rate movements (beginning point minus ending point) to each of the various driver rates utilized by management have the following results:

	At December 31, 2015
	RISING	FALLING
Driver Rates	(200 Basis Points)	(100 Basis Points)
Prime	200	(25)
Federal Funds	200	(25)
One-Year CMT	200	(56)
Three-Year CMT	200	(100)
Five-Year CMT	200	(100)
CD's	200	(21)
FHLB	200	(83)

Results for the base, rising 200 basis points, and falling 100 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at December 31, 2015. The net interest income shown represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

	At December 31, 2015
			RISING			FALLING
(Dollars in Thousands)	Base		(200 Basis Points)			(100 Basis Points)
Net Interest Income	$	198,711	$	213,758		$	188,921
Variance from Base			$	15,047		$	(9,790	)
Percent of Change from Base			7.57		%	(4.93		)%

The comparative rising 200 basis points and falling 100 basis points scenarios below, as of December 31, 2014, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario. In addition, total rate movements (beginning point minus ending point) to each of the various driver rates utilized by management in the base simulation are as follows:

	At December 31, 2014
	RISING	FALLING
Driver Rates	(200 Basis Points)	(100 Basis Points)
Prime	200	0
Federal Funds	200	0
One-Year CMT	200	(15)
Three-Year CMT	200	(83)
Five-Year CMT	200	(100)
CD's	200	(23)
FHLB	200	(43)

43

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results for the base, rising 200 basis points, and falling 100 basis points interest rate scenarios are listed below. The net interest income shown represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

	At December 31, 2014
			RISING			FALLING
(Dollars in Thousands)	Base		(200 Basis Points)			(100 Basis Points)
Net Interest Income	$	180,175	$	192,164		$	175,118
Variance from Base			$	11,989		$	(5,057	)
Percent of Change from Base			6.65		%	(2.81		)%

EARNING ASSETS

The following table presents the earning asset mix as of December 31, 2015, and 2014. Earnings assets at December 31, 2015 increased by $849,059,000 compared to December 31, 2014.  Loans and loans held for sale and investment securities increased by $771,616,000 and $96,368,000, respectively. The five largest loan segments that experienced increases were commercial and industrial, construction, residential, commercial and farmland and other loans. A slight decrease was noted in agricultural production financing and other loans to farmers. The two most significant earning assets acquired in the Ameriana transaction were loans of $319,664,000 and investment securities available for sale of $63,058,000, while the most significant earning asset acquired in the C Financial transaction was loans of $110,625,000.

	December 31,		December 31,
(Dollars in Thousands)	2015		2014
Interest-bearing time deposits	$	32,315	$	47,520
Investment securities available for sale	658,400		549,543
Investment securities held to maturity	618,599		631,088
Mortgage loans held for sale	9,894		7,235
Loans	4,693,822		3,924,865
Federal Reserve and Federal Home Loan Bank stock	37,633		41,353
	$	6,050,663	$	5,201,604

DEPOSITS AND BORROWINGS

The table below reflects the level of deposits and borrowed funds (federal funds purchased, repurchase agreements; FHLB advances; subordinated debentures and term loans) based on year-end levels at December 31, 2015 and 2014.

	December 31,		December 31,
(Dollars in Thousands)	2015		2014
Deposits	$	5,289,647	$	4,640,694
Federal funds purchased	49,721		15,381
Securities sold under repurchase agreements	155,325		124,539
Federal Home Loan Bank advances	235,652		145,264
Subordinated debentures and term loans	127,846		126,810
	$	5,858,191	$	5,052,688

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in deposits of $382,547,000 and $105,326,000, respectively. As part of the Ameriana acquisition, the Corporation assumed approximately $24,938,000 of Federal Home Loan Bank Adances. The C Financial acquisition resulted in an additional $18,958,000 of Federal Home Loan Bank advances at acquisition, of which, approximately $7,361,000 matured during 2015 and $11,597,000 remained at December 31, 2015.

On August 10, 2015, the Corporation completed the cancellation of $5,000,000 of subordinated debentures at a gain of $1,250,000. This decrease was offset by an increase in subordinated debentures of $5,961,000 as a result of the Ameriana acquisition. Details regarding the acquisitions are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The Corporation has leveraged its capital position with FHLB advances, as well as repurchase agreements, which are pledged against acquired investment securities as collateral for the borrowings. Further discussion regarding FHLB advances is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “LIQUIDITY”. Additionally, the interest rate risk is included as part of the Corporation’s interest simulation discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K under the heading “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK”.

44

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INCOME TAXES

Income tax expense totaled $25,665,000 for 2015 compared to $22,123,000 for 2014.  The Corporation’s federal statutory income tax rate is 35 percent and its state tax rate varies from 0 to 9.5 percent depending on the state in which the subsidiary company is domiciled. The Corporation’s effective tax rate is lower than the blended effective statutory federal and state rates primarily due to the Corporation’s income on tax-exempt securities and loans, income generated by the subsidiaries domiciled in a state with no state or local income tax, income tax credits generated from investments in affordable housing projects, tax-exempt earnings from bank-owned life insurance contracts and reduced state taxes, resulting from the effect of state income apportionment.  The reconciliation of federal statutory to actual tax expense is shown in Note 22. INCOME TAX, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The Corporation’s tax asset, deferred and receivable increased from $41,960,000 at December 31, 2014 to $46,977,000 at December 31, 2015. In addition, the Corporation’s net deferred tax asset has increased from $39,392,000 at December 31, 2014 to $43,555,000 at December 31, 2015.  The $4,163,000 increase in the Corporation’s net deferred tax asset was primarily driven by a $9,262,000 increase resulting from the Ameriana acquisition. The largest offsetting deferred tax asset decreases not related to the Ameriana acquisition were associated with accounting for loans, federal net operating loss carryforwards, deferred compensation, and allowance for loan losses of $1,873,000, $1,662,000, $857,000 and $789,000, respectively. The deferred tax asset decreases were partially offset by a decline in the deferred tax liability associated with the accounting for unrealized gains on available for sale securities of $955,000.

The Corporation has recorded a valuation allowance of $15,736,000 related to deferred state taxes as it does not anticipate having future state taxable income sufficient to fully utilize the deferred state tax asset.  This is primarily due to the Corporation’s current tax structure as noted above.

INFLATION

Changing prices of goods, services and capital affect the financial position of every business enterprise. The level of market interest rates and the price of funds loaned or borrowed fluctuate due to changes in the rate of inflation and various other factors, including government monetary policy.

Fluctuating interest rates affect the Corporation’s net interest income and loan volume. As the inflation rate increases, the purchasing power of the dollar decreases. Those holding fixed-rate monetary assets incur a loss, while those holding fixed-rate monetary liabilities enjoy a gain. The nature of a financial holding company’s operations is such that there will generally be an excess of monetary assets over monetary liabilities, and, thus, a financial holding company will tend to suffer from an increase in the rate of inflation and benefit from a decrease.

OTHER

The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including the Corporation, and that address is www.sec.gov.

45

PART II: ITEM 7. AND ITEM 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The quantitative and qualitative disclosures about market risk information are presented in the “INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

46

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

First Merchants Corporation

Muncie, Indiana

We have audited the accompanying consolidated balance sheets of First Merchants Corporation (Corporation) as of December 31, 2015, and 2014, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2015. The Corporation's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material

misstatement. Our audits included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Merchants Corporation as of December 31, 2015, and 2014, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), First Merchants Corporation's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 29, 2016, expressed an unqualified opinion on the effectiveness of the Corporation's internal control over financial reporting.

BKD, LLP

Indianapolis, Indiana

February 29, 2016

47

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
(Dollars in Thousands, Except Share Data)	2015			2014
ASSETS
Cash and cash equivalents	$	102,170		$	118,616
Interest-bearing time deposits	32,315			47,520
Investment securities available for sale	658,400			549,543
Investment securities held to maturity (fair value of $632,380 and $647,723)	618,599			631,088
Loans held for sale	9,894			7,235
Loans	4,693,822			3,924,865
Less: Allowance for loan losses	(62,453		)	(63,964		)
Net loans	4,631,369			3,860,901
Premises and equipment	97,648			77,691
Federal Reserve and Federal Home Loan Bank stock	37,633			41,353
Interest receivable	24,415			19,984
Core deposit intangibles	16,635			16,031
Goodwill	243,129			202,724
Cash surrender value of life insurance	200,539			169,424
Other real estate owned	17,257			19,293
Tax asset, deferred and receivable	46,977			41,960
Other assets	24,023			20,764
TOTAL ASSETS	$	6,761,003		$	5,824,127
LIABILITIES
Deposits:
Noninterest-bearing	$	1,266,027		$	1,070,859
Interest-bearing	4,023,620			3,569,835
Total Deposits	5,289,647			4,640,694
Borrowings:
Federal funds purchased	49,721			15,381
Securities sold under repurchase agreements	155,325			124,539
Federal Home Loan Bank advances	235,652			145,264
Subordinated debentures and term loans	127,846			126,810
Total Borrowings	568,544			411,994
Interest payable	3,092			3,201
Other liabilities	49,211			41,411
Total Liabilities	5,910,494			5,097,300
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized - 600 shares
Issued and outstanding - 125 shares	125			125
Common Stock, $.125 stated value:
Authorized - 50,000,000 shares
Issued and outstanding - 40,664,259 and 37,669,948 shares	5,083			4,709
Additional paid-in capital	504,530			431,220
Retained earnings	342,133			292,403
Accumulated other comprehensive loss	(1,362		)	(1,630		)
Total Stockholders' Equity	850,509			726,827
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,761,003		$	5,824,127

See notes to consolidated financial statements.

48

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

	December 31,		December 31,		December 31,
(Dollars in Thousands, Except Share Data)	2015		2014		2013
INTEREST INCOME
Loans receivable:
Taxable	$	180,805	$	172,039	$	142,752
Tax-exempt	3,459		327		393
Investment securities:
Taxable	17,885		19,882		15,214
Tax-exempt	16,922		14,383		10,829
Deposits with financial institutions	160		124		158
Federal Reserve and Federal Home Loan Bank stock	1,967		2,124		1,488
Total Interest Income	221,198		208,879		170,834
INTEREST EXPENSE
Deposits	14,855		11,678		10,053
Federal funds purchased	74		177		102
Securities sold under repurchase agreements	368		529		787
Federal Home Loan Bank advances	2,836		2,842		2,096
Subordinated debentures, revolving credit lines and term loans	6,661		6,616		3,531
Total Interest Expense	24,794		21,842		16,569
NET INTEREST INCOME	196,404		187,037		154,265
Provision for loan losses	417		2,560		6,648
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	195,987		184,477		147,617
OTHER INCOME
Service charges on deposit accounts	16,201		15,747		12,400
Fiduciary activities	9,196		8,966		8,594
Other customer fees	16,959		15,699		11,866
Commission income	4,147		7,411		7,141
Earnings on cash surrender value of life insurance	2,919		3,659		2,613
Net gains and fees on sales of loans	6,483		4,899		7,511
Net realized gains on sales of available for sale securities	2,670		3,581		487
Gain on sale of insurance subsidiary	8,265
Gain on cancellation of subordinated debentures	1,250
Other income	4,441		6,438		5,404
Total Other Income	72,531		66,400		56,016
OTHER EXPENSES
Salaries and employee benefits	101,908		96,499		85,413
Net occupancy	14,668		13,831		10,291
Equipment	10,787		9,337		7,737
Marketing	3,493		3,464		2,236
Outside data processing fees	7,109		7,315		5,591
Printing and office supplies	1,353		1,565		1,340
Core deposit amortization	2,835		2,445		1,649
FDIC assessments	3,655		3,738		2,862
Other real estate owned and foreclosure expenses	6,137		8,043		6,661
Professional and other outside services	9,855		8,116		8,297
Other expenses	15,669		14,239		11,142
Total Other Expenses	177,469		168,592		143,219
INCOME BEFORE INCOME TAX	91,049		82,285		60,414
Income tax expense	25,665		22,123		15,884
NET INCOME	65,384		60,162		44,530
Preferred stock dividends					(2,380		)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	65,384	$	60,162	$	42,150
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE:
Basic	$	1.73	$	1.66	$	1.42
Diluted	$	1.72	$	1.65	$	1.41

See notes to consolidated financial statements.

49

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)	December 31, 2015			December 31, 2014			December 31, 2013
Net income	$	65,384		$	60,162		$	44,530
Other comprehensive income (loss) net of tax:
Unrealized holding gain (loss) on securities available for sale arising during the period, net of tax of $20, $8,001, and $6,841	(37		)	14,860			(12,705		)
Unrealized loss on securities transferred to held-to-maturity, net of tax of $0, $0, and $1,786							(3,316		)
Unrealized gain on securities available for sale for which a portion of an other than temporary impairment has been recognized in income, net of tax of  $0, $995, and $767				1,847			1,425
Unrealized gain (loss) on cash flow hedges arising during the period, net of tax of $588, $1,397, and $831	(1,093		)	(2,599		)	1,543
Reclassification adjustment for net losses (gains) included in net income net of tax of $435, $760, and $157	(808		)	(1,410		)	291
Defined benefit pension plans, net of tax of  $1,187, $4,264, and $6,382
Net gain (loss) arising during period	2,404			(7,580		)	10,704
Amortization of prior service cost	(198		)	(338		)	1,147
	268			4,780			(911		)
Comprehensive income	$	65,652		$	64,942		$	43,619

See notes to consolidated financial statements.

50

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

	Preferred					Common Stock
(Dollars in Thousands, Except Share Data)	Shares		Amount			Shares		Amount			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balances, December 31, 2012	90,908		$	90,908		28,692,616		$	3,587		$	256,843		$	206,397		$	(5,499	)	$	552,236
Comprehensive income
Net income														44,530						44,530
Other comprehensive income (loss), net of tax																	(911		)	(911		)
Cash dividends on common stock ($.18 per share)														(5,612		)				(5,612		)
Cash dividends on preferred stock under small business lending fund														(2,380		)				(2,380		)
Preferred stock redemption under small business lending fund	(90,783	)	(90,783		)															(90,783		)
Issuance of common stock related to acquisition						7,079,457		885			134,757									135,642
Share-based compensation						116,978		15			1,758									1,773
Stock issued under employee benefit plans						33,451		4			475									479
Stock issued under dividend reinvestment and stock purchase plan						18,449		2			323									325
Stock options exercised						13,750		2			113									115
Stock redeemed						(32,940	)	(5		)	(486		)							(491		)
Balances, December 31, 2013	125		$	125		35,921,761		$	4,490		$	393,783		$	242,935		$	(6,410	)	$	634,923
Comprehensive income
Net income														60,162						60,162
Other comprehensive income, net of tax																	4,780			4,780
Cash dividends on common stock ($.29 per share)														(10,694		)				(10,694		)
Issuance of common stock related to acquisition						1,574,298		197			34,784									34,981
Share-based compensation						132,446		17			2,160									2,177
Stock issued under employee benefit plans						26,547		3			475									478
Stock issued under dividend reinvestment and stock purchase plan						24,556		3			520									523
Stock options exercised						41,249		5			559									564
Stock redeemed						(50,909	)	(6		)	(1,061		)							(1,067		)
Balances, December 31, 2014	125		$	125		37,669,948		$	4,709		$	431,220		$	292,403		$	(1,630	)	$	726,827
Comprehensive income
Net income														65,384						65,384
Other comprehensive income, net of tax																	268			268
Cash dividends on common stock ($.41 per share)														(15,654		)				(15,654		)
Issuance of common stock related to acquisition						2,769,568		346			70,056									70,402
Share-based compensation						149,577		19			2,251									2,270
Stock issued under employee benefit plans						22,074		3			457									460
Stock issued under dividend reinvestment and stock purchase plan						26,375		3			658									661
Stock options exercised						96,066		12			1,519									1,531
Stock redeemed						(69,349	)	(9		)	(1,631		)							(1,640		)
Balances, December 31, 2015	125		$	125		40,664,259		$	5,083		$	504,530		$	342,133		$	(1,362	)	$	850,509

See notes to consolidated financial statements.

51

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

	December 31,			December 31,			December 31,
(Dollars in Thousands)	2015			2014			2013
Cash Flow From Operating Activities:
Net income	$	65,384		$	60,162		$	44,530
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	417			2,560			6,648
Depreciation and amortization	6,262			6,007			4,670
Change in deferred taxes	4,444			15,048			2,147
Share-based compensation	2,270			2,177			1,773
Tax benefit from stock options exercised	(70		)	(60		)
Loans originated for sale	(364,411		)	(222,892		)	(280,693		)
Proceeds from sales of Loans	361,752			220,988			297,851
Gain on sale of insurance subsidiary	(8,265		)
Gain on cancellation of subordinated debentures	(1,250		)
Gains on sales of securities available for sale	(2,670		)	(3,581		)	(487		)
Change in interest receivable	(2,833		)	(545		)	(535		)
Change in interest payable	(162		)	1,332			(364		)
Change in other receivable							110,032
Other adjustments	(4,208		)	(5,356		)	(2,441		)
Net cash provided by operating activities	$	56,660		$	75,840		$	183,131
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	$	24,917		$	24,075		$	196,753
Purchases of:
Securities available for sale	(200,154		)	(110,936		)	(398,491		)
Securities held to maturity	(87,282		)	(142,988		)	(11,145		)
Proceeds from sales of securities available for sale	83,647			126,575			25,222
Proceeds from maturities of:
Securities available for sale	63,124			68,339			93,273
Securities held to maturity	98,581			69,420			78,534
Change in Federal Reserve and Federal Home Loan Bank stock	7,268			(413		)	(17		)
Net change in loans	(350,287		)	(170,109		)	(142,861		)
Net cash and cash equivalents received (paid) in acquisition	(7,936		)	(10,084		)	10,992
Net cash received from sale of insurance subsidiary	15,155
Proceeds from the sale of other real estate owned	12,567			14,241			12,346
Other investing activities	9			5,889			(2,768		)
Net cash used in investing activities	$	(340,391	)	$	(125,991	)	$	(138,162	)
Cash Flows from Financing Activities:
Net change in :
Demand and savings deposits	$	240,736		$	53,062		$	141,052
Certificates of deposit and other time deposits	(79,656		)	127,740			(211,399		)
Borrowings	491,660			678,290			295,537
Repayment of borrowings	(370,813		)	(789,563		)	(163,838		)
Cash dividends on common stock	(15,654		)	(10,694		)	(5,612		)
Cash dividends on preferred stock							(2,380		)
Stock issued under employee benefit plans	460			478			479
Stock issued under dividend reinvestment and stock purchase plans	661			523			325
Stock options exercised	1,461			504			115
Tax benefit from stock options exercised	70			60
Cumulative preferred stock redeemed (SBLF)							(90,783		)
Stock redeemed	(1,640		)	(1,067		)	(491		)
Net cash provided by (used in) financing activities	$	267,285		$	59,333		$	(36,995	)
Net Change in Cash and Cash Equivalents	(16,446		)	9,182			7,974
Cash and Cash Equivalents, January 1	118,616			109,434			101,460
Cash and Cash Equivalents, December 31	$	102,170		$	118,616		$	109,434
Additional cash flow information:
Interest paid	$	24,903		$	20,412		$	16,639
Income tax paid	21,200			6,209			7,578
Loans transferred to other real estate owned	3,644			4,431			7,170
Fixed assets transferred to other real estate owned	1,600			297			461
Non-cash investing activities using trade date accounting	1,559			3,170			4,984

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

In conjunction with the acquisitions, liabilities were assumed as follows:

	December 31, 2015			December 31, 2014			December 31, 2013
Fair value of assets acquired	$	635,047		$	280,725		$	1,132,231
Cash received (paid) in acquisition	(14,500		)	(14,208		)
Less: Common stock issued	70,402			34,981			135,642
Liabilities assumed	$	550,145		$	231,536		$	996,589

See notes to consolidated financial statements.

52

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 1

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of First Merchants Corporation (the “Corporation”), and its principal wholly owned subsidiary, First Merchants Bank, N.A. (the “Bank”), conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry. The Bank also operates Lafayette Bank and Trust, Ameriana Bank, Ameriana Financial Services and First Merchants Trust Company as divisions of First Merchants Bank, N.A.

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.

The Corporation is a financial holding company whose principal activity is the ownership and management of the Bank and operates in a single significant business segment. The Bank operates under a national bank charter and provides full banking services. As a national bank, the Bank is subject to the regulation of the Office of Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”).  The OCC and the FDIC regulate or monitor virtually all areas of the Bank’s operations. The Bank must undergo regular on-site examinations by the OCC and FDIC and must submit periodic reports to both.

The Bank generates commercial, mortgage, and consumer loans and receives deposits from customers located primarily in central and northwest Indiana, northeast Illinois and central Ohio counties. The Bank’s loans are generally secured by specific items of collateral, including real property, consumer assets and business assets.

A brief description of current accounting practices and current valuation methodologies are presented below.

CONSOLIDATION of the Corporation's financial statements include the accounts of the Corporation and all its subsidiaries, after elimination of all material intercompany transactions.

BUSINESS COMBINATIONS are accounted for under the acquisition method of accounting. Under the acquisition method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition.

AVAILABLE FOR SALE SECURITIES are recorded at fair value on a recurring basis with the unrealized gains and losses, net of applicable income taxes, recorded in other comprehensive income. Realized gains and losses are recorded in earnings and the prior fair value adjustments are reclassified within stockholders' equity. Gains and losses on sales of securities are determined on the specific-identification method. Amortization of premiums and accretion of discounts are recorded as interest income from securities.

Available for sale and held to maturity securities are evaluated for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interest, including certain non-agency government-sponsored mortgage-backed securities, asset-backed securities and collateralized debt obligations are evaluated using the model outlined in ASC 325-10.

In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether a decline exists that is other-than-temporary, involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When the Corporation does not intend to sell a debt security, and it is more likely than not, the Corporation will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable income taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

If the intent is to sell or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis, less any recognized credit loss, the OTTI is recognized in earnings equal to the entire difference between the investment’s amortized cost basis, less any recognized credit loss, and its fair value at the balance sheet date.

53

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

HELD TO MATURITY SECURITIES are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Securities held to maturity are carried at amortized cost.  For held to maturity debt securities, the amount of an OTTI recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

LOANS HELD FOR SALE are carried at the principal amount outstanding. The carrying amount approximates fair value due to the short duration between origination and the date of sale.

LOANS held in the Corporation’s portfolio are carried at the principal amount outstanding, net of unearned income. Certain non-accrual and substantially delinquent loans may be considered to be impaired. A loan is impaired when, based on current information or events, it is probable that the Bank will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. In applying the provisions of ASC 310, the Corporation considers its investment in one-to-four family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. Interest income is accrued on the principal balances of loans, except for installment loans with add-on interest, for which a method that approximates the level yield method is used. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectable. Interest income accrued in the prior year, if any, is charged to the allowance for loan losses. Interest income is subsequently recognized only to the extent cash payments are received and the loan is returned to accruing status. Certain loan fees and direct costs are being deferred and amortized as an adjustment of yield on the loans.

Impaired loans are carried at the present value of estimated future cash flows using the loan’s existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. The valuation would be considered Level 3, consisting of appraisals of underlying collateral and discounted cash flow analysis.

Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses which limit the Bank’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.

LOANS ACQUIRED IN BUSINESS COMBINATIONS with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of purchase dates may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30). These loans are initially measured at fair value based upon expected cash flows without anticipation of prepayments and includes estimated future credit losses expected to be incurred over the life of the loans. As a result, related discounts are recognized subsequently through accretion based on the expected cash flows of the acquired loans. For purposes of applying ASC 310-30, loans acquired in business combinations are aggregated into pools of loans with common risk characteristics for the initial fair value measurement. Accordingly, allowances for credit losses related to these loans are not carried over and recorded at the acquisition date.

The expected cash flows of the acquired loans in excess of the fair values recorded is referred to as the accretable yield and is recognized in interest income over the remaining estimated lives of the loans. The Corporation will continually evaluate the fair value of the loans including cash flows expected to be collected.

ALLOWANCE FOR LOAN LOSSES is maintained to absorb losses inherent in the loan portfolio and is based on ongoing, quarterly assessments of the probable losses inherent in the loan portfolio. The allowance is increased by the provision for loan losses, which is charged against current operating results. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The Corporation’s strategy for credit risk management includes conservative credit policies and underwriting criteria for all loans, as well as an overall credit limit for each customer significantly below legal lending limits. The strategy also emphasizes diversification on a regional geographic, industry and customer level, regular credit quality reviews and management reviews of large credit exposures and loans experiencing deterioration of credit quality.

The Corporation’s methodology for assessing the appropriateness of the allowance consists of three key elements – the determination of the appropriate reserves for specifically identified loans, probable losses estimated from historical loss rates, and probable losses resulting from economic, environmental, qualitative or other deterioration above and beyond what is reflected in the first two components of the allowance.

Larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. Where appropriate, reserves are allocated to individual loans based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to the Corporation. Included in the review of individual loans are those that are impaired as provided in ASC 310. Any allowances for impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or fair value of the underlying collateral. The Corporation evaluates the collectability of both principal and interest when assessing the need for a loss accrual. Historical loss rates are applied to other commercial loans not subject to specific reserve allocations.

54

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The historical allocation for commercial loans graded pass are established by loan segments using loss rates based on the Corporation’s migration analysis. This migration analysis shows the loss rates for each segment of loans based on the loan grades at the beginning of the twelve month period. This loss rate is then applied to the current portfolio of loans in each respective loan segment.

Homogenous loans, such as consumer installment and residential mortgage loans, are not individually risk graded. Reserves are established for each segment of loans using loss rates based on charge offs for the same period as the migration analysis used for commercial loans.

Historical loss allocations for commercial and consumer loans may be adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Factors which management considers in the analysis include the effects of the national and local economies, trends in loan growth and charge-off rates, changes in mix, concentration of loans in specific industries, asset quality trends (delinquencies, charge offs and non-accrual loans), risk management and loan administration, changes in the internal lending policies and credit standards, examination results from bank regulatory agencies and the Corporation’s internal loan review.

PENSION benefits are provided to the Corporation’s employees. Its accounting policies related to pensions and other post retirement benefits reflect the guidance in ASC 715, Compensation – Retirement Benefits. The Corporation does not consolidate the assets and liabilities associated with the pension plan. Instead, the Corporation recognizes the funded status of the plan in the consolidated balance sheets. The measurement of the funded status and the annual pension expense involves actuarial and economic assumptions. Various statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liabilities related to the plans. Key factors include assumptions on the expected rates of return on plan assets, discount rates, expected rates of salary increases and health care costs and trends. The Corporation considers market conditions, including changes in investment returns and interest rates in making these assumptions. The primary assumptions used in determining the Corporation’s pension and post retirement benefit obligations and related expenses are presented in Note 21. PENSION AND OTHER POST RETIREMENT BENEFIT PLANS, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

PREMISES AND EQUIPMENT is carried at cost net of accumulated depreciation. Depreciation is computed using the straight-line and declining balance methods based on the estimated useful lives of the assets ranging from three to forty years. Maintenance and repairs are expensed as incurred, while major additions and improvements, which extend the useful life, are capitalized. Gains and losses on dispositions are included in current operations.

FEDERAL RESERVE AND FEDERAL HOME LOAN BANK STOCK are required investments for institutions that are members of the Federal Reserve Bank (“FRB”) and Federal Home Loan Bank systems. The required investment in the common stock is based on a predetermined formula based on the level of borrowings and other factors. These investments are carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

INTANGIBLE ASSETS that are subject to amortization, including core deposit intangibles, are being amortized on both the straight-line and accelerated basis over three to twenty years. Intangible assets are periodically evaluated as to the recoverability of their carrying value.

GOODWILL is maintained by applying the provisions of ASC 350. For purchase acquisitions, the Corporation is required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates or other relevant factors. In addition, the determination of the useful lives for which an intangible asset will be amortized is subjective.

Under ASC 350, Intangibles – Goodwill and Other, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired, indicating that the carrying value may not be recoverable. The Corporation has historically elected to test for goodwill impairment as of October 1 of each year and has determined that no impairment exists.

BANK OWNED LIFE INSURANCE has been purchased on certain employees and directors of the Corporation. The Corporation records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement.

OTHER REAL ESTATE OWNED consists of assets acquired through, or in lieu of, loan foreclosure and are held for sale. They are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.  Revenue and expenses from operations and changes in the valuation are included in net income or expense from foreclosed assets. Other real estate owned also includes bank premises formerly, but no longer used for banking. Bank premises are transferred at the lower of carrying value or fair value less cost to sell.

DERIVATIVE INSTRUMENTS are carried at the fair value of the derivatives and reflects the estimated amounts that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.

As part of the asset/liability management program, the Corporation will utilize, from time to time, interest rate floors, caps or swaps to reduce its sensitivity to interest rate fluctuations. These are derivative instruments, which are recorded as assets or liabilities in the consolidated balance sheets at fair value. Changes in the fair values of derivatives are reported in the consolidated statements of operations or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

55

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Derivatives that qualify for the hedge accounting treatment are designated as either: a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). To date, the Corporation has only entered into a cash flow hedge. For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in OCI are reflected in the consolidated statements of income in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, the Corporation establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of operations. The Corporation excludes the time value expiration of the hedge when measuring ineffectiveness.

The Corporation offers interest rate derivative products (e.g. interest rate swaps) to certain of its high-quality commercial borrowers. This product allows customers to enter into an agreement with the Corporation to swap their variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the risk of changes in the borrower’s interest rate or market price risk. The extension of credit incurred through the execution of these derivative products is subject to the same approvals and rigorous underwriting standards as the related traditional credit product. The Corporation limits its risk exposure to these products by entering into a mirror-image, offsetting swap agreement with a separate, well-capitalized and rated counterparty previously approved by the Credit and Asset Liability Committee. By using these interest rate swap arrangements, the Corporation is also better insulated from the interest rate risk associated with underwriting fixed-rate loans. These derivative contracts are not designated against specific assets or liabilities under ASC 815, Derivatives and Hedging, and, therefore, do not qualify for hedge accounting. The derivatives are recorded on the balance sheet at fair value and changes in fair value of both the customer and the offsetting swap agreements are recorded (and essentially offset) in non-interest income. The fair value of the derivative instruments incorporates a consideration of credit risk (in accordance with ASC 820), resulting in some volatility in earnings each period.

INCOME TAX in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes. The Corporation files consolidated income tax returns with its subsidiaries.

The Corporation adopted the provisions of the ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740, the Corporation did not identify any uncertain tax positions that it believes should be recognized in the financial statements. The tax years still subject to examination by taxing authorities are years subsequent to 2011.

STOCK OPTION AND RESTRICTED STOCK AWARD PLANS are maintained by the Corporation. The compensation costs are recognized for stock options and restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options.  The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Compensation expense is recognized over the appropriate service period, which is generally two or three years.

TRANSFERS OF FINANCIAL ASSETS are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

NET INCOME PER SHARE is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding, plus the dilutive effect of outstanding stock options and nonvested restricted stock.

RECLASSIFICATIONS have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income.

56

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 2

ACQUISITIONS AND DIVESTITURES

Ameriana Bancorp, Inc.

On December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp, Inc., ("Ameriana"). Ameriana merged with and into the Corporation (the "Ameriana Merger") whereupon the separate corporate existence of Ameriana ceased and the Corporation survived. Immediately following the Ameriana Merger, Ameriana Bank, and Indiana Bank and wholly-owned subsidiary of Ameriana, merged with and into First Merchants Bank, National Association, a national Bank and wholly-owned subsidiary of the Corporation (the "Bank"), with the Bank continuing as the surviving bank. Ameriana was headquartered in New Castle, Indiana and had 13 banking centers serving central and east central Indiana. Pursuant to the merger agreement, each Ameriana shareholder received 0.9037 shares of First Merchants common stock for each outstanding share of Ameriana common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

The Corporation engaged in this transaction with the expectation that it would be accretive and expand the existing footprint in central and east central Indiana. Goodwill resulted from this transaction due to the expected synergies and economies of scale that are expected.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations 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 Ameriana acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	4,068
Interest-bearing time deposits	8,790
Investment securities	60,365
Loans	319,664
Premises and equipment	14,491
Federal Home Loan Bank stock	2,693
Other real estate owned	5,719
Interest receivable	1,306
Cash surrender value of life insurance	28,188
Other assets	7,086
Deposits	(382,547		)
Interest payable	(24		)
Federal Home Loan Bank Advances	(24,938		)
Subordinated Debentures	(5,961		)
Other liabilities	(9,451		)
Net tangible assets acquired	29,449
Core deposit intangible	3,200
Goodwill	37,753
Purchase price	$	70,402

Of the total purchase price, $3,200,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

C Financial Corporation

On April 17, 2015, the Corporation acquired 100 percent of C Financial Corporation, ("C Financial"). C Financial merged with and into the Corporation (the “C Financial Merger”) whereupon the separate corporate existence of C Financial ceased and the Corporation survived.  Immediately following the C Financial Merger, Cooper State Bank, an Ohio state bank and wholly-owned subsidiary of C Financial, merged with and into the Bank, with the Bank continuing as the surviving bank.  C Financial was headquartered in Columbus, Ohio and had 6 full service banking centers serving the Columbus, Ohio market. As part of the $14.5 million C Financial Merger, shareholders of C Financial received $6.738 in cash for each share of C Financial common stock held. The Corporation expects the transaction to be accretive to income and expand the existing footprint in Columbus, Ohio. Goodwill resulted from this transaction due to the synergies and economies of scale that are expected.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations 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 C Financial acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	2,496
Federal Funds sold	7,018
Interest-bearing time deposits	922
Loans	110,625
Premises and equipment	7,290
Federal Home Loan Bank stock	855
Interest receivable	292
Other assets	119
Deposits	(105,326		)
Interest payable	(29		)
Federal Home Loan Bank Advances	(18,958		)
Other liabilities	(2,911		)
Net tangible assets acquired	2,393
Core deposit intangible	981
Goodwill	11,126
Purchase price	$	14,500

Of the total purchase price, $981,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is deductible for tax purposes because the transaction was considered a taxable exchange.

Community Bancshares, Inc.

On November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Community merged with and into the Corporation (the "Community Merger") whereupon the separate corporate existence of Community ceased and the Corporation survived. Immediately following the Community Merger, Community Bank, an Indiana bank and wholly-owned subsidiary of Community, merged with and into the Bank, with the Bank continuing as the surviving bank. Community was headquartered in Noblesville, Indiana and had 10 full-service banking centers serving central Indiana. Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of the Corporation's common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

58

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The Corporation engaged in this transaction with the expectation that it would be accretive and expand the existing footprint in central Indiana. Goodwill resulted from this transaction due to the expected synergies from combining operations. The purchase price of the Community acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	4,124
Interest -bearing time deposits	16,526
Investment Securities, available for sale	76,807
Loans	145,064
Premises and equipment	3,610
Federal Home Loan Bank stock	1,950
Interest Receivable	767
Cash surrender value of life insurance	3,266
Other real estate owned	6,662
Taxes, deferred and receivable	3,348
Other assets	167
Deposits	(228,424		)
Interest payable	(98		)
Other liabilities	(3,014		)
Net tangible assets acquired	$	30,755
Core deposit intangible	4,658
Goodwill	13,776
Purchase price	$	49,189

Of the total purchase price, $4,658,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

CFS Bancorp, Inc.

On November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp, Inc. ("CFS") in an all stock transaction. CFS merged with and into the Corporation (the "CFS Merger") whereupon the separate corporate existence of CFS ceased and the Corporation survived. Immediately following the CFS Merger, Citizens Financial Bank, a federal savings bank and wholly-owned subsidiary of CFS, merged with and into the Bank, with the Bank continuing as the surviving bank. CFS was headquartered in Munster, Indiana and had 20 full-service banking centers serving the northwestern Indiana and northeastern Illinois areas. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million.

The Corporation engaged in this transaction with the expectation that it would be accretive and add a new market area with a demographic profile consistent with many of the current Indiana markets served by the Bank. Goodwill resulted from this transaction due to the expected synergies from combining operations. The purchase price for the CFS acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	10,992
Interest-bearing time deposits	213,379
Investment securities available for sale	15,913
Investment securities held to maturity	14,372
Mortgage loans held for sale	189
Loans	603,114
Premises and equipment	19,643
Federal Home Loan Bank stock	6,188
Interest receivable	1,770
Cash surrender value of life insurance	36,555
Other real estate owned	12,857
Tax asset, deferred and receivable	30,717
Other assets	111,656
Deposits	(955,432		)
Securities sold under repurchase agreements	(9,830		)
Federal Home Loan Bank advances	(15,000		)
Interest payable	(294		)
Other liabilities	(16,033		)
Net tangible assets acquired	$	80,756
Core deposit intangible	7,313
Goodwill	47,573
Purchase price	$	135,642

59

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Of the total purchase price, $7,313,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

First Merchants Insurance Services, Inc.

On June 12, 2015, the Corporation sold all of its stock in First Merchants Insurance Services, Inc., an Indiana Corporation ("FMIG"), to USI Insurance Services LLC, a Delaware limited liability company ("USI"). The sale price was $18.0 million, of which $16.0 million was paid at closing with the remaining $2.0 million paid through a two-year promissory note. The sale of FMIG generated a gain on sale of $8.3 million.

Pro Forma Financial Information

The results of operations of C Financial, Community and CFS have been included in the Corporation's consolidated financial statements since the acquisition dates. The following schedule includes pro forma results for the periods ended December 31, 2015, 2014 and 2013 as if the Ameriana, Community and CFS acquisitions had occurred as of the beginning of the comparable prior annual reporting period. Pro forma financial information of the C Financial acquisition is not included in the table below as it is deemed immaterial.

	2015		2014		2013
Total revenue (net interest income plus other income)	$	291,614	$	284,890	$	253,668
Net income	$	60,497	$	64,174	$	39,979
Net income available to common shareholders	$	60,497	$	64,174	$	37,559
Earnings per share:
Basic	$	1.49	$	1.58	$	0.98
Diluted	$	1.48	$	1.57	$	0.97

The pro forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits and borrowings acquired, premises expense for the banking centers acquired and the related income tax effects. The pro forma information for the year ended 2015 includes operating results from Ameriana as if the acquisition occurred at the beginning of the year. The 2015 pro forma includes $12.0 million, net of tax, of non-recurring expenses directly attributable to the Ameriana, C Financial and Community acquisitions and the FMIG divestiture. The pro forma information for the year ended 2014 includes $1.6 million of operating revenue from Community since the acquisition and approximately $1.8 million, net of tax, of non-recurring expenses directly attributable to the Community acquisition. The pro forma information for the year ended 2013 includes $4.9 million of operating revenue from CFS since the acquisition and approximately $9.5 million, net of tax, of non-recurring expenses directly attributable to the CFS acquisition.

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition consummated as of that time, nor is it intended to be a projection of future results.

NOTE 3

RESTRICTION ON CASH AND DUE FROM BANKS

The Corporation considers all liquid investments with original maturities of three months or less to be cash equivalents. As of December 31, 2015, cash and cash equivalents is defined to include cash on hand, deposits in other institutions and federal funds sold.

Effective October 3, 2008, the FDIC’s insurance limits temporarily increased to $250,000. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law, which, in part, permanently raised the standard maximum deposit insurance amount to $250,000.  On November 9, 2010, the FDIC implemented section 343 of the Dodd-Frank Act providing unlimited insurance coverage on noninterest-bearing transaction accounts.  Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts were fully insured, regardless of the balance of the account, at all FDIC-insured institutions.  As of January 1, 2013, noninterest-bearing transaction deposit accounts are no longer insured separately from other accounts at the same FDIC-insured institution. Instead, noninterest-bearing transaction accounts are added to any of the Corporation's other accounts, and the aggregate balance insured up to at least the Standard Maximum Deposit Insurance Amount of $250,000, at each institution.

At December 31, 2015, the Corporation’s interest-bearing cash accounts and noninterest-bearing transaction deposits held at other institutions exceeded federally insured limits by approximately $63,132,000. Each correspondent bank’s financial performance and market rating are reviewed on a quarterly basis to ensure the Corporation has deposits only at institutions providing minimal risk for those exceeding the federally insured limits.

Additionally, the Corporation had approximately $14,546,000 at the Federal Home Loan Bank and Federal Reserve Bank, which are government-sponsored entities not insured by the FDIC.

The Corporation is required to maintain reserve funds in cash and/or on deposit with the Federal Reserve Bank.  The reserve required at December 31, 2015, was $19,288,000.

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 4

INVESTMENT SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2015
U.S. Government-sponsored agency securities	$	100	$	4			$	104
State and municipal	291,730		14,241		$	60	305,911
U.S. Government-sponsored mortgage-backed securities	342,550		4,234		518		346,266
Corporate obligations	31						31
Equity securities	3,912						3,912
Certificates of deposit	2,176						2,176
Total available for sale	640,499		18,479		578		658,400
Held to maturity at December 31, 2015
State and municipal	219,767		6,982		15		226,734
U.S. Government-sponsored mortgage-backed securities	398,832		7,601		787		405,646
Total held to maturity	618,599		14,583		802		632,380
Total Investment Securities	$	1,259,098	$	33,062	$	1,380	$	1,290,780
Available for sale at December 31, 2014
U.S. Government-sponsored agency securities	$	100	$	9			$	109
State and municipal	216,915		11,801		$	123	228,593
U.S. Government-sponsored mortgage-backed securities	310,460		8,771		127		319,104
Corporate obligations	31						31
Equity securities	1,706						1,706
Total available for sale	529,212		20,581		250		549,543
Held to maturity at December 31, 2014
State and municipal	204,443		5,716		96		210,063
U.S. Government-sponsored mortgage-backed securities	426,645		11,527		512		437,660
Total held to maturity	631,088		17,243		608		647,723
Total Investment Securities	$	1,160,300	$	37,824	$	858	$	1,197,266

On December 31, 2015, the Corporation acquired 100 percent of Ameriana as discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. This purchase resulted in investment securities acquired of approximately $60.4 million.

Certain investments in debt securities are reported in the financial statements at amounts less than their historical cost.  The historical cost of these investments totaled $178,964,000 and $73,249,000 at December 31, 2015 and 2014, respectively.  Total fair value of these investments was $177,584,000  and $72,390,000, which was approximately 13.9 and 6.1 percent of the Corporation's available for sale and held to maturity investment portfolio at December 31, 2015 and 2014, respectively.

Except as discussed below, management believes the decline in fair value for these securities was temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income during the period the other-than-temporary impairment (“OTTI”) is identified.

The Corporation’s management has evaluated all securities with unrealized losses for OTTI as of December 31, 2015.  The evaluations are based on the nature of the securities, the extent and duration of the loss and the intent and ability of the Corporation to hold these securities either to maturity or through the expected recovery period.

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level I and Level II in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

61

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

U.S. Government-Sponsored Mortgage-Backed Securities

The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2015. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $518,000 on twenty-six securities and $787,000 on twenty-two securities in the available for sale and held to maturity portfolios, respectively. All these securities are issued by a government-sponsored entity.

State and Municipal Securities

The unrealized losses on the Corporation's investments in securities of state and political subdivisions were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2015. As noted in the table above, the state and political subdivision securities portfolio contains unrealized losses of $60,000 on twenty-two securities and $15,000 on seven securities in the available for sale and held to maturity portfolios, respectively.

Certain Losses Recognized on Investments

Certain debt securities have experienced fair value deterioration due to credit losses and other market factors.  The following table provides information about debt securities for which only a credit loss was recognized in income and other losses were recorded in other comprehensive income.

	Accumulated Credit Losses in			Accumulated Credit Losses in
	2015			2014
Credit losses on debt securities held:
Balance, January 1	$	500		$	11,355
Reductions for previous other-than-temporary losses realized on securities sold during the year	(500		)	$	(10,855	)
Balance, December 31	$	—		$	500

The following table shows the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2015 and 2014: 

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2015
State and municipal	$	7,558	$	60					$	7,558	$	60
U.S. Government-sponsored mortgage-backed securities	83,396		445		$	2,101	$	73	85,497		518
Total Temporarily Impaired Available for Sale Securities	90,954		505		2,101		73		93,055		578
Temporarily Impaired Held to Maturity Securities at December 31, 2015
State and municipal					1,982		15		1,982		15
U.S. Government-sponsored mortgage-backed securities	69,641		519		12,906		268		82,547		787
Total Temporarily Impaired Held to Maturity Securities	69,641		519		14,888		283		84,529		802
Total Temporarily Impaired Investment Securities	$	160,595	$	1,024	$	16,989	$	356	$	177,584	$	1,380
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2014
State and municipal	$	1,256	$	7	$	9,850	$	116	$	11,106	$	123
U.S. Government-sponsored mortgage-backed securities	2,186		13		5,447		114		7,633		127
Total Temporarily Impaired Available for Sale Securities	3,442		20		15,297		230		18,739		250
Temporarily Impaired Held to Maturity Securities at December 31, 2014
State and municipal	5,119		96		250				5,369		96
U.S. Government-sponsored mortgage-backed securities	9,791		82		38,491		430		48,282		512
Total Temporarily Impaired Held to Maturity Securities	14,910		178		38,741		430		53,651		608
Total Temporarily Impaired Investment Securities	$	18,352	$	198	$	54,038	$	660	$	72,390	$	858

62

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The amortized cost and fair value of securities available for sale and held to maturity at December 31, 2015 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2015
Due in one year or less	$	4,658	$	4,704	$	4,144	$	4,148
Due after one through five years	13,725		14,295		28,054		29,175
Due after five through ten years	52,878		55,375		81,483		83,646
Due after ten years	220,600		231,672		106,086		109,765
	291,861		306,046		219,767		226,734
U.S. Government-sponsored mortgage-backed securities	342,550		346,266		398,832		405,646
Equity securities	3,912		3,912
Certificates of deposit	2,176		2,176
Total Investment Securities	$	640,499	$	658,400	$	618,599	$	632,380

Securities with a carrying value of approximately $637,358,000, $449,408,000 and $373,533,000  were pledged at December 31, 2015, 2014 and 2013, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

Gross gains of $2,770,000, $3,581,000 and $487,000 were realized on sales of investment securities in 2015, 2014 and 2013, respectively. Gross losses of $100,000 were realized on sales of investment securities in 2015. There were no losses from the sales of investment securities in 2014 or 2013, respectively.

NOTE 5

LOANS AND ALLOWANCE

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, residential real estate and consumer, which results in portfolio diversification. The following tables show the composition of the loan portfolio, the allowance for loan losses and certain credit quality aspects, all excluding loans held for sale.  Loans held for sale at December 31, 2015 and 2014, were $9,894,000 and $7,235,000, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the years indicated:

	December 31, 2015			December 31, 2014
Commercial and industrial loans	$	1,057,075		$	896,688
Agricultural production financing and other loans to farmers	97,711			104,927
Real estate loans:
Construction	366,704			207,221
Commercial and farmland	1,802,921			1,672,661
Residential	786,105			647,315
Home equity	348,613			286,529
Individuals' loans for household and other personal expenditures	74,717			73,400
Lease financing receivables, net of unearned income	588			1,106
Other commercial loans	159,388			35,018
Loans	4,693,822			3,924,865
Allowance for loan losses	(62,453		)	(63,964		)
Net Loans	$	4,631,369		$	3,860,901

During the twelve months ended December 31, 2015, loans acquired through business combinations totaled $430,289,000. See the information regarding the business combinations in the Note 2. ACQUISITIONS AND DIVESTITURES section of the Financial Statements and Supplementary Data included as Item 8 of this Annual Report on Form 10-K.

At December 31, 2015, Other commercial loans totaled $159,388,000, an increase of $124,370,000 from December 31, 2014. This increase was primarily a result of organic growth in the obligations of the state and political subdivisions sector of the portfolio.

63

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Allowance, Credit Quality and Loan Portfolio

The Corporation maintains an allowance for loan losses to cover probable credit losses identified during its loan review process. Management believes that the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio at December 31, 2015.  The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results.  It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters.  The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examinations, and will increase or decrease as deemed necessary to ensure it remains adequate.  In addition, the allowance as a percentage of charge offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values.

The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings. The allowance is increased by provision expense and decreased by charge offs less recoveries. All charge offs are approved by the Bank’s senior loan officers or loan committees, depending on the amount of the charge off. The Bank charges off a loan when a determination is made that all or a portion of the loan is uncollectible. The amount provided for loan losses in a given period may be greater than or less than net loan losses experienced during the period, and is based on management’s judgment as to the appropriate level of the allowance for loan losses. The determination of the provision amount is based on management’s ongoing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and independent loan reviews.  The evaluation takes into consideration identified credit problems, the possibility of losses inherent in the loan portfolio that are not specifically identified and management’s judgment as to the impact of the current environment and economic conditions on the portfolio.

The allowance consists of specific impairment reserves as required by ASC 310-10-35, a component for historical losses in accordance with ASC 450 and the consideration of current environmental factors in accordance with ASC 450. A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected.

The historical loss allocation for loans not deemed impaired according to ASC 310 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment. The historical loss factors are based upon actual loss experience within each risk and call code classification. The historical look back period for non-criticized loans looks to the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans. Each of the rolling four quarter periods used to obtain the average, include all charge offs for the previous twelve-month period, therefore the historical look back period includes seven quarters. The resulting allocation is reflective of current conditions. Criticized loans are grouped based on the risk grade assigned to the loan. Loans with a special mention grade are assigned a loss factor, and loans with a classified grade but not impaired are assigned a separate loss factor. The loss factor computation for this allocation includes a segmented historical loss migration analysis of risk grades to charge off.

In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to ensure that losses inherent in the portfolio are reflected in the allowance for loan losses. The environmental component adjusts the historical loss allocations for non-impaired loans to reflect relevant current conditions that, in management's opinion, have an impact on loss recognition. Environmental factors that management reviews in the analysis include: national and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes.

In conformance with ASC 805 and ASC 820, loans purchased after December 31, 2008 are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan or the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceeds the fair value adjustment on the portion of the purchased portfolio not deemed impaired.

At December 31, 2015, the allowance for loan losses was $62,453,000, a decrease of $1,511,000 from the December 31, 2014 balance of $63,964,000. Specific reserves on impaired loans decreased $927,000 to $1,842,000, from $2,769,000 at December 31, 2014. Net charge offs for the twelve months ended December 31, 2015, were $1,928,000, a decrease of $4,538,000 from the same period in 2014. The provision for loan losses for the twelve months ended December 31, 2015 was $417,000, a decrease of $2,143,000 from the same period in 2014. The determination of the provision for loan losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio.

64

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The following table summarizes changes in the allowance for loan losses by loan segment for the twelve months ended December 31, 2015, 2014 and 2013:

	Twelve Months Ended December 31, 2015
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964
Provision for losses	(1,901		)	1,710			299			310			(1		)	417
Recoveries on loans	1,911			2,545			352			1,536						6,344
Loans charged off	(2,356		)	(1,437		)	(620		)	(3,859		)				(8,272		)
Balances, December 31, 2015	$	26,478		$	22,145		$	2,689		$	11,139		$	2		$	62,453

	Twelve Months Ended December 31, 2014
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870
Provision for losses	3,459			(464		)	423			(839		)	$	(19	)	2,560
Recoveries on loans	5,435			3,297			377			1,783			24			10,916
Loans charged off	(7,246		)	(6,608		)	(657		)	(2,869		)	(2		)	(17,382		)
Balances, December 31, 2014	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964

	Twelve Months Ended December 31, 2013
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	25,913		$	26,703		$	2,593		$	14,157					$	69,366
Provision for losses	2,794			340			(11		)	3,514			$	11		6,648
Recoveries on loans	4,586			3,552			556			1,292			4			9,990
Loans charged off	(6,117		)	(7,493		)	(623		)	(3,886		)	(15		)	(18,134		)
Balances, December 31, 2013	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870

The following tables show the Corporation’s allowance for loan losses and loan portfolio by loan segment for the years indicated:

	December 31, 2015
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,277	$	243			$	169			$	1,689
Collectively evaluated for impairment	25,201		21,753		$	2,689	10,966		$	2	60,611
Loans acquired with deteriorated credit quality			149				4				153
Total Allowance for Loan Losses	$	26,478	$	22,145	$	2,689	$	11,139	$	2	$	62,453
Loan balances:
Individually evaluated for impairment	$	7,877	$	16,670			$	4,020			$	28,567
Collectively evaluated for impairment	1,298,988		2,096,089		$	74,717	1,125,316		$	588	4,595,698
Loans acquired with deteriorated credit quality	7,309		56,866				5,382				69,557
Loans	$	1,314,174	$	2,169,625	$	74,717	$	1,134,718	$	588	$	4,693,822

	December 31, 2014
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,455	$	470			$	194			$	2,119
Collectively evaluated for impairment	27,369		18,207		$	2,658	12,958		$	3	61,195
Loans acquired with deteriorated credit quality			650								650
Total Allowance for Loan Losses	$	28,824	$	19,327	$	2,658	$	13,152	$	3	$	63,964
Loan balances:
Individually evaluated for impairment	$	16,108	$	23,963			$	4,022			$	44,093
Collectively evaluated for impairment	1,011,122		1,796,797		$	73,400	925,282		$	1,106	3,807,707
Loans acquired with deteriorated credit quality	9,403		59,122				4,540				73,065
Loans	$	1,036,633	$	1,879,882	$	73,400	$	933,844	$	1,106	$	3,924,865

65

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The risk characteristics of the Corporation’s material portfolio segments are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Residential and Consumer

With respect to residential loans that are secured by 1-4 family residences and are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. Uncollected interest previously recorded, but not deemed collectible, is reversed and charged against current income. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.  Payments received on impaired accruing or delinquent loans are applied to interest income as accrued.

The following table summarizes the Corporation’s non-accrual loans by loan class for the years indicated:

	December 31, 2015		December 31, 2014
Commercial and industrial loans	$	4,634	$	7,048
Agriculture production financing and other loans to farmers	827		5,800
Real estate loans:
Construction	736		1,439
Commercial and farmland	11,277		19,350
Residential	11,818		12,933
Home equity	1,952		1,988
Individuals' loans for household and other personal expenditures	145		231
Total	$	31,389	$	48,789

Commercial impaired loans include non-accrual loans, loans accounted for under ASC 310-30, and loans risk graded as substandard, doubtful and loss that were still accruing but deemed impaired according to the guidance set forth in ASC 310. Also included in impaired loans are accruing loans that are contractually past due 90 days or more and troubled debt restructurings.

Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings andor customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

66

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The following tables show the composition of the Corporation’s commercial impaired loans by loan class for the years indicated:

	December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	22,151	$	11,669			$	12,578	$	488
Agriculture production financing and other loans to farmers	370		361				439
Real estate loans:
Construction	4,551		2,336				3,662		157
Commercial and farmland	95,930		69,024				71,569		3,328
Residential	11,262		7,338				7,926		244
Home equity	297		247				249
Other commercial loans	20
Total	$	134,581	$	90,975			$	96,423	$	4,217
Impaired loans with related allowance:
Commercial and industrial loans	$	3,043	$	2,690	$	1,247	$	2,752	$	38
Agriculture production financing and other loans to farmers	466		466		30		538
Real estate loans:
Commercial and farmland	2,144		1,933		392		1,868
Residential	2,300		1,463		173		1,787
Total	$	7,953	$	6,552	$	1,842	$	6,945	$	38
Total Impaired Loans	$	142,534	$	97,527	$	1,842	$	103,368	$	4,255

	December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,514	$	18,029			$	18,711	$	362
Agriculture production financing and other loans to farmers	26		22				26
Real estate loans:
Construction	12,956		9,318				9,837		427
Commercial and farmland	95,856		68,187				70,844		3,389
Residential	10,591		6,839				6,987		119
Home equity	3,590		398				402
Other commercial loans	30
Total	$	158,563	$	102,793			$	106,807	$	4,297
Impaired loans with related allowance:
Commercial and industrial loans	$	1,766	$	1,684	$	1,055	$	1,721	$	40
Agriculture production financing and other loans to farmers	6,777		5,777		400		8,044		1
Real estate loans:
Commercial and farmland	7,159		4,971		1,120		4,999		24
Residential	1,001		998		194		1,000
Total	$	16,703	$	13,430	$	2,769	$	15,764	$	65
Total Impaired Loans	$	175,266	$	116,223	$	2,769	$	122,571	$	4,362

67

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

	December 31, 2013
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,066	$	16,371			$	19,209	$	192
Agriculture production financing and other loans to farmers	32		30				32
Real estate loans:
Construction	16,109		10,625				11,621		117
Commercial and farmland	128,073		83,033				84,057		1,663
Residential	6,746		3,910				4,236		75
Home equity	3,299		112				225
Other commercial loans	454		172				181		1
Total	$	189,779	$	114,253			$	119,561	$	2,048
Impaired loans with related allowance:
Commercial and industrial loans	$	1,390	$	1,216	$	683	$	1,240	$	9
Real estate loans:
Commercial and farmland	4,657		4,215		894		4,291		9
Residential	74		71		6		76
Total	$	6,121	$	5,502	$	1,583	$	5,607	$	18
Total Impaired Loans	$	195,900	$	119,755	$	1,583	$	125,168	$	2,066

At December 31, 2015, the commercial impaired loan total of $97,527,000 included $11,365,000 and $1,841,000 in loans acquired from Ameriana and C Financial, respectively. At December 31, 2014, the commercial impaired loan total of $116,223,000 included $17,027,000 in loans acquired from Community. At December 31, 2013, the commercial impaired loan total of $119,755,000 included $69,448,000 in loans acquired from CFS.

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge offs, (iii) non-performing loans and (iv) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

• Pass - Loans that are considered to be of acceptable credit quality.

• Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification. The key distinctions of this category's classification are that it is indicative of an unwarranted level of risk; and weaknesses are considered “potential”, not “defined”, impairments to the primary source of repayment. Examples include businesses that may be suffering from inadequate management, loss of key personnel or significant customer or litigation.

• Substandard - A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Other characteristics may include:

o the likelihood that a loan will be paid from the primary source of repayment is uncertain or financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss,

o the primary source of repayment is gone, and the Corporation is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees,

o loans have a distinct possibility that the Corporation will sustain some loss if deficiencies are not corrected,

o unusual courses of action are needed to maintain a high probability of repayment,

o the borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments,

o the Corporation is forced into a subordinated or unsecured position due to flaws in documentation,

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(table dollar amounts in thousands, except share data)

o loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms,

o the Corporation is seriously contemplating foreclosure or legal action due to the apparent deterioration of the loan, and

o there is significant deterioration in market conditions to which the borrower is highly vulnerable.

• Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable. Other credit characteristics may include the primary source of repayment is gone or there is considerable doubt as to the quality of the secondary sources of repayment. The possibility of loss is high, but because of certain important pending factors that may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

• Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical not desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the years indicated.  Consumer non-performing loans include accruing consumer loans 90 plus days delinquent and consumer non-accrual loans.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.

	December 31, 2015
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	962,340	$	48,432	$	45,984	$	319						$	1,057,075
Agriculture production financing and other loans to farmers	77,884		6,665		13,162									97,711
Real estate loans:
Construction	345,449		1,271		1,790					$	18,114	$	80	366,704
Commercial and farmland	1,679,141		46,442		77,338									1,802,921
Residential	171,576		3,107		10,428					593,533		7,461		786,105
Home equity	8,218		48		600					337,718		2,029		348,613
Individuals' loans for household and other personal expenditures										74,491		226		74,717
Lease financing receivables, net of unearned income	495				93									588
Other commercial loans	159,388													159,388
Loans	$	3,404,491	$	105,965	$	149,395	$	319		$	1,023,856	$	9,796	$	4,693,822

	December 31, 2014
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	823,732	$	24,455	$	48,226	$	275						$	896,688
Agriculture production financing and other loans to farmers	96,155		1,195		7,577									104,927
Real estate loans:
Construction	185,394		3,164		2,928					$	15,588	$	147	207,221
Commercial and farmland	1,552,781		29,484		90,161							235		1,672,661
Residential	149,430		6,321		10,918					470,972		9,674		647,315
Home equity	6,368		12		690					277,571		1,888		286,529
Individuals' loans for household and other personal expenditures										73,165		235		73,400
Lease financing receivables, net of unearned income	998				108									1,106
Other commercial loans	35,018													35,018
Loans	$	2,849,876	$	64,631	$	160,608	$	275		$	837,296	$	12,179	$	3,924,865

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(table dollar amounts in thousands, except share data)

The following tables illustrate the past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	December 31, 2015
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	1,052,275	$	166					$	4,634	$	4,800	$	1,057,075
Agriculture production financing and other loans to farmers	96,884								827		827		97,711
Real estate loans:
Construction	362,084		3,884						736		4,620		366,704
Commercial and farmland	1,786,092		5,552						11,277		16,829		1,802,921
Residential	765,634		6,090		$	2,061	$	502	11,818		20,471		786,105
Home equity	344,344		1,433		560		324		1,952		4,269		348,613
Individuals' loans for household and other personal expenditures	73,990		445		56		81		145		727		74,717
Lease financing receivables, net of unearned income	588												588
Other commercial loans	159,324				64						64		159,388
Loans	$	4,641,215	$	17,570	$	2,741	$	907	$	31,389	$	52,607	$	4,693,822

	December 31, 2014
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	882,596	$	4,006	$	53	$	2,985	$	7,048	$	14,092	$	896,688
Agriculture production financing and other loans to farmers	98,236		891						5,800		6,691		104,927
Real estate loans:
Construction	204,683		1,017		82				1,439		2,538		207,221
Commercial and farmland	1,642,016		9,846		778		$	671	19,350		30,645		1,672,661
Residential	626,821		4,876		1,831		854		12,933		20,494		647,315
Home equity	282,828		1,213		352		148		1,988		3,701		286,529
Individuals' loans for household and other personal expenditures	72,853		258		53		5		231		547		73,400
Lease financing receivables, net of unearned income	1,106												1,106
Other commercial loans	35,018												35,018
Loans	$	3,846,157	$	22,107	$	3,149	$	4,663	$	48,789	$	78,708	$	3,924,865

See the information regarding the analysis of loan loss experience in the “Loan Quality" and "Provision And Allowance For Loan Losses" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

On occasion, borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays including debt payments. Concurrently, in an effort to preserve and protect its earning assets, specifically troubled loans, the Corporation is working to maintain its relationship with certain customers who are experiencing financial difficulty by contractually modifying the borrower's debt agreement with the Corporation. In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a trouble debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be paid.

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(table dollar amounts in thousands, except share data)

The following tables summarize troubled debt restructurings that occurred during the periods ended December 31, 2015 and 2014:

	December 31, 2015
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Commercial and industrial loans	$	4,111	$	2,115	7
Real estate loans:
Construction	79		80		1
Commercial and farmland	1,281		3,024		3
Residential	200		1,113		10
Home equity	263		242		1
Individuals' loans for household and other personal expenditures	26		27		1
Total	$	5,960	$	6,601	23

	December 31, 2014
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Real estate loans:
Commercial and farmland	$	259	$	259	1
Residential	632		622		9
Home equity	320		350		11
Individuals' loans for household and other personal expenditures	26		26		2
Total	$	1,237	$	1,257	23

The following tables show the recorded investment of troubled debt restructurings, by modification type, that occurred during the years indicated:

	December 31, 2015
	Term Modification		Rate Modification		Combination		Total Modification
Commercial and industrial loans	$	761			$	1,053	$	1,814
Real estate loans:
Commercial and farmland	1,231				1,026		2,257
Residential	823		$	170	45		1,038
Home equity			242				242
Individuals' loans for household and other personal expenditures			27				27
Total	$	2,815	$	439	$	2,124	$	5,378

	December 31, 2014
	Term Modification		Rate Modification		Combination		Total Modification
Real estate loans:
Commercial and farmland	$	288					$	288
Residential	31		$	218	$	360	609
Home equity			100		243		343
Individuals' loans for household and other personal expenditures					23		23
Total	$	319	$	318	$	626	$	1,263

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Loans secured by commercial and farmland real estate made up 46 percent of the post-modification balances of the troubled debt restructured loans during the twelve months ending December 31, 2015.  The second largest class of troubled debt restructurings during 2015 was commercial and industrial loans, which accounted for 32 percent of the total post modification balances.

The following tables summarize troubled debt restructures that occurred during the twelve months ended December 31, 2015 and 2014, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due.

	Twelve Months Ended December 31, 2015
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	21
Total	1	$	21

	Twelve Months Ended December 31, 2014
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	70
Total	1	$	70

For potential consumer loan restructures, impairment evaluation occurs prior to modification. Any subsequent impairment is typically addressed through the charge off process, or may be addressed through a specific reserve. Consumer troubled debt restructurings are generally included in the general historical allowance for loan loss at the post modification balance. Consumer non-accrual and delinquent troubled debt restructurings are also considered in the calculation of the non-accrual and delinquency trend environmental allowance allocation. Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for impairment under ASC 310. Any resulting specific reserves are included in the allowance for loan losses. Commercial 30 - 89 day delinquent troubled debt restructurings are included in the calculation of the delinquency trend environmental allowance allocation. All commercial non-impaired loans, including non-accrual and 90+ day delinquents, are included in the ASC 450 loss migration analysis.

NOTE 6

ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A PURCHASE

The Bank acquired loans in a purchase during the years ended December 31, 2015, 2014, 2013 and 2012. The acquired loans detailed in the tables below are included in Note 5. LOANS AND ALLOWANCE, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. As described in Note 5, loans purchased after December 31, 2008 are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable portion of the fair value discount or premium. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. All other loans not accounted for under ASC 310-30 are accounted for under ASC 310-20 which allows the remaining fair value adjustment to be accreted into income over the remaining life of the loans.

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(table dollar amounts in thousands, except share data)

The following table includes the outstanding balance and carrying amount of all the performing and non-performing acquired loans, which are included in the Corporation's balance sheet at December 31, 2015 and 2014.

	December 31, 2015
	Ameriana		C Financial		Community		CFS		SCB		Total
Outstanding Balance:
Commercial and industrial loans	$	21,888	$	104	$	6,769	$	52,060	$	4,620	$	85,441
Agricultural production financing and other loans to farmers					1,761				1,288		3,049
Real estate loans:
Construction	23,365		6,214		10,436		976				40,991
Commercial and farmland	144,514		27,838		49,997		189,372		13,293		425,014
Residential	123,231		55,856		21,886		118,105		6,063		325,141
Home Equity	14,261		9,144		8,231		31,986		13,431		77,053
Individuals' loans for household and other personal expenditures	1,731		10		461		443		48		2,693
Other commercial loans	1,928						72				2,000
Total	$	330,918	$	99,166	$	99,541	$	393,014	$	38,743	$	961,382
Carrying Amount	$	319,664	$	96,829	$	93,355	$	373,649	$	34,092	$	917,589
Allowance					4		149				153
Carrying Amount Net of Allowance	$	319,664	$	96,829	$	93,351	$	373,500	$	34,092	$	917,436

	December 31, 2014
	Community		CFS		SCB		Total
Outstanding Balance:
Commercial and industrial loans	$	8,168	$	64,897	$	6,059	$	79,124
Agricultural production financing and other loans to farmers	1,100				893		1,993
Real estate loans:
Construction	19,063		9,113				28,176
Commercial and farmland	74,600		251,002		15,593		341,195
Residential	28,863		144,396		7,384		180,643
Home Equity	9,881		39,244		15,758		64,883
Individuals' loans for household and other personal expenditures	1,314		922		121		2,357
Other commerical loans			86				86
Total	$	142,989	$	509,660	$	45,808	$	698,457
Carrying Amount	$	134,198	$	484,949	$	39,324	$	658,471
Allowance			650				650
Carrying Amount Net of Allowance	$	134,198	$	484,299	$	39,324	$	657,821

Certain purchased credit impaired loans with subsequent deterioration since acquisition required an allowance for loan losses and corresponding provision expense of $153,000 and $650,000 at December 31, 2015 and 2014, respectively.

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(table dollar amounts in thousands, except share data)

As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield, are identified in the table below.

	Twelve Months Ended December 31, 2015
	Ameriana		C Financial			Community			CFS			SCB			Total
Beginning balance						$	2,122		$	2,400		$	868		$	5,390
Additions	$	2,848	$	145											2,993
Accretion			(31		)	(723		)	(4,050		)	(1,046		)	(5,850		)
Reclassification from nonaccretable						249			2,854			822			3,925
Disposals						(140		)	(16		)	(2		)	(158		)
Ending balance	$	2,848	$	114		$	1,508		$	1,188		$	642		$	6,300

	Twelve Months Ended December 31, 2014
	Community			CFS			SCB			Total
Beginning balance				$	4,164		$	1,388		$	5,552
Additions	$	2,234								2,234
Accretion	(231		)	(4,146		)	(1,062		)	(5,439		)
Reclassification from nonaccretable	119			2,553			577			3,249
Disposals				(171		)	(35		)	(206		)
Ending balance	$	2,122		$	2,400		$	868		$	5,390

	Twelve Months Ended December 31, 2013
	CFS			SCB			Total
Beginning balance				$	1,715		$	1,715
Additions	$	3,502					3,502
Accretion	(10		)	(463		)	(473		)
Reclassification from nonaccretable	672			177			849
Disposals				(41		)	(41		)
Ending balance	$	4,164		$	1,388		$	5,552

The following table presents loans acquired during the periods ending December 31, 2015 and 2014, for which it was probable at acquisition that all contractually required payments would not be collected:

	2015						2014
	Ameriana		C Financial		Total		Community
Contractually required payments receivable at acquisition date	$	29,093	$	2,632	$	31,725	$	26,032
Nonaccretable difference	13,728		637		14,365		3,498
Expected cash flows at acquisition date	15,365		1,995		17,360		22,534
Accretable difference	2,848		145		2,993		2,234
Basis in loans at acquisition date	$	12,517	$	1,850	$	14,367	$	20,300

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(table dollar amounts in thousands, except share data)

NOTE 7

PREMISES AND EQUIPMENT

The following table summarizes the Corporation's premises and equipment as of December 31, 2015 and 2014:

	2015			2014
Cost at December 31:
Land	$	26,510		$	19,373
Buildings and Leasehold Improvements	115,461			99,451
Equipment	64,892			56,606
Total Cost	206,863			175,430
Accumulated Depreciation and Amortization	(109,215		)	(97,739		)
Net	$	97,648		$	77,691

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in additions to premises and equipment of $14,491,000 and $7,290,000, respectively. Additionally, on November 7, 2014, the Community acquisition resulted in an addition to premises and equipment of $3,610,000. Details regarding the acquisitions are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The Corporation is committed under various non-cancelable lease contracts for certain subsidiary office facilities and equipment. Total lease expense for 2015, 2014 and 2013 was $3,456,000, $3,258,000 and $2,608,000, respectively. The future minimum rental commitments required under the operating leases in effect at December 31, 2015, expiring at various dates through the year 2035 are as follows for the years ending December 31:

	Future Minimum Rental Commitments
2016	$	3,076
2017	2,353
2018	1,419
2019	1,222
2020	1,060
After 2020	6,629
Total Future Minimum Obligations	$	15,759

NOTE 8

GOODWILL

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in goodwill of $37,753,000 and $11,126,000, respectively. On June 12, 2015, the sale of FMIG resulted in a goodwill reduction of $8,474,000. Additionally, on November 7, 2014, the Community acquisition resulted in goodwill of $13,776,000. Details regarding the acquisitions and sale are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

No impairment loss was recorded in 2015 or 2014. The Corporation tested goodwill for impairment during 2015 and 2014. In both valuations, the fair value exceeded the Corporation’s carrying value; therefore, it was concluded goodwill is not impaired. For additional details related to impairment testing, see the “GOODWILL” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

	2015			2014
Balance, January 1	$	202,724		$	188,948
Goodwill acquired	48,879			13,776
Goodwill reduction	$	(8,474	)
Balance, December 31	$	243,129		$	202,724

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(table dollar amounts in thousands, except share data)

NOTE 9

CORE DEPOSIT AND OTHER INTANGIBLES

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in a core deposit intangible of $3,200,000 and $981,000, respectively. On June 12, 2015, the sale of FMIG resulted in an other intangible reduction of $742,000. Additionally, on November 7, 2014, the Community acquisition resulted in a core deposit intangible of $4,658,000. Details regarding the acquisitions and sale are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The carrying basis and accumulated amortization of recognized core deposit and other intangibles are noted below.

	2015			2014
Gross carrying amount	$	58,360		$	53,702
Core deposit intangible and other intangibles acquired	4,181			4,658
Accumulated amortization	(45,164		)	(42,329		)
Core deposit intangible and other intangibles reduction	(742		)
Core Deposit and Other Intangibles	$	16,635		$	16,031

Amortization expense for the years ended December 31, 2015, 2014 and 2013, was $2,835,000, $2,445,000 and $1,649,000, respectively.

Estimated future amortization expense is summarized as follows:

	Amortization Expense
2016	$	3,055
2017	3,017
2018	1,904
2019	1,676
2020	1,618
After 2020	5,365
Total Future Minimum Obligations	$	16,635

NOTE 10

DEPOSITS

The composition of the deposit portfolio is included in the table below for the years indicated:

	December 31, 2015		December 31, 2014
Demand deposits	$	2,576,283	$	2,146,492
Savings deposits	1,518,722		1,376,707
Certificates and other time deposits of $100,000 or more	323,698		260,685
Other certificates and time deposits	556,476		523,010
Brokered deposits	314,468		333,800
Total deposits	$	5,289,647	$	4,640,694

At December 31, 2015, the contractual maturities of time deposits are summarized as follows:

	Certificates and Other Time Deposits
2016	$	600,551
2017	272,652
2018	126,929
2019	74,750
2020	55,187
After 2020	64,573
	$	1,194,642

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(table dollar amounts in thousands, except share data)

NOTE 11

TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of December 31, 2015 were:

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	131,537	$	5,680	$	8,892	$	9,216	$	155,325

NOTE 12

BORROWINGS

The following table summarizes the Corporation's borrowings as of December 31, 2015 and 2014:

	December 31, 2015		December 31, 2014
Federal funds purchased	$	49,721	$	15,381
Securities sold under repurchase agreements	155,325		124,539
Federal Home Loan Bank advances	235,652		145,264
Subordinated debentures and term loans	127,846		126,810
Total Borrowings	$	568,544	$	411,994

Securities sold under repurchase agreements consist of obligations of the Bank to other parties. The obligations are secured by U.S. Treasury and U.S. Government-Sponsored Enterprise obligations, certain municipal securities and mortgage loans. The maximum amount of outstanding agreements at any month-end during 2015 and 2014 totaled $163,128,000 and $155,941,000, respectively, and the average of such agreements totaled $143,491,000 and $130,910,000 during 2015 and 2014, respectively.

Maturities of borrowings as of December 31, 2015, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2016	$	49,721	$	155,325	$	91,441	$	183
2017					37,222
2018					26,851
2019					13,828
2020					31,310
After 2020					35,000		132,012
ASC 805 fair value adjustments at acquisition							(4,349		)
	$	49,721	$	155,325	$	235,652	$	127,846

The terms of a security agreement with the FHLB require the Corporation to pledge, as collateral for advances, qualifying first mortgage loans, investment securities and multi-family loans in an amount equal to at least 146 percent of these advances depending on the type of collateral pledged. Advances, with interest rates from 0 to 6.81 percent, are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at December 31, 2015, was $388,176,000. As of December 31, 2015, the Corporation had $25,000,000 putable advances with the FHLB. Additionally as part of the Ameriana acquisition on December 31, 2015, the Corporation assumed approximately $24,938,000 of Federal Home Loan Bank Advances. The C Financial acquisition on April 17, 2015 resulted in an additional $18,958,000 of Federal Home Loan Bank advances at acquisition, of which approximately $7,361,000 matured during 2015 and $11,597,000 remained at December 31, 2015.

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Subordinated Debentures and Term Loans. As of December 31, 2015, subordinated debentures and term loans totaled $127,846,000.

• First Merchants Capital Trust II. The subordinated debenture was entered into on July 2, 2007 for $56,702,000. On August 10, 2015, the Corporation completed the cancellation of $5 million of subordinated debentures at a gain of $1,250,000. As of December 31, 2015, $51,702,000 of subordinated debentures remain outstanding with a maturity date of September 15, 2037. The Corporation could not redeem the debenture prior to September 15, 2012, and redemption is subject to the prior approval of the Board of Governors of the Federal Reserve System, as required by law or regulation. Interest was fixed at 6.495 percent for the period from the date of issuance through September 15, 2012; interest is now an annual floating rate equal to the three-month LIBOR plus 1.56 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2015 was 2.1 percent. The Corporation holds all of the outstanding common securities of First Merchants Capital Trust II.

• Ameriana Capital Trust I. On December 31, 2015 the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. The subordinated debentures of Ameriana Capital Trust I were entered into in March 2007 for $10,310,000 and have a maturity of March 2036. The interest rate is equal to the three-month LIBOR plus 1.50 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2015 was 2.0 percent. The Corporation holds all of the outstanding common securities of Ameriana Capital Trust I.

• On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the "Senior Debt") and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the "Subordinated Debt"). The interest rate on the Senior Debt and Subordinated Debt remains fixed for the first ten (10) years and will become floating thereafter. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants.

Line of Credit. As of December 31, 2015, there was no outstanding balance on the line of credit.

• U.S. Bank, N.A. On April 11, 2014, the Corporation entered into a line of credit agreement with U.S. Bank, N.A. with a maximum borrowing capacity of $20 million. As of December 31, 2015, there was no outstanding balance on the line of credit. Interest is payable quarterly based on one-month LIBOR plus 2.00 percent. The line of credit has a quarterly facility fee of 0.25 percent on the unused balance. The line of credit agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants. The line of credit was renewed on April 9, 2015 and will mature on April 8, 2016.

Subordinated Debentures and Term Loans. As of December 31, 2014, subordinated debentures and term loans totaled $126,810,000.

• First Merchants Capital Trust II. The subordinated debenture, entered into on July 2, 2007, for $56,702,000 will mature on September 15, 2037. The Corporation could not redeem the debenture prior to September 15, 2012, and redemption is subject to the prior approval of the Board of Governors of the Federal Reserve System, as required by law or regulation. Interest was fixed at 6.495 percent for the period from the date of issuance through September 15, 2012; interest is now an annual floating rate equal to the three-month LIBOR plus 1.56 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2014 was 1.8 percent. The Corporation holds all of the outstanding common securities of First Merchants Capital Trust II.

• On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the "Senior Debt") and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the "Subordinated Debt"). The interest rate on the Senior Debt and Subordinated Debt remains fixed for the first ten (10) years and will become floating thereafter. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2014, the Corporation was in compliance with these covenants. The net proceeds of the placement were used to pay off the Corporation's $55 million credit facility with Bank of America, N.A. which was scheduled to mature on February 15, 2015.

Line of Credit. As of December 31, 2014, there was no outstanding balance on the line of credit.

• U. S. Bank, N.A. On April 11, 2014, the Corporation entered into a line of credit agreement with the U. S. Bank, N.A. with a maximum borrowing capacity of $20 million. As of December 31, 2014, there was no outstanding balance on the line of credit. Interest is payable quarterly based on one-month LIBOR plus 2.00 percent. The line of credit has a quarterly facility fee of 0.25 percent on the unused balance. The maturity date for the line of credit is April 10, 2015. The line of credit agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2014, the Corporation was in compliance with these covenants.

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 13

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Corporation is exposed to certain risks arising from both its business operations and economic conditions.  The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments.  Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities.  The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities.  The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2015 and December 31, 2014.

Asset Derivatives

Liability Derivatives

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

36

Other Assets

$

137

Other Liabilities

$

2,921

Other Liabilities

$

2,650

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

4,938

Other Assets

$

3,730

Other Liabilities

$

5,149

Other Liabilities

$

3,887

Cash Flow Hedges of Interest Rate Risk

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.  As of December 31, 2015 and 2014, the Corporation had five interest rate swaps with a notional amount of $56.0 million and one interest rate cap with a notional amount of $13.0 million.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2015, $26.0 million of the interest rate swaps and the $13.0 million interest rate cap were used to hedge the variable cash outflows (LIBOR-based) associated with existing trust preferred securities when the outflows converted from a fixed rate to variable rate in September 2012.  In addition, the remaining $30.0 million of interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with three Federal Home Loan Bank advances. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2015 and 2014, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation’s variable-rate liabilities.  During the next twelve months, the Corporation expects to reclassify $1,157,000 from accumulated other comprehensive income to interest expense.

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of December 31, 2015, the notional amount of customer-facing swaps was approximately $192,759,000.  This amount is offset with third party counterparties, as described above. 

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Effect of Derivative Instruments on the Income Statement

The tables below present the effect of the Corporation’s derivative financial instruments on the Income Statement for the years ended December 31, 2015, 2014 and 2013.

Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2015			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2014			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2013
Interest rate contracts	Other income	$	(53	)	$	(73	)	$	247

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) For the Year Ended						Location of Loss Reclassified from Accumulated Other Comprehensive Income (Effective Portion)	Amount of Loss Reclassified from Other Comprehensive Income into Income (Effective Portion) For the Year Ended
	2015			2014				2015			2014			2013
Interest rate products	$	(1,681	)	$	(3,996	)	Interest expense	$	(1,427	)	$	(1,411	)	$	(935	)

The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties.  The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s, at or above investment grade.  The Corporation’s control of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging.

Credit-Risk-Related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well/adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of December 31, 2015, the termination value of derivatives in a net liability position related to these agreements was $8,367,000. As of December 31, 2015, the Corporation has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $11,690,000. If the Corporation had breached any of these provisions at December 31, 2015, it could have been required to settle its obligations under the agreements at their termination value.

NOTE 14

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation used fair value measurements to record fair value adjustments, to certain assets, and liabilities and to determine fair value disclosures. The accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  ASC 820 applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances.

As defined in ASC 820, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. The Corporation values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of the Corporation. Unobservable inputs are assumptions based on the Corporation’s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs for which there is little or no market activity (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted prices for similar assets; (ii) observable inputs for the asset or liability, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation considers an input to be significant if it drives 10 percent or more of the total fair value of a particular asset or liability.

RECURRING MEASUREMENTS

Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted, market prices are available in an active market and securities are classified within Level 1 of the valuation hierarchy. There are no securities classified within Level 1 of the hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include agencies, government-sponsored mortgage backs, state and municipal and equity securities and certificates of deposit. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal, corporate obligations and equity securities. Level 3 fair value on state and municipal, corporate obligations and equity securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3.

Interest Rate Derivative Agreements

See information regarding the Corporation’s interest rate derivative products in Note 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820-10 fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	104		$	104
State and municipal	305,911			300,014		$	5,897
U.S. Government-sponsored mortgage-backed securities	346,266			346,266
Certificates of deposit	2,176			2,176
Corporate obligations	31					31
Equity securities	3,912			3,908		4
Interest rate swap asset	4,938			4,938
Interest rate cap	36			36
Interest rate swap liability	8,070			8,070

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	109		$	109
State and municipal	228,593			221,982		$	6,611
U.S. Government-sponsored mortgage-backed securities	319,104			319,104
Corporate obligations	31					31
Equity securities	1,706			1,702		4
Interest rate swap asset	3,730			3,730
Interest rate cap	137			137
Interest rate swap liability	6,537			6,537

LEVEL 3 RECONCILIATION

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for year ended December 31, 2015 and 2014.

	Available for Sale Securities
	For The Year Ended
	December 31, 2015			December 31, 2014
Beginning Balance	$	6,646		$	9,977
Included in other comprehensive income	199			3,656
Principal payments	(913		)	(6,987		)
Ending balance	$	5,932		$	6,646

There were no gains or losses for the period included in earnings that were attributable to the changes in unrealized gains or losses related to assets or liabilities held at December 31, 2015 or 2014.

TRANSFERS BETWEEN LEVELS

There were no transfers in or out of Level 3 during 2015 or 2014.

NONRECURRING MEASUREMENTS

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for year ended December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	7,066			$	7,066
Other real estate owned	$	5,529			$	5,529

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	17,134			$	17,134
Other real estate owned	$	5,155			$	5,155

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Impaired Loans (collateral dependent)

Loans for which it is probable that the Corporation will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. During 2015, certain impaired loans were partially charged off or re-evaluated. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Other Real Estate Owned

The fair value for impaired loans and other real estate owned is measured based on the value of the collateral securing those loans or real estate and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of,  asset appraisals, accounts receivable aging reports, inventory listings andor customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

UNOBSERVABLE (LEVEL 3) INPUTS

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at December 31, 2015 and 2014.

December 31, 2015	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	5,897	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .80% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	7,066	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (2%)
Other real estate owned	$	5,529	Appraisals	Discount to reflect current market conditions	0% - 20% (2%)

December 31, 2014	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	6,611	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .90% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	17,134	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (3%)
Other real estate owned	$	5,155	Appraisals	Discount to reflect current market conditions	0% - 20% (7%)

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

State and Municipal Securities, Corporate Obligations and Equity Securities

The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities, corporate obligations and equity securities are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input.

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PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Corporation's financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

	2015
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	102,170	$	102,170
Interest-bearing time deposits	32,315		32,315
Investment securities available for sale	658,400				$	652,468	$	5,932
Investment securities held to maturity	618,599				598,082		34,298
Loans held for sale	9,894				9,894
Loans	4,631,369						4,539,940
Federal Reserve and Federal Home Loan Bank stock	37,633				37,633
Interest rate swap asset	4,974				4,974
Interest receivable	24,415				24,415
Liabilities at December 31:
Deposits	$	5,289,647	$	4,095,004	$	1,177,142
Borrowings:
Federal funds purchased	49,721				49,721
Securities sold under repurchase agreements	155,325				155,325
Federal Home Loan Bank advances	235,652				236,375
Subordinated debentures and term loans	127,846				103,643
Interest rate swap liability	8,070				8,070
Interest payable	3,092				3,092

	2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	118,616	$	118,616
Interest-bearing time deposits	47,520		47,520
Investment securities available for sale	549,543				$	542,897	$	6,646
Investment securities held to maturity	631,088				614,457		33,266
Loans held for sale	7,235				7,235
Loans	3,860,901						3,810,912
Federal Reserve and Federal Home Loan Bank stock	41,353				41,353
Interest rate swap asset	3,867				3,867
Interest receivable	19,984				19,984
Liabilities at December 31:
Deposits	$	4,640,694	$	3,532,199	$	1,099,610
Borrowings:
Federal funds purchased	15,381				15,381
Securities sold under repurchase agreements	124,539				124,539
Federal Home Loan Bank advances	145,264				146,669
Subordinated debentures and term loans	126,810				92,802
Interest rate swap liability	6,537				6,537
Interest payable	3,201				3,201

84

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The following methods were used to estimate the fair value of all other financial instruments recognized in the Consolidated Condensed Balance Sheets at amounts other than fair value.

Cash and cash equivalents:  The fair value of cash and cash equivalents approximates carrying value.

Interest-bearing time deposits:  The fair value of interest-bearing time deposits approximates carrying value.

Investment securities:  Fair value is based on quoted market prices, if available.  If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The fair value of certain Level III securities is estimated using discounted cash flow analysis, using interest rates currently being offered on investments with similar maturities and investment quality.

Loans held for sale:  The carrying amount approximates fair value due to the short duration between origination and date of sale.

Loans:  The fair value for loans is estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  See Impaired Loans above.

Federal Reserve and Federal Home Loan Bank stock:  The fair value of Federal Reserve Bank and Federal Home Loan Bank stock is based on the price which it may be resold to the Federal Reserve and Federal Home Loan Bank.

Derivative instruments:  The fair value of interest rate swaps reflect the estimated amounts that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.  Interest rate caps are valued using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rate of the caps.  The projected cash receipts on the caps are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities.

Interest receivable and Interest payable:  The fair value of interest receivable/payable approximates carrying value.

Deposits:  The fair values of noninterest-bearing and interest-bearing demand accounts and savings deposits are equal to the amount payable on demand at the balance sheet date. The carrying amounts for variable rate, fixed-term certificates of deposit approximate their fair values at the balance sheet date. Fair values for fixed-rate certificates of deposit and other time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to a schedule of aggregated expected monthly maturities on such time deposits.

Borrowings:  The fair value of Federal Funds purchased approximates the carrying amount. The fair value of all other borrowings is estimated using a discounted cash flow calculation, based on current rates for similar debt.

NOTE 15

COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business there are outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying financial statements.  The Corporation's exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments.  The Bank uses the same credit policies in making such commitments as they do for instruments that are included in the consolidated balance sheets.

Financial instruments, whose contract amount represents credit risk as of December 31, were as follows:

	2015		2014
Amounts of commitments:
Loan commitments to extend credit	$	1,547,048	$	1,617,552
Standby letters of credit	$	46,734	$	52,655

Commitments to extend credit are agreements to lend to a customer, as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation.  Collateral held varies, but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.

The Corporation and subsidiaries are also subject to claims and lawsuits, which arise primarily in the ordinary course of business.  It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Corporation.

85

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 16

STOCKHOLDERS' EQUITY

National banking laws restrict the maximum amount of dividends that a bank may pay in any calendar year.  National banks are limited to the bank’s retained net income (as defined) for the current year plus those for the previous two years.  The amount at December 31, 2015, available for 2016 dividends from the Corporation’s subsidiaries (both banking and non-banking) was $29,812,000.

Total stockholders' equity for all subsidiaries at December 31, 2015, was $930,360,000 of which $900,548,000 was restricted from dividend distribution to the Corporation.

The Corporation has a Dividend Reinvestment and Stock Purchase Plan, enabling stockholders to elect to have their cash dividends on all shares automatically reinvested in additional shares of the Corporation’s common stock. In addition, stockholders may elect to make optional cash payments up to an aggregate of $2,500 per quarter for the purchase of additional shares of common stock.  The stock is credited to participant accounts at fair market value.  Dividends are reinvested on a quarterly basis.

Preferred Stock

On September 22, 2011, the Corporation entered into a Securities Purchase Agreement with the Treasury, pursuant to which the Corporation issued 90,782.94 shares of the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”), having a liquidation amount per share equal to $1,000, for a total purchase price of $90,782,940. The Purchase Agreement was entered into, and the Series B Preferred Stock was issued, pursuant to the SBLF program, a $30 billion fund established under the Small Business Jobs Act of 2010, that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion.

On January 3, 2013, the Corporation redeemed 22,695.94 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $22,695,940 plus accrued but unpaid dividends. Following the redemption, the Treasury held 68,087 shares of the Series B Preferred Stock representing a remaining liquidation amount of approximately $68 million.

On July 2, 2013, the Corporation redeemed an additional 34,044 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,044,000 plus accrued but unpaid dividends. Following the redemption, the Treasury held 34,043 shares of the Series B Preferred Stock representing a remaining liquidation amount of approximately $34 million.

On November 22, 2013, the Corporation redeemed the final 34,043 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,043,000 plus accrued but unpaid dividends. There are no shares of the Corporation's Series B Preferred Stock currently outstanding.

CFS Acquisition

On November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp, Inc. ("CFS") in an all stock transaction. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS Bancorp common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million.

Community Acquisition

On November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of First Merchants' common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

Ameriana Acquisition

On December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp, Inc., ("Ameriana"). Pursuant to the merger agreement, each Ameriana shareholder received 0.9037 of a share of First Merchants common stock for each outstanding share of Ameriana Bancorp common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

86

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 17

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of December 31, 2015 and 2014:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale			Unrealized Gains (Losses) on Securities Available for Sale for which a Portion of Other-Than-Temporary Impairment has been Recognized in Income			Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Defined Benefit Plans			Total
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)
Other comprehensive income before reclassifications	(37		)				(1,093		)	2,404			1,274
Amounts reclassified from accumulated other comprehensive income	(1,736		)				928			(198		)	(1,006		)
Period change	(1,773		)	—			(165		)	2,206			268
Balance at December 31, 2015	$	12,325		$	—		$	(2,347	)	$	(11,340	)	$	(1,362	)
Balance at December 31, 2013	$	1,566		$	(1,847	)	$	(501	)	$	(5,628	)	$	(6,410	)
Other comprehensive income before reclassifications	14,860			1,847			(2,599		)	(7,580		)	6,528
Amounts reclassified from accumulated other comprehensive income	(2,328		)				918			(338		)	(1,748		)
Period change	12,532			1,847			(1,681		)	(7,918		)	4,780
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the twelve months ended December 31, 2015, 2014 and 2013:

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2015			2014			2013			Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	2,670		$	3,581		$	487		Other income - net realized gains on sales of available for sale securities
Related income tax expense	(934		)	(1,253		)	(170		)	Income tax expense
	$	1,736		$	2,328		$	317
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(1,427	)	$	(1,411	)	$	(935	)	Interest expense - subordinated debentures and term loans
Related income tax benefit	499			493			327			Income tax expense
	$	(928	)	$	(918	)	$	(608	)
Unrealized gains (losses) on defined benefit plans
Amortization of net loss and prior service costs	$	305		$	520		$	(1,765	)	Other expenses - salaries and employee benefits
Related income tax benefit (expense)	(107		)	(182		)	618			Income tax expense
	$	198		$	338		$	(1,147	)
Total reclassifications for the period, net of tax	$	1,006		$	1,748		(1,438		)

⁽¹⁾ For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive income see Note 4. INVESTMENT SECURITIES.

⁽²⁾ For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see Note 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.

87

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 18

REGULATORY CAPITAL

Capital adequacy is an important indicator of financial stability and performance.  The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category.  The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 capital, and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity.  The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.  

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.  Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels.  The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.  Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III was effective for the Corporation on January 1, 2015. Basel III requires the Corporation and the Bank to maintain minimum amounts and ratio of common equity tier 1 capital to risk weighted assets, as defined in the regulation. Under the new Basel III rules, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer above the adequately capitalized common equity tier 1 capital to risk-weighted assets ratio. The capital conservation buffer is being phased in from zero percent to 2.50 percent by 2019. Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. Regulatory capital ratios at December 31, 2015, were calculated under Basel III while regulatory capital ratios at December 31, 2014, were calculated under Basel I.

As of December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized. There is no threshold for well capitalized status for bank holding companies. The Corporation's and Bank's actual and required capital ratios as of December 31, 2015 and December 31, 2014 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	783,776	14.94	%	$	419,809	8.00	%	N/A		N/A
First Merchants Bank	739,793		13.98		423,242		8.00		$	529,052	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	656,323	12.51	%	$	314,857	6.00	%	N/A		N/A
First Merchants Bank	677,340		12.80		317,431		6.00		$	423,242	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	603,063	11.49	%	$	236,143	4.50	%	N/A		N/A
First Merchants Bank	677,340		12.80		238,074		4.50		$	343,884	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	656,323	10.85	%	$	242,001	4.00	%	N/A		N/A
First Merchants Bank	677,340		11.22		241,423		4.00		$	301,779	5.00	%
					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	685,507	15.34	%	$	357,581	8.00	%	N/A		N/A
First Merchants Bank	653,169		14.64		356,884		8.00		$	446,105	10.00	%
Tier 1 capital to risk weighted assets
First Merchants Corporation	$	564,535	12.63	%	$	178,791	4.00	%	N/A		N/A
First Merchants Bank	597,305		13.39		178,442		4.00		$	267,663	6.00	%
Tier 1 capital to average assets
First Merchants Corporation	$	564,535	10.15	%	$	222,533	4.00	%	N/A		N/A
First Merchants Bank	597,305		10.56		226,339		4.00		$	282,953	5.00	%

88

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 19

LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets.  The loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Fannie Mae, and Federal Home Loan Bank of Indianapolis, and the unpaid balances totaled $312,204,000, $254,223,000 and $271,871,000 at December 31, 2015, 2014 and 2013, respectively.  The amount of capitalized servicing assets is considered immaterial.

NOTE 20

SHARE-BASED COMPENSATION

Stock options and restricted stock awards ("RSAs") have been issued to directors, officers and other management employees under the Corporation's 1999 Long-term Equity Incentive Plan and the 2009 Long-term Equity Incentive Plan.  The stock options, which have a ten-year life, become 100 percent vested ranging from six months to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant.  RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSA's vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. RSAs for employees and non-employee directors retired from the Corporation are either immediately vested at retirement or continue to vest after retirement, depending on the plan under which the shares were granted. Deferred stock units ("DSUs") can be credited to non-employee directors who elect to defer payment of compensation under the Corporation's 2008 Equity Compensation Plan for Non-employee Directors.  DSUs credited are equal to the restricted shares that the non-employee director would have received under the plan.  As of December 31, 2015, the Corporation did not have any outstanding DSUs.

The Corporation’s 2009 Employee Stock Purchase Plan (“ESPP”) provides eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $25,000.

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings. Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the years ended December 31, 2015, 2014, and 2013 was $2,270,000, $2,177,000, and $1,773,000, respectively, and has been recognized as a component of salaries and benefits expense in the accompanying CONSOLIDATED STATEMENTS OF INCOME.

There were no stock options granted in 2015. The estimated fair value of the stock options granted during 2014 and 2013 was calculated using a Black-Scholes option pricing model.  The following summarizes the assumptions used in the Black-Scholes model for those options granted in 2014 and 2013:

	2014			2013
Risk-free interest rate	2.41	%		1.25	%
Expected price volatility	45.05	%		45.68	%
Dividend yield	2.73	%		2.96	%
Forfeiture rate	5.46	%		4.73	%
Weighted-average expected life, until exercise	7.74		years	7.27		years

The Black-Scholes model incorporates assumptions used to value share-based awards. The risk-free rate of interest, for periods equal to the expected life of the option, is based on a U.S. government instrument over a similar contractual term of the equity instrument. Expected price volatility is based on historical volatility of the Corporation’s common stock.  In addition, the Corporation generally uses historical information to determine the dividend yield and weighted-average expected life of the options until exercise. Separate groups of employees that have similar historical exercise behavior with regard to option exercise timing and forfeiture rates are considered separately for valuation and attribution purposes.

89

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

Share-based compensation expense recognized in the CONSOLIDATED STATEMENTS OF INCOME is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 5.5 percent for the year ended December 31, 2015, based on historical experience.

The following table summarizes the components of the Corporation's share-based compensation awards recorded as expense:

	Year Ended December 31,			Year Ended December 31,			Year Ended December 31,
	2015			2014			2013
Stock and ESPP Options
Pre-tax compensation expense	$	101		$	237		$	253
Income tax expense (benefit)	4			(47		)	(16		)
Stock and ESPP option expense, net of income taxes	$	105		$	190		$	237
Restricted Stock Awards
Pre-tax compensation expense	$	2,169		$	1,940		$	1,520
Income tax benefit	(749		)	(679		)	(531		)
Restricted stock awards expense, net of income taxes	$	1,420		$	1,261		$	989
Total Share-Based Compensation:
Pre-tax compensation expense	$	2,270		$	2,177		$	1,773
Income tax benefit	(745		)	(726		)	(547		)
Total share-based compensation expense, net of income taxes	$	1,525		$	1,451		$	1,226

As of December 31, 2015, unrecognized compensation expense related to RSAs was $3,269,000 and is expected to be recognized over weighted-average period of 1.28 years. The Corporation did not have any unrecognized compensation expense related to stock options as of December 31, 2015.

Stock option activity under the Corporation's stock option plans, as of December 31, 2015, and changes during the year ended December 31, 2015, were as follows:

	Number of Shares		Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2015	737,931		$	20.99
Exercised	(96,066	)	$	15.21
Canceled	(199,853	)	$	25.99
Outstanding December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Vested and Expected to Vest at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Exercisable at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319

There were no options granted during the year ended December 31, 2015. The weighted-average grant date fair value was $8.13 and $5.73 for stock options granted during the years ended December 31, 2014 and 2013, respectively.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on December 31, 2015.  The amount of aggregate intrinsic value will change based on the fair market value of the Corporation's common stock.  

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2015 and 2014 was $921,000 and $392,000, respectively. Cash receipts of stock options exercised during 2015 and 2014 were $1,461,000 and $504,000, respectively.

90

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The following table summarizes information on unvested RSAs outstanding as of December 31, 2015:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2015	385,450		$	15.65
Granted	125,050		$	23.48
Forfeited	(6,419	)	$	17.99
Vested	(149,577	)	$	11.88
Unvested RSAs at December 31, 2015	354,504		$	19.65

The grant date fair value of ESPP options was estimated at the beginning of the October 1, 2015, quarterly offering period of approximately $23,000. The ESPP options vested during the three months ending December 31, 2015, leaving no unrecognized compensation expense related to unvested ESPP options at December 31, 2015.

NOTE 21

PENSION AND OTHER POST RETIREMENT BENEFIT PLANS

The Corporation’s defined-benefit pension plans cover approximately 20 percent of the Corporation’s employees. In 2005, the Board of Directors of the Corporation approved the curtailment of the accumulation of defined benefits for future services provided by certain participants in the First Merchants Corporation Retirement Plan. No additional pension benefits have been earned by any employees who had not attained both the age of 55 and accrued at least 10 years of vesting service as of March 1, 2005. The benefits are based primarily on years of service and employees’ pay near retirement. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. The Corporation also maintains post retirement benefit plans that provide health insurance benefits to retirees. The plans allow retirees to be carried under the Corporation’s health insurance plan, generally from ages 55 to 65. The retirees pay 100 percent of the premiums due for their coverage. The table below sets forth the plans’ funded status and amounts recognized in the consolidated balance sheets at December 31, using measurement dates of December 31, 2015 and 2014.

	2015			2014
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	80,650		$	62,270
Service cost	55			73
Interest cost	3,087			3,235
Actuarial loss (gain)	(5,617		)	12,968
Benefits paid	(6,428		)	(5,541		)
Net transfers in from CFS acquisition				7,645
Benefit obligation at end of year	$	71,747		$	80,650
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	77,139		$	69,871
Actual return on plan assets	153			5,232
Employer contributions	532			504
Benefits paid	(6,428		)	(5,541		)
CFS acquisition				7,073
End of year	71,396			77,139
Funded status at end of year	$	(351	)	$	(3,511	)
Assets and Liabilities Recognized in the Balance Sheets:
Deferred tax asset	$	7,461		$	8,541
Assets	$	4,006		$	1,329
Liabilities	$	4,357		$	4,840
Amounts Recognized in Accumulated Other Comprehensive Income Not Yet Recognized as Components of Net Periodic (Benefit) Cost Consist of:
Accumulated loss	$	(13,857	)	$	(15,863	)
Prior service credit	(305		)	(346		)
	$	(14,162	)	$	(16,209	)

91

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The actuarial gain recognized in 2015 was primarily due to an increase in the discount rate assumption from 4.00% at December 31, 2014 to 4.50% at December 31, 2015. The actuarial loss recognized in 2014 was primarily due to two factors. The first factor was a decrease in the discount rate assumption from 4.80% at December 31, 2013 to 4.00% at December 31, 2014. The second factor contributing to the loss was the Corporation's adoption of the Society of Actuaries new mortality tables.

Ameriana participated in the Pentegra Defined Benefit Plan for Financial Institutions (the "Pentegra Plan”), an industry-wide, tax-qualified defined-benefit pension plan. The Pentegra Plan operated as a multi-employer plan for accounting purposes and as a multiple employer plan under ERISA and the Internal Revenue Code. On November 20, 2015, Ameriana provided Pentegra a 60-day written notice of withdrawal as a Participating Employer in the Pentegra Plan. Upon completion of the withdrawal from the Pentegra Plan, the assets and liabilities will be merged into the First Merchants Corporation Retirement Plan. A liability of $5,435,000 has been recorded as the estimated final contribution to the Pentegra Plan to complete the withdrawal. The merging of the plan assets and liabilities is expected to occur in early 2016.

The accumulated benefit obligation for all defined benefit plans was $71,747,000 and $80,650,000 at December 31, 2015 and 2014, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets is included in the table below.

	December 31, 2015		December 31, 2014
Projected benefit obligation	$	4,357	$	4,840
Accumulated benefit obligation	$	4,357	$	4,840
Fair value of plan assets

The following table shows the components of net periodic pension costs:

	December 31, 2015			December 31, 2014			December 31, 2013
Service cost	$	55		$	73		$	131
Interest cost	3,087			3,235			2,670
Expected return on plan assets	(4,471		)	(4,467		)	(4,265		)
Amortization of prior service costs	64			81			25
Amortization of net loss	1,722			478			2,131
Net periodic pension (benefit) cost	$	457		$	(600	)	$	692

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

	December 31, 2015		December 31, 2014			December 31, 2013
Net periodic pension (benefit) cost	$	457	$	(600	)	$	692
Net gain (loss)	1,299		(12,203		)	11,942
Amortization of loss	1,722		478			2,131
Amortization of prior service cost	64		81			25
Total recognized in other comprehensive income (loss)	3,085		(11,644		)	14,098
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	2,628	$	(11,044	)	$	13,406

The estimated net loss and transition obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic pension cost over the next fiscal year are:

	December 31, 2015			December 31, 2014			December 31, 2013
Amortization of net loss	$	(1,505	)	$	(1,770	)	$	(533	)
Amortization of prior service cost	(61		)	(64		)	(25		)
Total	$	(1,566	)	$	(1,834	)	$	(558	)

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(table dollar amounts in thousands, except share data)

Significant assumptions include:

	December 31, 2015		December 31, 2014		December 31, 2013
Weighted-average Assumptions Used to Determine Benefit Obligation:
Discount rate	4.50	%	4.00	%	4.80	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%
Weighted-average Assumptions Used to Determine Cost:
Discount rate	4.00	%	4.80	%	4.00	%
Expected return on plan assets	6.00	%	6.00	%	7.00	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%

At December 31, 2015 and 2014, the Corporation based its estimate of the expected long-term rate of return on analysis of the historical returns of the plans and current market information available. The plans’ investment strategies are to provide for preservation of capital with an emphasis on long-term growth without undue exposure to risk. The assets of the plans’ are invested in accordance with the plans’ Investment Policy Statement, subject to strict compliance with Employee Retirement Income Security Act of 1974 ("ERISA") and any other applicable statutes.

The plans’ risk management practices include quarterly evaluations of investment managers, including reviews of compliance with investment manager guidelines and restrictions; ability to exceed performance objectives; adherence to the investment philosophy and style; and ability to exceed the performance of other investment managers. The evaluations are reviewed by management with appropriate follow-up and actions taken, as deemed necessary. The Investment Policy Statement generally allows investments in cash and cash equivalents, real estate, fixed income debt securities and equity securities, and specifically prohibits investments in derivatives, options, futures, private placements, short selling, non-marketable securities and purchases of non-investment grade bonds.

At December 31, 2015, the maturities of the plans’ debt securities ranged from 15 days to 9.04 years, with a weighted average maturity of 4.47 years. At December 31, 2014, the maturities of the plans’ debt securities ranged from 15 days to 9.59 years, with a weighted average maturity of 5.02 years.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as of December 31, 2015. The minimum contribution required in 2016 will likely be zero but the Corporation may decide to make a discretionary contribution during the year.

2016	$	4,814
2017	4,729
2018	4,657
2019	4,838
2020	4,772
After 2020	24,440
	$	48,250

Plan assets are re-balanced quarterly. At December 31, 2015 and 2014, plan assets by category are as follows:

	December 31, 2015				December 31, 2014
	Actual		Target		Actual		Target
Cash and cash equivalents	2.2	%	2.0	%	2.6	%	2.0	%
Equity securities	58.1		60.0		58.7		60.0
Debt securities	37.4		36.0		36.5		36.0
Alternative investments	2.3		2.0		2.2		2.0
	100.0	%	100.0	%	100.0	%	100.0	%

The First Merchants Corporation Retirement and Income Savings Plan (the “Savings Plan”), a Section 401(k) qualified defined contribution plan, was amended on March 1, 2005 to provide enhanced retirement benefits, including employer and matching contributions, for eligible employees of the Corporation and its subsidiaries. The Corporation matches employees’ contributions primarily at the rate of 50 percent for the first 6 percent of base salary contributed by participants.

Beginning in 2005, employees who have completed 1000 hours of service and are an active employee on the last day of the year receive an additional retirement contribution after year-end. Employees hired after January 1, 2010 do not participate in the additional retirement contribution. Effective January 1, 2013, the additional retirement contribution was fixed at 2 percent. Full vesting occurs after five years of service. The Corporation’s expense for the Savings Plan, including the additional retirement contribution, was $3,526,000, $3,396,000 and $3,138,000 for 2015, 2014 and 2013, respectively.

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(table dollar amounts in thousands, except share data)

The Corporation maintains post retirement benefit plans that provide health insurance benefits to retirees. The plans allow retirees to be carried under the Corporation’s health insurance plan, generally from ages 55 to 65. The retirees pay 100 percent of the premiums due for their coverage. The obligations payable under the plans totaled $1,403,000 and $1,811,000 at December 31, 2015 and 2014, respectively. Post retirement plan expense totaled $(127,000), $97,000 and $519,000 for the years ending December 31, 2015, 2014 and 2013, respectively.

Pension Plan Assets

Following is a description of the valuation methodologies used for pension plan assets measured at fair value on a recurring basis, as well as the general classification of pension plan assets pursuant to the valuation hierarchy.

Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation hierarchy.  Level 1 plan assets total $52,433,000 and include cash and cash equivalents, common stocks, mutual funds and corporate bonds and notes.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of plan assets with similar characteristics or discounted cash flows.  Level 2 plan assets total $18,963,000 and include governmental agencies, taxable municipals, common collective trust investments (which are classified below as Party-in-Interest investments -- common bond fund and common equity fund) and certificates of deposit.  In certain cases where Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy.  There are no assets classified within Level 3 of the hierarchy at December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	1,608	$	1,608
Corporate Bonds and Notes	9,113		9,113
Government Agency and Municipal Bonds and Notes	6,993				$	6,993
Certificates of Deposit	1,511				1,511
Party-in-Interest Investments
Common Stock	1,538		1,538
Common Bond Fund	4,647				4,647
Common Equity Fund	5,812				5,812
Mutual Funds
Taxable Bond	4,536		4,536
Large Cap Equity	18,528		18,528
Mid Cap Equity	8,537		8,537
Small Cap Equity	3,578		3,578
International Equity	3,353		3,353
Specialty Alternative Equity	1,642		1,642
	$	71,396	$	52,433	$	18,963

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	2,032	$	2,032
Corporate Bonds and Notes	9,384		9,384
Government Agency and Municipal Bonds and Notes	8,252				$	8,252
Certificates of Deposit	1,001				1,001
Party-in-Interest Investments
Common Stock	1,376		1,376
Common Bond Fund	4,615				4,615
Common Equity Fund	5,858				5,858
Mutual Funds
Taxable Bond	4,987		4,987
Large Cap Equity	21,185		21,185
Mid Cap Equity	9,434		9,434
Small Cap Equity	3,872		3,872
International Equity	3,474		3,474
Specialty Alternative Equity	1,669		1,669
	$	77,139	$	57,413	$	19,726

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(table dollar amounts in thousands, except share data)

NOTE 22

INCOME TAX

The reconciliation between the statutory and actual income tax expense (benefit) is summarized in the following table for the years indicated:

	2015			2014			2013
Income Tax Expense for the Year Ended December 31:
Currently Payable:
Federal	$	21,221		$	7,075		$	13,737
State
Deferred:
Federal	3,952			14,538			2,147
State	492			510
Total Income Tax Expense	$	25,665		$	22,123		$	15,884
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 35%	$	31,867		$	28,800		$	21,145
Tax-exempt Interest Income	(7,083		)	(5,148		)	(3,923		)
Basis Difference on Sale of Insurance Subsidiary	2,252
Stock Compensation	34			36			50
Earnings on Life Insurance	(1,012		)	(1,271		)	(905		)
Tax Credits	(583		)	(911		)	(857		)
Other	190			617			374
Actual Tax Expense	$	25,665		$	22,123		$	15,884

Tax expense applicable to security gains and losses, including unrealized losses relating to other-than-temporary impairment charges, for the years ended December 31, 2015, 2014 and 2013, was $435,000, $760,000 and $157,000, respectively.

The Corporation or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  With a few exceptions, the Corporation is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2012.

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	2015			2014
Deferred Tax Asset at December 31:
Assets:
Differences in Accounting for Loan Losses	$	25,867		$	26,665
Differences in Accounting for Loan Fees	762			747
Differences in Accounting for Loans and Securities	9,359			9,910
Deferred Compensation	5,100			5,234
Difference in Accounting for Pensions and Other Employee Benefits	2,247			1,084
Federal & State Income Tax Loss Carryforward and Credits	23,737			23,977
Other	9,310			8,535
Total Assets	76,382			76,152
Liabilities:
Differences in Depreciation Methods	7,742			8,220
State Income Tax	591			591
Net Unrealized Gain on Securities Available for Sale	6,636			7,591
Gain on FDIC Modified Whole Bank Transaction	1,405			1,694
Other	717			1,096
Total Liabilities	17,091			19,192
Net Deferred Tax Asset Before Valuation Allowance	59,291			56,960
Valuation allowance:
Beginning Balance	(17,568		)	(17,171		)
Decrease/(Increase) During the Year	1,832			(397		)
Ending Balance	(15,736		)	(17,568		)
Net Deferred Tax Asset	$	43,555		$	39,392

95

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

The $4,163,000 increase in the Corporation’s net deferred tax asset was primarily driven by a $9,262,000 increase resulting from the Ameriana acquisition. The largest offsetting deferred tax asset decreases not related to the Ameriana acquisition were associated with accounting for loans, federal net operating loss carryforwards, deferred compensation, and allowance for loan losses of $1,873,000, $1,662,000, $857,000 and $789,000, respectively. The deferred tax asset decreases were partially offset by a decline in the deferred tax liability associated with the accounting for unrealized gains on available for sale securities of $955,000.

The Corporation has recorded a valuation allowance of $15,736,000 related to deferred state taxes as it does not anticipate having future state taxable income sufficient to fully utilize the deferred state tax asset.  This is primarily due to the Corporation’s current tax structure as discussed in the “INCOME TAXES” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as item 7 of this Annual Report on Form 10-K.

As of December 31, 2015, the Corporation had approximately $121,626,000 of state tax loss carryforward available to offset future state taxes.  This state loss carryforward has a valuation allowance of approximately $120,369,000.

The Corporation has additional paid-in capital that is considered restricted resulting from the acquisitions of CFS and Ameriana of approximately $13,393,000 and $11,883,000, respectively. CFS and Ameriana qualified as a banks under provisions of the Internal Revenue Code which permitted them to deduct from taxable income an allowance for bad debts which differed from the provision for losses charged to income. No provision for income taxes had been provided. If in the future this portion of additional paid-in capital is distributed, or the Corporation no longer qualifies as a bank for income tax purposes, income taxes may be imposed at the then applicable tax rates. The unrecorded deferred tax liability at December 31, 2015, would have been approximately $8,847,000.

NOTE 23

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average shares outstanding during the reporting period. Diluted net income per share is computed by dividing net income by the combination of all dilutive common share equivalents, comprised of shares issuable under the Corporation’s share-based compensation plans, and the weighted-average shares outstanding during the reporting period.

Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of share-based awards, the amount of compensation expense, if any, for future service that the Corporation has not yet recognized, and the amount of estimated tax benefits that would be recorded in additional paid-in capital when share-based awards are exercised, are assumed to be used to repurchase common stock in the current period.

The following table reconciles basic and diluted net income per share for the years indicated:

	2015					2014					2013
			Weighted-Average Shares					Weighted-Average Shares						Weighted-Average Shares
Basic net income per share:	$	65,384				$	60,162				$	44,530
Preferred stock dividends											(2,380		)
Net income available to common stockholders	65,384		37,816,399	$	1.73	60,162		36,266,356	$	1.66	42,150			29,731,420	$	1.42
Effect of dilutive stock options and warrants			271,834					288,253						276,960
Diluted net income per share:
Net income available to common stockholders	$	65,384	38,088,233	$	1.72	$	60,162	36,554,609	$	1.65	$	42,150		30,008,380	$	1.41

Options to purchase 286,119, 543,514, and 800,674 shares of common stock with weighted average exercise prices of $19.99, $20.99, and $21.32 at December 31, 2015, 2014 and 2013 respectively, were excluded from the computation of diluted net income per share because the options exercise price was greater than the average market price of the common stock.

96

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 24

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following table sets forth certain quarterly results for the years ended December 31, 2015 and 2014:

	2015								2014
	First		Second		Third		Fourth		First		Second		Third		Fourth
Interest income	$	52,944	$	55,202	$	56,538	$	56,514	$	51,009	$	51,527	$	53,290	$	53,053
Interest expense	5,968		6,171		6,215		6,440		5,117		5,408		5,424		5,893
Net interest income	46,976		49,031		50,323		50,074		45,892		46,119		47,866		47,160
Provision for loan losses			417										1,600		960
Net interest income after provision for loan losses	46,976		48,614		50,323		50,074		45,892		46,119		46,266		46,200
Non-interest income	16,232		24,633		16,899		14,767		15,434		16,179		18,412		16,375
Non-interest expense	41,202		46,423		43,598		46,246		43,089		41,250		42,576		41,677
Income before income tax expense	22,006		26,824		23,624		18,595		18,237		21,048		22,102		20,898
Income tax expense	5,834		8,856		6,557		4,418		4,617		5,888		5,980		5,638
Net income available to common stockholders	$	16,172	$	17,968	$	17,067	$	14,177	$	13,620	$	15,160	$	16,122	$	15,260
Basic EPS	$	0.43	$	0.47	$	0.46	$	0.37	$	0.38	$	0.42	$	0.45	$	0.41
Diluted EPS	$	0.43	$	0.47	$	0.45	$	0.37	$	0.38	$	0.41	$	0.45	$	0.41
Average Shares Outstanding:
Basic	37,709,883		37,793,448		37,850,827		37,908,873		35,956,436		36,026,763		36,054,867		37,018,014
Diluted	38,000,074		38,043,359		38,118,199		38,190,694		36,260,624		36,294,149		36,328,981		37,323,276

NOTE 25

CONDENSED FINANCIAL INFORMATION (parent company only)

Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Corporation.

Condensed Balance Sheets

	December 31, 2015		December 31, 2014
Assets
Cash	$	43,622	$	36,044
Investment in subsidiaries	932,372		820,123
Goodwill	448		448
Other assets	9,668		6,281
Total assets	$	986,110	$	862,896
Liabilities
Borrowings	$	127,663	$	126,702
Other liabilities	7,938		9,367
Total liabilities	135,601		136,069
Stockholders' equity	850,509		726,827
Total liabilities and stockholders' equity	$	986,110	$	862,896

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(table dollar amounts in thousands, except share data)

Condensed Statements of Income and Comprehensive Income

	December 31, 2015			December 31, 2014		December 31, 2013
Income
Dividends from subsidiaries	$	39,032		$	53,231	$	63,732
Gain on the sale of insurance subsidiary	8,265
Gain on cancellation of subordinated debentures	1,250
Other income	197			538		45
Total income	48,744			53,769		63,777
Expenses
Interest expense	6,661			6,616		3,531
Salaries and employee benefits	3,023			3,128		3,284
Net occupancy and equipment expenses	464			442		258
Other outside services	1,455			458		1,141
Professional services	636			409		648
Other expenses	1,234			1,132		870
Total expenses	13,473			12,185		9,732
Income before income tax benefit (expense) and equity in undistributed income of subsidiaries	35,271			41,584		54,045
Income tax benefit (expense)	(974		)	3,999		3,153
Income before equity in undistributed income of subsidiaries	34,297			45,583		57,198
Equity in undistributed (distributions in excess of) income of subsidiaries	31,087			14,579		(12,668		)
Net income	65,384			60,162		44,530
Preferred stock dividends and discount accretion						(2,380		)
Net income available to common stockholders	$	65,384		$	60,162	$	42,150
Net income	$	65,384		$	60,162	$	44,530
Other comprehensive income (loss)	268			4,780		(911		)
Comprehensive income	$	65,652		$	64,942	$	43,619

Condensed Statement of Cash Flows

	Year Ended December 31,
	2015			2014			2013
Cash Flow From Operating Activities:
Net income	$	65,384		$	60,162		$	44,530
Adjustments to Reconcile Net Income to Net Cash:
Share-based compensation	843			887			778
Distributions in excess of (equity in undistributed) income of subsidiaries	(31,087		)	(14,579		)	12,668
Gain on sale of insurance subsidiary	(8,265		)
Gain on cancellation of subordinated debentures	(1,250		)
Net Change in:
Other assets	(441		)	2,425			(1,354		)
Other liabilities	(1,486		)	1,466			(8,438		)
Investment in subsidiaries - operating activities	197			(4,517		)	12,991
Net cash provided by operating activities	23,895			45,844			61,175
Cash Flow From Investing Activities:
Net cash paid in acquisition	(14,500		)	(12,832		)
Proceeds from business divestitures	16,000
Other	575						240
Net cash provided (used) in investing activities	2,075			(12,832		)	240
Cash Flow From Financing Activities:
Cash dividends	(15,654		)	(10,694		)	(7,992		)
Repayment of borrowings	(3,750		)				(55,000		)
Proceeds from issuance of long-term debt							70,000
Preferred stock redemption under small business lending fund							(90,783		)
Stock issued under employee benefit plans	460			478			479
Stock issued under dividend reinvestment and stock purchase plan	661			523			325
Stock options exercised	1,531			564			115
Stock redeemed	(1,640		)	(1,067		)	(491		)
Net cash used by financing activities	(18,392		)	(10,196		)	(83,347		)
Cash, beginning of the year	36,044			13,228			35,160
Cash, end of year	$	43,622		$	36,044		$	13,228

98

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(table dollar amounts in thousands, except share data)

NOTE 26

ACCOUNTING MATTERS

FASB Accounting Standards Updates No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): recognition and Measurement of Financial Assets and Financial Liabilities

The FASB has issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities.

The new guidance makes targeted improvements to existing U.S. GAAP by:

Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;

• Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;

• Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;

• Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;

• Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and

• Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. In addition, the new guidance permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

FASB ACCOUNTING STANDARDS Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.

The FASB has issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments.

U.S. GAAP currently requires that during the measurement period, the acquirer retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. Those adjustments are required when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The acquirer also must revise comparative information for prior periods presented in financial statements as needed, including revising depreciation, amortization, or other income effects as a result of changes made to provisional amounts.

The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

The amendments require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

The only disclosures required at transition should be the nature of and reason for the change in accounting principle. An entity should disclose that information in the first annual period of adoption and in the interim periods within the first annual period if there is a measurement-period adjustment during the first annual period in which the changes are effective.

99

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

FASB Accounting Standards Update No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.

The FASB has issued Accounting Standards Update (ASU) No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements.

Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This ASU was effective upon issuance (August 18, 2015) and adoption did not have a significant effect on the Corporation’s consolidated financial statements.

FASB Accounting Standards Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

The FASB has issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.

The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability).

For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that have not been previously issued. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

FASB Accounting Standards Update No. 2015-01, Eliminating the Concept of Extraordinary Items

The FASB has issued Accounting Standards Update (ASU) No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements.

This ASU eliminates from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.

If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item.

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

100

PART II: ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

NOTE 27

GENERAL LITIGATION

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

NOTE 28

SUBSEQUENT EVENTS

On February 9, 2016, the Board of Directors of the Corporation approved a stock repurchase program of up to $15 million of the outstanding shares of the Corporation’s common stock.  At the February 9, 2016 trading price of the shares, this amount would represent approximately 1.7% of the number of shares outstanding.  The shares may be purchased from time to time in open market transactions at prevailing market prices in accordance with federal securities laws.  The Corporation is not obligated to purchase any shares under the program, and the program may be discontinued at any time.  The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Corporation at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

101

PART II: ITEM 9., ITEM 9A. AND ITEM 9B.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

In connection with its audits for the two most recent fiscal years ended December 31, 2015, there have been no disagreements with the Corporation’s independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure or audit scope or procedure, nor have there been any changes in accountants.

ITEM 9A.  CONTROLS AND PROCEDURES

At the end of the period covered by this report (the “Evaluation Date”), the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Corporation’s disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Corporation reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of First Merchants Corporation (the “Corporation”) is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting is designed to provide reasonable assurance to the Corporation’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. As part of its function of assisting the Corporation’s Board of Directors in discharging its responsibility of ensuring financial reporting and regulatory risks to the organization are properly being managed, mitigated and monitored by Management, the Audit Committee of the Board of Directors oversees management’s internal controls over financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria set forth in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management has determined that the Corporation’s internal control over financial reporting as of December 31, 2015 is effective based on the specified criteria. As permitted, the Corporation excluded the operations of Ameriana Bancorp, Inc., acquired on December 31, 2015, from the scope of management's report on internal control over financial reporting.

There have been no changes in the Corporation’s internal controls over financial reporting identified in connection with the evaluation referenced above that occurred during the Corporation’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

BKD, LLP, the independent registered public accounting firm that audited the financial statements included in Item 8 of this Annual Report on Form 10-K, has issued an attestation report on the Corporation’s internal control over financial reporting as of December 31, 2015, which appears as follows.

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PART II: ITEM 9., ITEM 9A. AND ITEM 9B.

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

First Merchants Corporation

Muncie, Indiana

We have audited First Merchants Corporation's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Corporation's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was

maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements in accordance with accounting principles generally accepted in the United States of

America. Because management's assessment and our audit were also conducted to meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA), our examination of Corporation's internal control over financial reporting included controls over the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and with the instructions to the Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C). A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

As permitted, the Corporation excluded the operations of Ameriana Bancorp acquired on December 31, 2015, from the scope of management’s report on internal control over financial reporting. As such, this entity has also been executed from the scope of our audit of internal control over financial reporting.

In our opinion, First Merchants Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of First Merchants Corporation and our report dated February 29, 2016, expressed an unqualified opinion thereon.

BKD, LLP

Indianapolis, Indiana

February 29, 2016

ITEM 9B. OTHER INFORMATION

None

103

PART III: ITEM 10., ITEM 11., ITEM 12., ITEM 13. AND ITEM 14.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information in the Corporation’s Proxy Statement dated March 23, 2016 to be furnished to its stockholders in connection with an annual meeting to be held May 2, 2016 (the “2016 Proxy Statement”), under the captions "BOARD OF DIRECTORS”; “CORPORATE GOVERNANCE”; "BOARD COMMITTEES - AUDIT COMMITTEE"; and "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE", is expressly incorporated herein by reference. The information required under this item relating to executive officers is set forth in Part I, “Supplemental Information - Executive Officers of the Registrant” of this Annual Report on Form 10-K.

The Corporation has adopted a Code of Ethics that applies to its Chief Executive Officer, Chief Financial Officer, Chief Banking Officer, Senior Vice President of Finance, Corporate Controller and Corporate Treasurer. It is part of the Corporation’s Code of Business Conduct, which applies to all employees and directors of the Corporation and its affiliates. A copy of the Code of Business Conduct may be obtained, free of charge, by writing to First Merchants Corporation at 200 East Jackson Street, Muncie, IN 47305. In addition, the Code of Ethics is maintained on the Corporation’s website, which can be accessed at https://www.firstmerchants.com.

ITEM 11. EXECUTIVE COMPENSATION

The information in the Corporation’s 2016 Proxy Statement, under the captions, "BOARD COMMITTEES - COMPENSATION AND HUMAN RESOURCES COMMITTEE - Compensation and Human Resources Committee Interlocks and Insider Participation and Compensation and Human Resources Committee Report"; "BOARD COMMITTEES - RISK AND CREDIT POLICY COMMITTEE"; "COMPENSATION OF EXECUTIVE OFFICERS"; and "COMPENSATION OF DIRECTORS" is expressly incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information in the Corporation’s 2016 Proxy Statement, under the captions, "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT", is expressly incorporated herein by reference. The information required under this item relating to equity compensation plans is set forth in Part II, Item 5 under the table entitled “Equity Compensation Plan Information” on this Annual Report on Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information in the Corporation’s 2016 Proxy Statement, under the captions, "CORPORATE GOVERNANCE - BOARD INDEPENDENCE"; and "TRANSACTIONS WITH RELATED PERSONS", is expressly incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information in the Corporation’s 2016 Proxy Statement, under the caption "INDEPENDENT AUDITOR", is expressly incorporated herein by reference.

104

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

FINANCIAL INFORMATION

(a) 1.           The following financial statements are filed as part of this document under Item 8 hereof:

Independent accountants' report

Consolidated balance sheets at December 31, 2015 and 2014

Consolidated statements of income, years ended December 31, 2015, 2014 and 2013

Consolidated statements of comprehensive income, years ended December 31, 2015, 2014 and 2013

Consolidated statements of stockholders' equity, years ended December 31, 2015, 2014 and 2013

Consolidated statements of cash flows, years ended December 31, 2015, 2014 and 2013

Notes to consolidated financial statements

(a) 2.           Financial statement schedules:

All schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or related notes.

(a) 3.           Exhibits:

Exhibit No: Description of Exhibits:

2.1	Agreement and Plan of Reorganization and Merger Between First Merchants Corporation and Ameriana Bancorp dated as of June 26, 2015 (Incorporated by reference to registrant's Form 8-K filed on June 29, 2015)
3.1	First Merchants Corporation Articles of Incorporation, as amended (Incorporated by reference to registrant’s Form 10-Q filed on November 9, 2011) (SEC No. 000-17071)
3.2	Bylaws of First Merchants Corporation dated October 28, 2009 (Incorporated by reference to registrant’s Form 10-Q filed on November 9, 2009) (SEC No. 000-17071)
3.3	First Merchants Corporation Articles of Amendment of the Articles of Incorporation for the Series B Preferred Stock (Incorporated by reference to registrant’s Form 8-K filed on September 23, 2011) (SEC No. 000-17071)
4.1	First Merchants Corporation Amended and Restated Declaration of Trust of First Merchants Capital Trust II dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.2	Indenture dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.3	Guarantee Agreement dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.4	Form of Capital Securities Certification of First Merchants Capital Trust II (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.5	First Merchants Corporation Dividend Reinvestment and Stock Purchase Plan (Incorporated by reference to registrant’s Post-Effective Amendment No. 1 to Form S-3 filed on August 21, 2009) (SEC 033-45393)
4.6	Upon request, the registrant agrees to furnish supplementally to the Commission a copy of the instruments defining the rights of holders of its (a) 5.00% Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75% Fixed-to-Floating Rate Subordinated Notes due 2028 in aggregate principal amount of $65 million.
10.1	First Merchants Corporation Senior Management Incentive Compensation Program, dated February 26, 2015 (Incorporated by reference to registrant's Form 10-K filed on February 27, 2015) (1)
10.2	First Merchants Corporation Equity Compensation Plan for Non-Employee Directors, effective as amended January 1, 2015 (Incorporated by reference to the registrant's Form 10-K filed on February 27, 2015) (1)
10.3	First Merchants Corporation 2009 Long-Term Equity Incentive Plan, effective as amended January 1, 2015 (Incorporated by reference to registrant's Form 10-K filed on February 27, 2015) (1)
10.4	First Merchants Corporation Change of Control Agreement, as amended, with Michael C. Rechin dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.5	First Merchants Corporation Change of Control Agreement, as amended, with Mark K. Hardwick dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.6	First Merchants Corporation Change of Control Agreement, as amended, with Michael J. Stewart dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.7	First Merchants Corporation Change of Control Agreement, as amended, with John J. Martin dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.8	First Merchants Corporation Change of Control Agreement, as amended, with Kimberly J. Ellington dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.90	First Merchants Corporation Change of Control Agreement, as amended, with Jeffery B. Lorentson dated June 1, 2011 (Incorporated by reference to registrant’s Form 10-Q filed on August 9, 2011) (SEC No. 000-17071) (1)
10.10	First Merchants Corporation Change of Control Agreement, effective February 11, 2014, with Stephan H. Fluhler (Incorporated by reference to registrant's Form 8-K filed on May 12, 2014) (SEC No. 000-17071) (1)
10.11	Resolution of the Board of Directors of First Merchants Corporation on director compensation dated December 4, 2007 (Incorporated by reference to the registrant's Form 10-K for year ended December 31, 2007) (SEC No. 000-17071) (1)

105

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

10.12	First Merchants Corporation Supplemental Executive Retirement Plan and amendments thereto (Incorporated by reference to registrant's Form 10-K for year ended December 31, 1997) (SEC No. 000-17071) (1)
10.13	First Merchants Corporation Defined Contribution Supplemental Retirement Plan dated January 1, 2006 (Incorporated by reference to registrant's Form 8-K filed on February 6, 2007) (SEC No. 000-17071) (1)
10.14	First Merchants Corporation Participation Agreement of Michael C. Rechin dated January 26, 2007 (Incorporated by reference to registrant's Form 8-K filed on February 6, 2007) (SEC No. 000-17071) (1)
10.15	First Merchants Corporation 2009 Employee Stock Purchase Plan effective July 1, 2009 (Incorporated by reference to registrant's Form 8-K filed on May 11, 2009) (SEC No. 000-17071) (1)
10.16	2011 Executive Deferred Compensation Plan, effective January 1, 2011 (Incorporated by reference to registrant’s Form 8-K filed on November 3, 2011) (SEC No. 000-17071) (1)
10.17	Voting Agreement dated June 26, 2015, by and among First Merchants Corporation and certain shareholders of Ameriana Bancorp (Incorporated by reference to registrant's Form 8-K filed on June 29, 2015) (SEC No. 000-17071)
21	Subsidiaries of registrant (2)
23	Consent of Independent Registered Public Accounting Firm (2)
24	Limited Power of Attorney (2)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (2)
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (2)
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
99.1	Financial statements and independent registered public accounting firm’s report for First Merchants Corporation 2009 Employee Stock Purchase Plan (2004) (2)
101.INS	XBRL Instance Document (3)
101.SCH	XBRL Taxonomy Extension Schema Document (3)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (3)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (3)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (3)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (3)
	(1) Management contract or compensatory plan
	(2) Filed herewith.
	(3) Furnished herewith.

106

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29th day of February, 2016.

FIRST MERCHANTS CORPORATION
By:	/s/ Michael C. Rechin
Michael C. Rechin,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities indicated, on this 29th day of February, 2016.

/s/ Michael C. Rechin	/s/ Mark K. Hardwick
Michael C. Rechin, President and	Mark K. Hardwick, Executive Vice
Chief Executive Officer	President and Chief Financial Officer
(Principal Executive Officer)	(Principal Financial and Accounting Officer)
/s/ Michael R. Becher*	/s/ Michael C. Rechin
Michael R. Becher, Director	Michael C. Rechin, Director
/s/ Roderick English*	/s/ Charles E. Schalliol*
Roderick English, Director	Charles E. Schalliol, Director
/s/ F. Howard Halderman*	/s/ Patrick A. Sherman*
F. Howard Halderman, Director	Patrick A. Sherman, Director
/s/ William L. Hoy*	/s/ Terry L. Walker*
William L. Hoy, Director	Terry L. Walker, Director
/s/ Gary J. Lehman*	/s/ Jean L. Wojtowicz*
Gary J. Lehman, Director	Jean L. Wojtowicz, Director

* By Mark K. Hardwick as Attorney-in Fact pursuant to a Limited Power of Attorney executed by the directors listed above, which Power of Attorney is being filed with the Securities and Exchange Commission as an exhibit hereto.

By:	/s/ Mark K. Hardwick
Mark K. Hardwick
As Attorney-in-Fact February 29, 2016

107

EX-21

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-21

SUBSIDIARIES OF THE REGISTRANT

EXHIBIT 21-SUBSIDIARIES OF THE REGISTRANT

Name	Jurisdiction of Incorporation
First Merchants Bank, National Association	U.S.
FMB Portfolio Management, Inc.	Delaware
FMB Properties, Inc	Maryland
FMB Risk Management, Inc.	Nevada
First Merchants Capital Trust II	Delaware
Ameriana Capital Trust	Delaware
FMB Tax Credit Holdings I, LLC	Indiana
GS Asset Management, LLC	Indiana
WHCC, LLC	Indiana
Ameriana Financial Services	Indiana

EX-23

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EXHIBIT 23 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-50484, 333-80117 and 333-159643) and Form S-3 (File Nos. 033-45393 and 333-158334) of First Merchants Corporation (Corporation) of our reports dated February 29, 2016 on our audits of the consolidated financial statements of the Corporation as of December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015, which report is included in this Annual Report in Form 10-K. We also consent to the incorporation by reference of our report dated February 29, 2016, on our audit of the internal control over financial reporting of the Corporation as of December 31, 2015, which report is included in this Annual Report on Form 10-K.

BKD, LLP

Indianapolis, Indiana

February 29, 2016

EX-24

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-24

LIMITED POWER OF ATTORNEY

EXHIBIT 24-LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned directors and officers of First Merchants Corporation, an Indiana corporation, hereby constitute and appoint Mark K. Hardwick, the true and lawful agent and attorney-in-fact of the undersigned with full power and authority in said agent and attorney-in-fact to sign for the undersigned and in their respective names as directors and officers of the Corporation the Form 10-K of the Corporation to be filed with the Securities and Exchange Commission, Washington, D.C., under the Securities Exchange Act of 1934, as amended, and to sign any amendment to such Form 10-K, hereby ratifying and confirming all acts taken by such agent and attorney-in-fact, as herein authorized.

Dated: February 29, 2016

/s/ Michael C. Rechin	/s/ Mark K. Hardwick
Michael C. Rechin, President and	Mark K. Hardwick, Executive Vice
Chief Executive Officer	President and Chief Financial Officer
(Principal Executive Officer)	(Principal Financial and Accounting Officer)
/s/ Michael R. Becher*	/s/ Michael C. Rechin
Michael R. Becher, Director	Michael C. Rechin, Director
/s/ Roderick English*	/s/ Charles E. Schalliol*
Roderick English, Director	Charles E. Schalliol, Director
/s/ F. Howard Halderman*	/s/ Patrick A. Sherman*
F. Howard Halderman, Director	Patrick A. Sherman, Director
/s/ William L. Hoy*	/s/ Terry L. Walker*
William L. Hoy, Director	Terry L. Walker, Director
/s/ Gary J. Lehman*	/s/ Jean L. Wojtowicz*
Gary J. Lehman, Director	Jean L. Wojtowicz, Director

EX-31.1

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-31.1

FIRST MERCHANTS CORPORATION

FORM 10-K

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

_______________

I, Michael C. Rechin, President and Chief Executive Officer of First Merchants Corporation, certify that:

1. I have reviewed this Annual Report on Form 10-K of First Merchants Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board or directors (or persons performing the equivalent functions):

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

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

Date: February 29, 2016

By: /s/ Michael C. Rechin

Michael C. Rechin

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-31.2

FIRST MERCHANTS CORPORATION

FORM 10-K

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

_______________

I, Mark K. Hardwick, Executive Vice President and Chief Financial Officer of First Merchants Corporation, certify that:

1. I have reviewed this Annual Report on Form 10-K of First Merchants Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board or directors (or persons performing the equivalent functions):

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

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

Date: February 29, 2016

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Executive Vice President and

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of First Merchants Corporation (the “Corporation”) on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Rechin, President and Chief Executive Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: February 29, 2016By: /s/ Michael C. Rechin

Michael C. Rechin

President and Chief Executive Officer

(Principal Executive Officer)

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

In connection with the annual report of First Merchants Corporation (the “Corporation”) on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark K. Hardwick, Executive Vice President and Chief Financial Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: February 29, 2016By: /s/ Mark K. Hardwick

Mark K. Hardwick

Executive Vice President and

Chief Financial Officer

(Principal Financial and Accounting Officer)

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

EX-99.1

PART IV: ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

EXHIBIT-99.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT

FOR FIRST MERCHANTS CORPORATION EMPLOYEE STOCK PURCHASE PLAN

EXHIBIT 99.1-FINANCIAL STATEMENTS AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT FOR FIRST MERCHANTS CORPORATION EMPLOYEE STOCK PURCHASE PLAN

____________________________________________________________________________________________________________

The annual financial statements and independent registered public accounting firm's report thereon for First Merchants Corporation Employee Stock Purchase Plan for the year ending December 31, 2015, will be filed as an amendment to the 2015 Annual Report on Form 10-K.

XML

Document and Entity Information - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Feb. 23, 2016	Jun. 30, 2015
Document Documentand Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	FRME
Entity Registrant Name	FIRST MERCHANTS CORP
Entity Central Index Key	0000712534
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		40,671,228
Entity Public Float			$ 934,269

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 102,170	$ 118,616
Interest-bearing time deposits	32,315	47,520
Investment securities available for sale	658,400	549,543
Investment securities held to maturity (fair value of $632,380 and $647,723)	618,599	631,088
Loans held for sale	9,894	7,235
Loans	4,693,822	3,924,865
Less: Allowance for loan losses	(62,453)	(63,964)
Net Loans	4,631,369	3,860,901
Premises and equipment	97,648	77,691
Federal Reserve and Federal Home Loan Bank stock	37,633	41,353
Interest receivable	24,415	19,984
Core deposit intangibles	16,635	16,031
Goodwill	243,129	202,724
Cash surrender value of life insurance	200,539	169,424
Other real estate owned	17,257	19,293
Tax asset, deferred and receivable	46,977	41,960
Other assets	24,023	20,764
TOTAL ASSETS	6,761,003	5,824,127
Deposits:
Noninterest-bearing	1,266,027	1,070,859
Interest-bearing	4,023,620	3,569,835
Total Deposits	5,289,647	4,640,694
Borrowings:
Federal funds purchased	49,721	15,381
Securities sold under repurchase agreements	155,325	124,539
Federal Home Loan Bank advances	235,652	145,264
Subordinated debentures and term loans	127,846	126,810
Total Borrowings	568,544	411,994
Interest payable	3,092	3,201
Other liabilities	49,211	41,411
Total Liabilities	$ 5,910,494	$ 5,097,300
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value, Authorized 600 shares, Issued and outstanding - 125 shares	$ 125	$ 125
Common Stock - $.125 stated value, Authorized 50,000,000 shares, Issued and outstanding 40,664,259 and 37,669,948 shares	5,083	4,709
Additional paid-in capital	504,530	431,220
Retained earnings	342,133	292,403
Accumulated other comprehensive loss	(1,362)	(1,630)
Total Stockholders' Equity	850,509	726,827
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 6,761,003	$ 5,824,127

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Investment securities held to maturity	$ 632,380	$ 647,723
Common Stock, stated value (in dollars per share)	$ 0.125	$ 0.125
Common Stock, shares authorized	50,000,000	50,000,000
Common Stock, shares issued	40,664,259	37,669,948
Common Stock, shares outstanding	40,664,259	37,669,948
Preferred Stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, liquidation value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, shares authorized	600	600
Preferred Stock, shares issued	125	125
Preferred Stock, shares outstanding	125	125

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Loans receivable:
Taxable	$ 180,805	$ 172,039	$ 142,752
Tax-exempt	3,459	327	393
Investment securities:
Taxable	17,885	19,882	15,214
Tax-exempt	16,922	14,383	10,829
Deposits with financial institutions	160	124	158
Federal Reserve and Federal Home Loan Bank stock	1,967	2,124	1,488
Total Interest Income	221,198	208,879	170,834
INTEREST EXPENSE
Deposits	14,855	11,678	10,053
Federal funds purchased	74	177	102
Securities sold under repurchase agreements	368	529	787
Federal Home Loan Bank advances	2,836	2,842	2,096
Subordinated debentures, revolving credit lines and term loans	6,661	6,616	3,531
Total Interest Expense	24,794	21,842	16,569
NET INTEREST INCOME	196,404	187,037	154,265
Provision for loan losses	417	2,560	6,648
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	195,987	184,477	147,617
OTHER INCOME
Service charges on deposit accounts	16,201	15,747	12,400
Fiduciary activities	9,196	8,966	8,594
Other customer fees	16,959	15,699	11,866
Commission income	4,147	7,411	7,141
Earnings on cash surrender value of life insurance	2,919	3,659	2,613
Net gains and fees on sales of loans	6,483	4,899	7,511
Net realized gains on sales of available for sale securities	2,670	$ 3,581	$ 487
Gain on sale of insurance subsidiary	8,265
Gain on cancellation of subordinated debentures	1,250
Other income	4,441	$ 6,438	$ 5,404
Total Other Income	72,531	66,400	56,016
OTHER EXPENSES
Salaries and employee benefits	101,908	96,499	85,413
Net occupancy	14,668	13,831	10,291
Equipment	10,787	9,337	7,737
Marketing	3,493	3,464	2,236
Outside data processing fees	7,109	7,315	5,591
Printing and office supplies	1,353	1,565	1,340
Core deposit amortization	2,835	2,445	1,649
FDIC assessments	3,655	3,738	2,862
Other real estate owned and foreclosure expenses	6,137	8,043	6,661
Professional and other outside services	9,855	8,116	8,297
Other expenses	15,669	14,239	11,142
Total Other Expenses	177,469	168,592	143,219
INCOME BEFORE INCOME TAX	91,049	82,285	60,414
Income tax expense	25,665	22,123	15,884
NET INCOME	$ 65,384	$ 60,162	44,530
Preferred stock dividends			(2,380)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 65,384	$ 60,162	$ 42,150
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE:
Basic (in dollars per share)	$ 1.73	$ 1.66	$ 1.42
Diluted (in dollars per share)	$ 1.72	$ 1.65	$ 1.41

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 65,384	$ 60,162	$ 44,530
Other comprehensive income (loss) net of tax:
Unrealized holding gain (loss) on securities available for sale arising during the period, net of tax of $20, $8,001, and $6,841	$ (37)	$ 14,860	(12,705)
Unrealized loss on securities transferred to held-to-maturity, net of tax of $0, $0, and $1,786			(3,316)
Unrealized gain on securities available for sale for which a portion of an other than temporary impairment has been recognized in income, net of tax of $0, $995, and $767		$ 1,847	1,425
Unrealized gain (loss) on cash flow hedges arising during the period, net of tax of $588, $1,397, and $831	$ (1,093)	(2,599)	1,543
Reclassification adjustment for net losses (gains) included in net income net of tax of $435, $760, and $157	(808)	(1,410)	291
Defined benefit pension plans, net of tax of $1,187, $4,264, and $6,382
Net gain (loss) arising during period	2,404	(7,580)	10,704
Amortization of prior service cost	(198)	(338)	1,147
Period change	268	4,780	(911)
Comprehensive income	$ 65,652	$ 64,942	$ 43,619

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Statement of Comprehensive Income [Abstract]
Unrealized holding gain (loss) on securities available for sale arising during the period, tax	$ (20)	$ 8,001	$ (6,841)
Unrealized loss on securities transferred to held-to-maturity, tax	0	0	(1,786)
Unrealized gain (loss) on securities available for sale for which a portion of an other than temporary impairment has been recognized in income, tax	0	(995)	(767)
Unrealized gain (loss) on cash flow hedges arising during the period, tax	(588)	(1,397)	831
Reclassification adjustment for net losses (gains) included in net income, tax	435	760	(157)
Defined benefit pension plans, tax	$ (1,187)	$ 4,264	$ (6,382)

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred	Common Stock	Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2012		90,908	28,692,616
Beginning balance at Dec. 31, 2012	$ 552,236	$ 90,908	$ 3,587	$ 256,843	$ 206,397	$ (5,499)
Comprehensive income
Net income	44,530				44,530
Other comprehensive income (loss), net of tax	(911)					(911)
Cash dividends on common stock	(5,612)				(5,612)
Cash dividends on preferred stock under small business lending fund	(2,380)				(2,380)
Preferred stock redemption under small business lending fund (in shares)		(90,783)
Preferred stock redemption under small business lending fund	(90,783)	$ (90,783)
Issuance of common stock related to acquisition (in shares)			7,079,457
Issuance of common stock related to acquisition	135,642		$ 885	134,757
Share-based compensation (in shares)			116,978
Share-based compensation	1,773		$ 15	1,758
Stock Issued under employee benefit plans (in shares)			33,451
Stock issued under employee benefit plans	479		$ 4	475
Stock issued under dividend reinvestment and stock purchase plan (in shares)			18,449
Stock issued under dividend reinvestment and stock purchase plan	325		$ 2	323
Stock options exercised (in shares)			13,750
Stock options exercised	115		$ 2	113
Stock redeemed (in shares)			(32,940)
Stock redeemed	(491)		$ (5)	(486)
Ending balance (in shares) at Dec. 31, 2013		125	35,921,761
Ending balance at Dec. 31, 2013	634,923	$ 125	$ 4,490	393,783	242,935	(6,410)
Comprehensive income
Net income	60,162				60,162
Other comprehensive income (loss), net of tax	4,780					4,780
Cash dividends on common stock	(10,694)				(10,694)
Issuance of common stock related to acquisition (in shares)			1,574,298
Issuance of common stock related to acquisition	34,981		$ 197	34,784
Share-based compensation (in shares)			132,446
Share-based compensation	2,177		$ 17	2,160
Stock Issued under employee benefit plans (in shares)			26,547
Stock issued under employee benefit plans	478		$ 3	475
Stock issued under dividend reinvestment and stock purchase plan (in shares)			24,556
Stock issued under dividend reinvestment and stock purchase plan	523		$ 3	520
Stock options exercised (in shares)			41,249
Stock options exercised	564		$ 5	559
Stock redeemed (in shares)			(50,909)
Stock redeemed	(1,067)		$ (6)	(1,061)
Ending balance (in shares) at Dec. 31, 2014		125	37,669,948
Ending balance at Dec. 31, 2014	726,827	$ 125	$ 4,709	431,220	292,403	(1,630)
Comprehensive income
Net income	65,384				65,384
Other comprehensive income (loss), net of tax	268					268
Cash dividends on common stock	(15,654)				(15,654)
Issuance of common stock related to acquisition (in shares)			2,769,568
Issuance of common stock related to acquisition	70,402		$ 346	70,056
Share-based compensation (in shares)			149,577
Share-based compensation	2,270		$ 19	2,251
Stock Issued under employee benefit plans (in shares)			22,074
Stock issued under employee benefit plans	460		$ 3	457
Stock issued under dividend reinvestment and stock purchase plan (in shares)			26,375
Stock issued under dividend reinvestment and stock purchase plan	$ 661		$ 3	658
Stock options exercised (in shares)	96,066		96,066
Stock options exercised	$ 1,531		$ 12	1,519
Stock redeemed (in shares)			(69,349)
Stock redeemed	(1,640)		$ (9)	(1,631)
Ending balance (in shares) at Dec. 31, 2015		125	40,664,259
Ending balance at Dec. 31, 2015	$ 850,509	$ 125	$ 5,083	$ 504,530	$ 342,133	$ (1,362)

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Statement of Stockholders' Equity [Abstract]
Cash dividends on common stock (in dollars per share)	$ 0.41	$ 0.29	$ 0.18

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flow From Operating Activities:
Net income	$ 65,384	$ 60,162	$ 44,530
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	417	2,560	6,648
Depreciation and amortization	6,262	6,007	4,670
Change in deferred taxes	4,444	15,048	2,147
Share-based compensation	2,270	2,177	$ 1,773
Tax benefit from stock options exercised	(70)	(60)
Loans originated for sale	(364,411)	(222,892)	$ (280,693)
Proceeds from sales of Loans	361,752	$ 220,988	$ 297,851
Gain on sale of insurance subsidiary	(8,265)
Gain on cancellation of subordinated debentures	(1,250)
Gains on sales of securities available for sale	(2,670)	$ (3,581)	$ (487)
Change in interest receivable	(2,833)	(545)	(535)
Change in interest payable	$ (162)	$ 1,332	(364)
Change in other receivable			110,032
Other adjustments	$ (4,208)	$ (5,356)	(2,441)
Net cash provided by operating activities	56,660	75,840	183,131
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	24,917	24,075	196,753
Purchases of:
Securities available for sale	(200,154)	(110,936)	(398,491)
Securities held to maturity	(87,282)	(142,988)	(11,145)
Proceeds from sales of securities available for sale	83,647	126,575	25,222
Proceeds from maturities of:
Securities available for sale	63,124	68,339	93,273
Securities held to maturity	98,581	69,420	78,534
Change in Federal Reserve and Federal Home Loan Bank stock	7,268	(413)	(17)
Net change in loans	(350,287)	(170,109)	(142,861)
Net cash and cash equivalents received (paid) in acquisition	(7,936)	$ (10,084)	$ 10,992
Net cash received from sale of insurance subsidiary	15,155
Proceeds from the sale of other real estate owned	12,567	$ 14,241	$ 12,346
Other investing activities	9	5,889	(2,768)
Net cash used in investing activities	(340,391)	(125,991)	(138,162)
Net change in :
Demand and savings deposits	240,736	53,062	141,052
Certificates of deposit and other time deposits	(79,656)	127,740	(211,399)
Borrowings	491,660	678,290	295,537
Repayment of borrowings	(370,813)	(789,563)	(163,838)
Cash dividends on common stock	$ (15,654)	$ (10,694)	(5,612)
Cash dividends on preferred stock			(2,380)
Stock issued under employee benefit plans	$ 460	$ 478	479
Stock issued under dividend reinvestment and stock purchase plans	661	523	325
Stock options exercised	1,461	504	$ 115
Tax benefit from stock options exercised	$ 70	$ 60
Cumulative preferred stock redeemed (SBLF)			$ (90,783)
Stock redeemed	$ (1,640)	$ (1,067)	(491)
Net cash provided by (used in) financing activities	267,285	59,333	(36,995)
Net Change in Cash and Cash Equivalents	(16,446)	9,182	7,974
Cash and Cash Equivalents, beginning of the year	118,616	109,434	101,460
Cash and Cash Equivalents, end of year	102,170	118,616	109,434
Additional cash flow information:
Interest paid	24,903	20,412	16,639
Income tax paid	21,200	6,209	7,578
Loans transferred to other real estate owned	3,644	4,431	7,170
Fixed assets transferred to other real estate owned	1,600	297	461
Non-cash investing activities using trade date accounting	1,559	3,170	4,984
Liabilities assumed in conjunction with acquisitions
Fair value of assets acquired	635,047	280,725	$ 1,132,231
Cash received (paid) in acquisition	(14,500)	(14,208)
Less: Common stock issued	70,402	34,981	$ 135,642
Liabilities assumed	$ 550,145	$ 231,536	$ 996,589

XML

Nature of Operations and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of First Merchants Corporation (the “Corporation”), and its principal wholly owned subsidiary, First Merchants Bank, N.A. (the “Bank”), conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry. The Bank also operates Lafayette Bank and Trust, Ameriana Bank, Ameriana Financial Services and First Merchants Trust Company as divisions of First Merchants Bank, N.A.

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.

The Corporation is a financial holding company whose principal activity is the ownership and management of the Bank and operates in a single significant business segment. The Bank operates under a national bank charter and provides full banking services. As a national bank, the Bank is subject to the regulation of the Office of Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”).  The OCC and the FDIC regulate or monitor virtually all areas of the Bank’s operations. The Bank must undergo regular on-site examinations by the OCC and FDIC and must submit periodic reports to both.

The Bank generates commercial, mortgage, and consumer loans and receives deposits from customers located primarily in central and northwest Indiana, northeast Illinois and central Ohio counties. The Bank’s loans are generally secured by specific items of collateral, including real property, consumer assets and business assets.

A brief description of current accounting practices and current valuation methodologies are presented below.

CONSOLIDATION of the Corporation's financial statements include the accounts of the Corporation and all its subsidiaries, after elimination of all material intercompany transactions.

BUSINESS COMBINATIONS are accounted for under the acquisition method of accounting. Under the acquisition method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition.

AVAILABLE FOR SALE SECURITIES are recorded at fair value on a recurring basis with the unrealized gains and losses, net of applicable income taxes, recorded in other comprehensive income. Realized gains and losses are recorded in earnings and the prior fair value adjustments are reclassified within stockholders' equity. Gains and losses on sales of securities are determined on the specific-identification method. Amortization of premiums and accretion of discounts are recorded as interest income from securities.

Available for sale and held to maturity securities are evaluated for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interest, including certain non-agency government-sponsored mortgage-backed securities, asset-backed securities and collateralized debt obligations are evaluated using the model outlined in ASC 325-10.

In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether a decline exists that is other-than-temporary, involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When the Corporation does not intend to sell a debt security, and it is more likely than not, the Corporation will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable income taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

If the intent is to sell or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis, less any recognized credit loss, the OTTI is recognized in earnings equal to the entire difference between the investment’s amortized cost basis, less any recognized credit loss, and its fair value at the balance sheet date.

HELD TO MATURITY SECURITIES are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Securities held to maturity are carried at amortized cost.  For held to maturity debt securities, the amount of an OTTI recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

LOANS HELD FOR SALE are carried at the principal amount outstanding. The carrying amount approximates fair value due to the short duration between origination and the date of sale.

LOANS held in the Corporation’s portfolio are carried at the principal amount outstanding, net of unearned income. Certain non-accrual and substantially delinquent loans may be considered to be impaired. A loan is impaired when, based on current information or events, it is probable that the Bank will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. In applying the provisions of ASC 310, the Corporation considers its investment in one-to-four family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. Interest income is accrued on the principal balances of loans, except for installment loans with add-on interest, for which a method that approximates the level yield method is used. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectable. Interest income accrued in the prior year, if any, is charged to the allowance for loan losses. Interest income is subsequently recognized only to the extent cash payments are received and the loan is returned to accruing status. Certain loan fees and direct costs are being deferred and amortized as an adjustment of yield on the loans.

Impaired loans are carried at the present value of estimated future cash flows using the loan’s existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. The valuation would be considered Level 3, consisting of appraisals of underlying collateral and discounted cash flow analysis.

Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses which limit the Bank’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.

LOANS ACQUIRED IN BUSINESS COMBINATIONS with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of purchase dates may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30). These loans are initially measured at fair value based upon expected cash flows without anticipation of prepayments and includes estimated future credit losses expected to be incurred over the life of the loans. As a result, related discounts are recognized subsequently through accretion based on the expected cash flows of the acquired loans. For purposes of applying ASC 310-30, loans acquired in business combinations are aggregated into pools of loans with common risk characteristics for the initial fair value measurement. Accordingly, allowances for credit losses related to these loans are not carried over and recorded at the acquisition date.

The expected cash flows of the acquired loans in excess of the fair values recorded is referred to as the accretable yield and is recognized in interest income over the remaining estimated lives of the loans. The Corporation will continually evaluate the fair value of the loans including cash flows expected to be collected.

ALLOWANCE FOR LOAN LOSSES is maintained to absorb losses inherent in the loan portfolio and is based on ongoing, quarterly assessments of the probable losses inherent in the loan portfolio. The allowance is increased by the provision for loan losses, which is charged against current operating results. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The Corporation’s strategy for credit risk management includes conservative credit policies and underwriting criteria for all loans, as well as an overall credit limit for each customer significantly below legal lending limits. The strategy also emphasizes diversification on a regional geographic, industry and customer level, regular credit quality reviews and management reviews of large credit exposures and loans experiencing deterioration of credit quality.

The Corporation’s methodology for assessing the appropriateness of the allowance consists of three key elements – the determination of the appropriate reserves for specifically identified loans, probable losses estimated from historical loss rates, and probable losses resulting from economic, environmental, qualitative or other deterioration above and beyond what is reflected in the first two components of the allowance.

Larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. Where appropriate, reserves are allocated to individual loans based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to the Corporation. Included in the review of individual loans are those that are impaired as provided in ASC 310. Any allowances for impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or fair value of the underlying collateral. The Corporation evaluates the collectability of both principal and interest when assessing the need for a loss accrual. Historical loss rates are applied to other commercial loans not subject to specific reserve allocations.

The historical allocation for commercial loans graded pass are established by loan segments using loss rates based on the Corporation’s migration analysis. This migration analysis shows the loss rates for each segment of loans based on the loan grades at the beginning of the twelve month period. This loss rate is then applied to the current portfolio of loans in each respective loan segment.

Homogenous loans, such as consumer installment and residential mortgage loans, are not individually risk graded. Reserves are established for each segment of loans using loss rates based on charge offs for the same period as the migration analysis used for commercial loans.

Historical loss allocations for commercial and consumer loans may be adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Factors which management considers in the analysis include the effects of the national and local economies, trends in loan growth and charge-off rates, changes in mix, concentration of loans in specific industries, asset quality trends (delinquencies, charge offs and non-accrual loans), risk management and loan administration, changes in the internal lending policies and credit standards, examination results from bank regulatory agencies and the Corporation’s internal loan review.

PENSION benefits are provided to the Corporation’s employees. Its accounting policies related to pensions and other post retirement benefits reflect the guidance in ASC 715, Compensation – Retirement Benefits. The Corporation does not consolidate the assets and liabilities associated with the pension plan. Instead, the Corporation recognizes the funded status of the plan in the consolidated balance sheets. The measurement of the funded status and the annual pension expense involves actuarial and economic assumptions. Various statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liabilities related to the plans. Key factors include assumptions on the expected rates of return on plan assets, discount rates, expected rates of salary increases and health care costs and trends. The Corporation considers market conditions, including changes in investment returns and interest rates in making these assumptions. The primary assumptions used in determining the Corporation’s pension and post retirement benefit obligations and related expenses are presented in Note 21. PENSION AND OTHER POST RETIREMENT BENEFIT PLANS, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

PREMISES AND EQUIPMENT is carried at cost net of accumulated depreciation. Depreciation is computed using the straight-line and declining balance methods based on the estimated useful lives of the assets ranging from three to forty years. Maintenance and repairs are expensed as incurred, while major additions and improvements, which extend the useful life, are capitalized. Gains and losses on dispositions are included in current operations.

FEDERAL RESERVE AND FEDERAL HOME LOAN BANK STOCK are required investments for institutions that are members of the Federal Reserve Bank (“FRB”) and Federal Home Loan Bank systems. The required investment in the common stock is based on a predetermined formula based on the level of borrowings and other factors. These investments are carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

INTANGIBLE ASSETS that are subject to amortization, including core deposit intangibles, are being amortized on both the straight-line and accelerated basis over three to twenty years. Intangible assets are periodically evaluated as to the recoverability of their carrying value.

GOODWILL is maintained by applying the provisions of ASC 350. For purchase acquisitions, the Corporation is required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates or other relevant factors. In addition, the determination of the useful lives for which an intangible asset will be amortized is subjective.

Under ASC 350, Intangibles – Goodwill and Other, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired, indicating that the carrying value may not be recoverable. The Corporation has historically elected to test for goodwill impairment as of October 1 of each year and has determined that no impairment exists.

BANK OWNED LIFE INSURANCE has been purchased on certain employees and directors of the Corporation. The Corporation records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement.

OTHER REAL ESTATE OWNED consists of assets acquired through, or in lieu of, loan foreclosure and are held for sale. They are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.  Revenue and expenses from operations and changes in the valuation are included in net income or expense from foreclosed assets. Other real estate owned also includes bank premises formerly, but no longer used for banking. Bank premises are transferred at the lower of carrying value or fair value less cost to sell.

DERIVATIVE INSTRUMENTS are carried at the fair value of the derivatives and reflects the estimated amounts that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.

As part of the asset/liability management program, the Corporation will utilize, from time to time, interest rate floors, caps or swaps to reduce its sensitivity to interest rate fluctuations. These are derivative instruments, which are recorded as assets or liabilities in the consolidated balance sheets at fair value. Changes in the fair values of derivatives are reported in the consolidated statements of operations or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

Derivatives that qualify for the hedge accounting treatment are designated as either: a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). To date, the Corporation has only entered into a cash flow hedge. For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in OCI are reflected in the consolidated statements of income in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, the Corporation establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of operations. The Corporation excludes the time value expiration of the hedge when measuring ineffectiveness.

The Corporation offers interest rate derivative products (e.g. interest rate swaps) to certain of its high-quality commercial borrowers. This product allows customers to enter into an agreement with the Corporation to swap their variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the risk of changes in the borrower’s interest rate or market price risk. The extension of credit incurred through the execution of these derivative products is subject to the same approvals and rigorous underwriting standards as the related traditional credit product. The Corporation limits its risk exposure to these products by entering into a mirror-image, offsetting swap agreement with a separate, well-capitalized and rated counterparty previously approved by the Credit and Asset Liability Committee. By using these interest rate swap arrangements, the Corporation is also better insulated from the interest rate risk associated with underwriting fixed-rate loans. These derivative contracts are not designated against specific assets or liabilities under ASC 815, Derivatives and Hedging, and, therefore, do not qualify for hedge accounting. The derivatives are recorded on the balance sheet at fair value and changes in fair value of both the customer and the offsetting swap agreements are recorded (and essentially offset) in non-interest income. The fair value of the derivative instruments incorporates a consideration of credit risk (in accordance with ASC 820), resulting in some volatility in earnings each period.

INCOME TAX in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes. The Corporation files consolidated income tax returns with its subsidiaries.

The Corporation adopted the provisions of the ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740, the Corporation did not identify any uncertain tax positions that it believes should be recognized in the financial statements. The tax years still subject to examination by taxing authorities are years subsequent to 2011.

STOCK OPTION AND RESTRICTED STOCK AWARD PLANS are maintained by the Corporation. The compensation costs are recognized for stock options and restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options.  The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Compensation expense is recognized over the appropriate service period, which is generally two or three years.

TRANSFERS OF FINANCIAL ASSETS are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

NET INCOME PER SHARE is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding, plus the dilutive effect of outstanding stock options and nonvested restricted stock.

RECLASSIFICATIONS have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income.

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Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Acquisitions and Divestitures

ACQUISITIONS AND DIVESTITURES

Ameriana Bancorp, Inc.

On December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp, Inc., ("Ameriana"). Ameriana merged with and into the Corporation (the "Ameriana Merger") whereupon the separate corporate existence of Ameriana ceased and the Corporation survived. Immediately following the Ameriana Merger, Ameriana Bank, and Indiana Bank and wholly-owned subsidiary of Ameriana, merged with and into First Merchants Bank, National Association, a national Bank and wholly-owned subsidiary of the Corporation (the "Bank"), with the Bank continuing as the surviving bank. Ameriana was headquartered in New Castle, Indiana and had 13 banking centers serving central and east central Indiana. Pursuant to the merger agreement, each Ameriana shareholder received 0.9037 shares of First Merchants common stock for each outstanding share of Ameriana common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

The Corporation engaged in this transaction with the expectation that it would be accretive and expand the existing footprint in central and east central Indiana. Goodwill resulted from this transaction due to the expected synergies and economies of scale that are expected.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations 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 Ameriana acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	4,068
Interest-bearing time deposits	8,790
Investment securities	60,365
Loans	319,664
Premises and equipment	14,491
Federal Home Loan Bank stock	2,693
Other real estate owned	5,719
Interest receivable	1,306
Cash surrender value of life insurance	28,188
Other assets	7,086
Deposits	(382,547		)
Interest payable	(24		)
Federal Home Loan Bank Advances	(24,938		)
Subordinated Debentures	(5,961		)
Other liabilities	(9,451		)
Net tangible assets acquired	29,449
Core deposit intangible	3,200
Goodwill	37,753
Purchase price	$	70,402

Of the total purchase price, $3,200,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

C Financial Corporation

On April 17, 2015, the Corporation acquired 100 percent of C Financial Corporation, ("C Financial"). C Financial merged with and into the Corporation (the “C Financial Merger”) whereupon the separate corporate existence of C Financial ceased and the Corporation survived.  Immediately following the C Financial Merger, Cooper State Bank, an Ohio state bank and wholly-owned subsidiary of C Financial, merged with and into the Bank, with the Bank continuing as the surviving bank.  C Financial was headquartered in Columbus, Ohio and had 6 full service banking centers serving the Columbus, Ohio market. As part of the $14.5 million C Financial Merger, shareholders of C Financial received $6.738 in cash for each share of C Financial common stock held. The Corporation expects the transaction to be accretive to income and expand the existing footprint in Columbus, Ohio. Goodwill resulted from this transaction due to the synergies and economies of scale that are expected.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on preliminary valuations 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 C Financial acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	2,496
Federal Funds sold	7,018
Interest-bearing time deposits	922
Loans	110,625
Premises and equipment	7,290
Federal Home Loan Bank stock	855
Interest receivable	292
Other assets	119
Deposits	(105,326		)
Interest payable	(29		)
Federal Home Loan Bank Advances	(18,958		)
Other liabilities	(2,911		)
Net tangible assets acquired	2,393
Core deposit intangible	981
Goodwill	11,126
Purchase price	$	14,500

Of the total purchase price, $981,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is deductible for tax purposes because the transaction was considered a taxable exchange.

Community Bancshares, Inc.

On November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Community merged with and into the Corporation (the "Community Merger") whereupon the separate corporate existence of Community ceased and the Corporation survived. Immediately following the Community Merger, Community Bank, an Indiana bank and wholly-owned subsidiary of Community, merged with and into the Bank, with the Bank continuing as the surviving bank. Community was headquartered in Noblesville, Indiana and had 10 full-service banking centers serving central Indiana. Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of the Corporation's common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

The Corporation engaged in this transaction with the expectation that it would be accretive and expand the existing footprint in central Indiana. Goodwill resulted from this transaction due to the expected synergies from combining operations. The purchase price of the Community acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	4,124
Interest -bearing time deposits	16,526
Investment Securities, available for sale	76,807
Loans	145,064
Premises and equipment	3,610
Federal Home Loan Bank stock	1,950
Interest Receivable	767
Cash surrender value of life insurance	3,266
Other real estate owned	6,662
Taxes, deferred and receivable	3,348
Other assets	167
Deposits	(228,424		)
Interest payable	(98		)
Other liabilities	(3,014		)
Net tangible assets acquired	$	30,755
Core deposit intangible	4,658
Goodwill	13,776
Purchase price	$	49,189

Of the total purchase price, $4,658,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

CFS Bancorp, Inc.

On November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp, Inc. ("CFS") in an all stock transaction. CFS merged with and into the Corporation (the "CFS Merger") whereupon the separate corporate existence of CFS ceased and the Corporation survived. Immediately following the CFS Merger, Citizens Financial Bank, a federal savings bank and wholly-owned subsidiary of CFS, merged with and into the Bank, with the Bank continuing as the surviving bank. CFS was headquartered in Munster, Indiana and had 20 full-service banking centers serving the northwestern Indiana and northeastern Illinois areas. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million.

The Corporation engaged in this transaction with the expectation that it would be accretive and add a new market area with a demographic profile consistent with many of the current Indiana markets served by the Bank. Goodwill resulted from this transaction due to the expected synergies from combining operations. The purchase price for the CFS acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	10,992
Interest-bearing time deposits	213,379
Investment securities available for sale	15,913
Investment securities held to maturity	14,372
Mortgage loans held for sale	189
Loans	603,114
Premises and equipment	19,643
Federal Home Loan Bank stock	6,188
Interest receivable	1,770
Cash surrender value of life insurance	36,555
Other real estate owned	12,857
Tax asset, deferred and receivable	30,717
Other assets	111,656
Deposits	(955,432		)
Securities sold under repurchase agreements	(9,830		)
Federal Home Loan Bank advances	(15,000		)
Interest payable	(294		)
Other liabilities	(16,033		)
Net tangible assets acquired	$	80,756
Core deposit intangible	7,313
Goodwill	47,573
Purchase price	$	135,642

Of the total purchase price, $7,313,000 has been allocated to a core deposit intangible that will be amortized over its estimated life of 10 years. The residual purchase price has been allocated to goodwill, which is not deductible for tax purposes.

First Merchants Insurance Services, Inc.

On June 12, 2015, the Corporation sold all of its stock in First Merchants Insurance Services, Inc., an Indiana Corporation ("FMIG"), to USI Insurance Services LLC, a Delaware limited liability company ("USI"). The sale price was $18.0 million, of which $16.0 million was paid at closing with the remaining $2.0 million paid through a two-year promissory note. The sale of FMIG generated a gain on sale of $8.3 million.

Pro Forma Financial Information

The results of operations of C Financial, Community and CFS have been included in the Corporation's consolidated financial statements since the acquisition dates. The following schedule includes pro forma results for the periods ended December 31, 2015, 2014 and 2013 as if the Ameriana, Community and CFS acquisitions had occurred as of the beginning of the comparable prior annual reporting period. Pro forma financial information of the C Financial acquisition is not included in the table below as it is deemed immaterial.

	2015		2014		2013
Total revenue (net interest income plus other income)	$	291,614	$	284,890	$	253,668
Net income	$	60,497	$	64,174	$	39,979
Net income available to common shareholders	$	60,497	$	64,174	$	37,559
Earnings per share:
Basic	$	1.49	$	1.58	$	0.98
Diluted	$	1.48	$	1.57	$	0.97

The pro forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits and borrowings acquired, premises expense for the banking centers acquired and the related income tax effects. The pro forma information for the year ended 2015 includes operating results from Ameriana as if the acquisition occurred at the beginning of the year. The 2015 pro forma includes $12.0 million, net of tax, of non-recurring expenses directly attributable to the Ameriana, C Financial and Community acquisitions and the FMIG divestiture. The pro forma information for the year ended 2014 includes $1.6 million of operating revenue from Community since the acquisition and approximately $1.8 million, net of tax, of non-recurring expenses directly attributable to the Community acquisition. The pro forma information for the year ended 2013 includes $4.9 million of operating revenue from CFS since the acquisition and approximately $9.5 million, net of tax, of non-recurring expenses directly attributable to the CFS acquisition.

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition consummated as of that time, nor is it intended to be a projection of future results.

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Restriction on Cash and Due From Banks

12 Months Ended

Dec. 31, 2015

Cash and Cash Equivalents [Abstract]

Restriction on Cash and Due From Banks

RESTRICTION ON CASH AND DUE FROM BANKS

The Corporation considers all liquid investments with original maturities of three months or less to be cash equivalents. As of December 31, 2015, cash and cash equivalents is defined to include cash on hand, deposits in other institutions and federal funds sold.

Effective October 3, 2008, the FDIC’s insurance limits temporarily increased to $250,000. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law, which, in part, permanently raised the standard maximum deposit insurance amount to $250,000.  On November 9, 2010, the FDIC implemented section 343 of the Dodd-Frank Act providing unlimited insurance coverage on noninterest-bearing transaction accounts.  Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts were fully insured, regardless of the balance of the account, at all FDIC-insured institutions.  As of January 1, 2013, noninterest-bearing transaction deposit accounts are no longer insured separately from other accounts at the same FDIC-insured institution. Instead, noninterest-bearing transaction accounts are added to any of the Corporation's other accounts, and the aggregate balance insured up to at least the Standard Maximum Deposit Insurance Amount of $250,000, at each institution.

At December 31, 2015, the Corporation’s interest-bearing cash accounts and noninterest-bearing transaction deposits held at other institutions exceeded federally insured limits by approximately $63,132,000. Each correspondent bank’s financial performance and market rating are reviewed on a quarterly basis to ensure the Corporation has deposits only at institutions providing minimal risk for those exceeding the federally insured limits.

Additionally, the Corporation had approximately $14,546,000 at the Federal Home Loan Bank and Federal Reserve Bank, which are government-sponsored entities not insured by the FDIC.

The Corporation is required to maintain reserve funds in cash and/or on deposit with the Federal Reserve Bank.  The reserve required at December 31, 2015, was $19,288,000.

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Investment Securities

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

INVESTMENT SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2015
U.S. Government-sponsored agency securities	$	100	$	4			$	104
State and municipal	291,730		14,241		$	60	305,911
U.S. Government-sponsored mortgage-backed securities	342,550		4,234		518		346,266
Corporate obligations	31						31
Equity securities	3,912						3,912
Certificates of deposit	2,176						2,176
Total available for sale	640,499		18,479		578		658,400
Held to maturity at December 31, 2015
State and municipal	219,767		6,982		15		226,734
U.S. Government-sponsored mortgage-backed securities	398,832		7,601		787		405,646
Total held to maturity	618,599		14,583		802		632,380
Total Investment Securities	$	1,259,098	$	33,062	$	1,380	$	1,290,780
Available for sale at December 31, 2014
U.S. Government-sponsored agency securities	$	100	$	9			$	109
State and municipal	216,915		11,801		$	123	228,593
U.S. Government-sponsored mortgage-backed securities	310,460		8,771		127		319,104
Corporate obligations	31						31
Equity securities	1,706						1,706
Total available for sale	529,212		20,581		250		549,543
Held to maturity at December 31, 2014
State and municipal	204,443		5,716		96		210,063
U.S. Government-sponsored mortgage-backed securities	426,645		11,527		512		437,660
Total held to maturity	631,088		17,243		608		647,723
Total Investment Securities	$	1,160,300	$	37,824	$	858	$	1,197,266

On December 31, 2015, the Corporation acquired 100 percent of Ameriana as discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. This purchase resulted in investment securities acquired of approximately $60.4 million.

Certain investments in debt securities are reported in the financial statements at amounts less than their historical cost.  The historical cost of these investments totaled $178,964,000 and $73,249,000 at December 31, 2015 and 2014, respectively.  Total fair value of these investments was $177,584,000  and $72,390,000, which was approximately 13.9 and 6.1 percent of the Corporation's available for sale and held to maturity investment portfolio at December 31, 2015 and 2014, respectively.

Except as discussed below, management believes the decline in fair value for these securities was temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income during the period the other-than-temporary impairment (“OTTI”) is identified.

The Corporation’s management has evaluated all securities with unrealized losses for OTTI as of December 31, 2015.  The evaluations are based on the nature of the securities, the extent and duration of the loss and the intent and ability of the Corporation to hold these securities either to maturity or through the expected recovery period.

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level I and Level II in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

U.S. Government-Sponsored Mortgage-Backed Securities

The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2015. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $518,000 on twenty-six securities and $787,000 on twenty-two securities in the available for sale and held to maturity portfolios, respectively. All these securities are issued by a government-sponsored entity.

State and Municipal Securities

The unrealized losses on the Corporation's investments in securities of state and political subdivisions were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2015. As noted in the table above, the state and political subdivision securities portfolio contains unrealized losses of $60,000 on twenty-two securities and $15,000 on seven securities in the available for sale and held to maturity portfolios, respectively.

Certain Losses Recognized on Investments

Certain debt securities have experienced fair value deterioration due to credit losses and other market factors.  The following table provides information about debt securities for which only a credit loss was recognized in income and other losses were recorded in other comprehensive income.

	Accumulated Credit Losses in			Accumulated Credit Losses in
	2015			2014
Credit losses on debt securities held:
Balance, January 1	$	500		$	11,355
Reductions for previous other-than-temporary losses realized on securities sold during the year	(500		)	$	(10,855	)
Balance, December 31	$	—		$	500

The following table shows the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2015 and 2014: 

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2015
State and municipal	$	7,558	$	60					$	7,558	$	60
U.S. Government-sponsored mortgage-backed securities	83,396		445		$	2,101	$	73	85,497		518
Total Temporarily Impaired Available for Sale Securities	90,954		505		2,101		73		93,055		578
Temporarily Impaired Held to Maturity Securities at December 31, 2015
State and municipal					1,982		15		1,982		15
U.S. Government-sponsored mortgage-backed securities	69,641		519		12,906		268		82,547		787
Total Temporarily Impaired Held to Maturity Securities	69,641		519		14,888		283		84,529		802
Total Temporarily Impaired Investment Securities	$	160,595	$	1,024	$	16,989	$	356	$	177,584	$	1,380
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2014
State and municipal	$	1,256	$	7	$	9,850	$	116	$	11,106	$	123
U.S. Government-sponsored mortgage-backed securities	2,186		13		5,447		114		7,633		127
Total Temporarily Impaired Available for Sale Securities	3,442		20		15,297		230		18,739		250
Temporarily Impaired Held to Maturity Securities at December 31, 2014
State and municipal	5,119		96		250				5,369		96
U.S. Government-sponsored mortgage-backed securities	9,791		82		38,491		430		48,282		512
Total Temporarily Impaired Held to Maturity Securities	14,910		178		38,741		430		53,651		608
Total Temporarily Impaired Investment Securities	$	18,352	$	198	$	54,038	$	660	$	72,390	$	858

The amortized cost and fair value of securities available for sale and held to maturity at December 31, 2015 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2015
Due in one year or less	$	4,658	$	4,704	$	4,144	$	4,148
Due after one through five years	13,725		14,295		28,054		29,175
Due after five through ten years	52,878		55,375		81,483		83,646
Due after ten years	220,600		231,672		106,086		109,765
	291,861		306,046		219,767		226,734
U.S. Government-sponsored mortgage-backed securities	342,550		346,266		398,832		405,646
Equity securities	3,912		3,912
Certificates of deposit	2,176		2,176
Total Investment Securities	$	640,499	$	658,400	$	618,599	$	632,380

Securities with a carrying value of approximately $637,358,000, $449,408,000 and $373,533,000  were pledged at December 31, 2015, 2014 and 2013, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

Gross gains of $2,770,000, $3,581,000 and $487,000 were realized on sales of investment securities in 2015, 2014 and 2013, respectively. Gross losses of $100,000 were realized on sales of investment securities in 2015. There were no losses from the sales of investment securities in 2014 or 2013, respectively.

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Loans and Allowance

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Loans and Allowance

LOANS AND ALLOWANCE

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, residential real estate and consumer, which results in portfolio diversification. The following tables show the composition of the loan portfolio, the allowance for loan losses and certain credit quality aspects, all excluding loans held for sale.  Loans held for sale at December 31, 2015 and 2014, were $9,894,000 and $7,235,000, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the years indicated:

	December 31, 2015			December 31, 2014
Commercial and industrial loans	$	1,057,075		$	896,688
Agricultural production financing and other loans to farmers	97,711			104,927
Real estate loans:
Construction	366,704			207,221
Commercial and farmland	1,802,921			1,672,661
Residential	786,105			647,315
Home equity	348,613			286,529
Individuals' loans for household and other personal expenditures	74,717			73,400
Lease financing receivables, net of unearned income	588			1,106
Other commercial loans	159,388			35,018
Loans	4,693,822			3,924,865
Allowance for loan losses	(62,453		)	(63,964		)
Net Loans	$	4,631,369		$	3,860,901

During the twelve months ended December 31, 2015, loans acquired through business combinations totaled $430,289,000. See the information regarding the business combinations in the Note 2. ACQUISITIONS AND DIVESTITURES section of the Financial Statements and Supplementary Data included as Item 8 of this Annual Report on Form 10-K.

At December 31, 2015, Other commercial loans totaled $159,388,000, an increase of $124,370,000 from December 31, 2014. This increase was primarily a result of organic growth in the obligations of the state and political subdivisions sector of the portfolio.

Allowance, Credit Quality and Loan Portfolio

The Corporation maintains an allowance for loan losses to cover probable credit losses identified during its loan review process. Management believes that the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio at December 31, 2015.  The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results.  It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters.  The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examinations, and will increase or decrease as deemed necessary to ensure it remains adequate.  In addition, the allowance as a percentage of charge offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values.

The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings. The allowance is increased by provision expense and decreased by charge offs less recoveries. All charge offs are approved by the Bank’s senior loan officers or loan committees, depending on the amount of the charge off. The Bank charges off a loan when a determination is made that all or a portion of the loan is uncollectible. The amount provided for loan losses in a given period may be greater than or less than net loan losses experienced during the period, and is based on management’s judgment as to the appropriate level of the allowance for loan losses. The determination of the provision amount is based on management’s ongoing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and independent loan reviews.  The evaluation takes into consideration identified credit problems, the possibility of losses inherent in the loan portfolio that are not specifically identified and management’s judgment as to the impact of the current environment and economic conditions on the portfolio.

The allowance consists of specific impairment reserves as required by ASC 310-10-35, a component for historical losses in accordance with ASC 450 and the consideration of current environmental factors in accordance with ASC 450. A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected.

The historical loss allocation for loans not deemed impaired according to ASC 310 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment. The historical loss factors are based upon actual loss experience within each risk and call code classification. The historical look back period for non-criticized loans looks to the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans. Each of the rolling four quarter periods used to obtain the average, include all charge offs for the previous twelve-month period, therefore the historical look back period includes seven quarters. The resulting allocation is reflective of current conditions. Criticized loans are grouped based on the risk grade assigned to the loan. Loans with a special mention grade are assigned a loss factor, and loans with a classified grade but not impaired are assigned a separate loss factor. The loss factor computation for this allocation includes a segmented historical loss migration analysis of risk grades to charge off.

In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to ensure that losses inherent in the portfolio are reflected in the allowance for loan losses. The environmental component adjusts the historical loss allocations for non-impaired loans to reflect relevant current conditions that, in management's opinion, have an impact on loss recognition. Environmental factors that management reviews in the analysis include: national and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes.

In conformance with ASC 805 and ASC 820, loans purchased after December 31, 2008 are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan or the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceeds the fair value adjustment on the portion of the purchased portfolio not deemed impaired.

At December 31, 2015, the allowance for loan losses was $62,453,000, a decrease of $1,511,000 from the December 31, 2014 balance of $63,964,000. Specific reserves on impaired loans decreased $927,000 to $1,842,000, from $2,769,000 at December 31, 2014. Net charge offs for the twelve months ended December 31, 2015, were $1,928,000, a decrease of $4,538,000 from the same period in 2014. The provision for loan losses for the twelve months ended December 31, 2015 was $417,000, a decrease of $2,143,000 from the same period in 2014. The determination of the provision for loan losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio.

The following table summarizes changes in the allowance for loan losses by loan segment for the twelve months ended December 31, 2015, 2014 and 2013:

	Twelve Months Ended December 31, 2015
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964
Provision for losses	(1,901		)	1,710			299			310			(1		)	417
Recoveries on loans	1,911			2,545			352			1,536						6,344
Loans charged off	(2,356		)	(1,437		)	(620		)	(3,859		)				(8,272		)
Balances, December 31, 2015	$	26,478		$	22,145		$	2,689		$	11,139		$	2		$	62,453

	Twelve Months Ended December 31, 2014
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870
Provision for losses	3,459			(464		)	423			(839		)	$	(19	)	2,560
Recoveries on loans	5,435			3,297			377			1,783			24			10,916
Loans charged off	(7,246		)	(6,608		)	(657		)	(2,869		)	(2		)	(17,382		)
Balances, December 31, 2014	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964

	Twelve Months Ended December 31, 2013
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	25,913		$	26,703		$	2,593		$	14,157					$	69,366
Provision for losses	2,794			340			(11		)	3,514			$	11		6,648
Recoveries on loans	4,586			3,552			556			1,292			4			9,990
Loans charged off	(6,117		)	(7,493		)	(623		)	(3,886		)	(15		)	(18,134		)
Balances, December 31, 2013	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870

The following tables show the Corporation’s allowance for loan losses and loan portfolio by loan segment for the years indicated:

	December 31, 2015
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,277	$	243			$	169			$	1,689
Collectively evaluated for impairment	25,201		21,753		$	2,689	10,966		$	2	60,611
Loans acquired with deteriorated credit quality			149				4				153
Total Allowance for Loan Losses	$	26,478	$	22,145	$	2,689	$	11,139	$	2	$	62,453
Loan balances:
Individually evaluated for impairment	$	7,877	$	16,670			$	4,020			$	28,567
Collectively evaluated for impairment	1,298,988		2,096,089		$	74,717	1,125,316		$	588	4,595,698
Loans acquired with deteriorated credit quality	7,309		56,866				5,382				69,557
Loans	$	1,314,174	$	2,169,625	$	74,717	$	1,134,718	$	588	$	4,693,822

	December 31, 2014
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,455	$	470			$	194			$	2,119
Collectively evaluated for impairment	27,369		18,207		$	2,658	12,958		$	3	61,195
Loans acquired with deteriorated credit quality			650								650
Total Allowance for Loan Losses	$	28,824	$	19,327	$	2,658	$	13,152	$	3	$	63,964
Loan balances:
Individually evaluated for impairment	$	16,108	$	23,963			$	4,022			$	44,093
Collectively evaluated for impairment	1,011,122		1,796,797		$	73,400	925,282		$	1,106	3,807,707
Loans acquired with deteriorated credit quality	9,403		59,122				4,540				73,065
Loans	$	1,036,633	$	1,879,882	$	73,400	$	933,844	$	1,106	$	3,924,865

The risk characteristics of the Corporation’s material portfolio segments are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Residential and Consumer

With respect to residential loans that are secured by 1-4 family residences and are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. Uncollected interest previously recorded, but not deemed collectible, is reversed and charged against current income. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.  Payments received on impaired accruing or delinquent loans are applied to interest income as accrued.

The following table summarizes the Corporation’s non-accrual loans by loan class for the years indicated:

	December 31, 2015		December 31, 2014
Commercial and industrial loans	$	4,634	$	7,048
Agriculture production financing and other loans to farmers	827		5,800
Real estate loans:
Construction	736		1,439
Commercial and farmland	11,277		19,350
Residential	11,818		12,933
Home equity	1,952		1,988
Individuals' loans for household and other personal expenditures	145		231
Total	$	31,389	$	48,789

Commercial impaired loans include non-accrual loans, loans accounted for under ASC 310-30, and loans risk graded as substandard, doubtful and loss that were still accruing but deemed impaired according to the guidance set forth in ASC 310. Also included in impaired loans are accruing loans that are contractually past due 90 days or more and troubled debt restructurings.

Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings andor customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The following tables show the composition of the Corporation’s commercial impaired loans by loan class for the years indicated:

	December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	22,151	$	11,669			$	12,578	$	488
Agriculture production financing and other loans to farmers	370		361				439
Real estate loans:
Construction	4,551		2,336				3,662		157
Commercial and farmland	95,930		69,024				71,569		3,328
Residential	11,262		7,338				7,926		244
Home equity	297		247				249
Other commercial loans	20
Total	$	134,581	$	90,975			$	96,423	$	4,217
Impaired loans with related allowance:
Commercial and industrial loans	$	3,043	$	2,690	$	1,247	$	2,752	$	38
Agriculture production financing and other loans to farmers	466		466		30		538
Real estate loans:
Commercial and farmland	2,144		1,933		392		1,868
Residential	2,300		1,463		173		1,787
Total	$	7,953	$	6,552	$	1,842	$	6,945	$	38
Total Impaired Loans	$	142,534	$	97,527	$	1,842	$	103,368	$	4,255

	December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,514	$	18,029			$	18,711	$	362
Agriculture production financing and other loans to farmers	26		22				26
Real estate loans:
Construction	12,956		9,318				9,837		427
Commercial and farmland	95,856		68,187				70,844		3,389
Residential	10,591		6,839				6,987		119
Home equity	3,590		398				402
Other commercial loans	30
Total	$	158,563	$	102,793			$	106,807	$	4,297
Impaired loans with related allowance:
Commercial and industrial loans	$	1,766	$	1,684	$	1,055	$	1,721	$	40
Agriculture production financing and other loans to farmers	6,777		5,777		400		8,044		1
Real estate loans:
Commercial and farmland	7,159		4,971		1,120		4,999		24
Residential	1,001		998		194		1,000
Total	$	16,703	$	13,430	$	2,769	$	15,764	$	65
Total Impaired Loans	$	175,266	$	116,223	$	2,769	$	122,571	$	4,362

	December 31, 2013
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,066	$	16,371			$	19,209	$	192
Agriculture production financing and other loans to farmers	32		30				32
Real estate loans:
Construction	16,109		10,625				11,621		117
Commercial and farmland	128,073		83,033				84,057		1,663
Residential	6,746		3,910				4,236		75
Home equity	3,299		112				225
Other commercial loans	454		172				181		1
Total	$	189,779	$	114,253			$	119,561	$	2,048
Impaired loans with related allowance:
Commercial and industrial loans	$	1,390	$	1,216	$	683	$	1,240	$	9
Real estate loans:
Commercial and farmland	4,657		4,215		894		4,291		9
Residential	74		71		6		76
Total	$	6,121	$	5,502	$	1,583	$	5,607	$	18
Total Impaired Loans	$	195,900	$	119,755	$	1,583	$	125,168	$	2,066

At December 31, 2015, the commercial impaired loan total of $97,527,000 included $11,365,000 and $1,841,000 in loans acquired from Ameriana and C Financial, respectively. At December 31, 2014, the commercial impaired loan total of $116,223,000 included $17,027,000 in loans acquired from Community. At December 31, 2013, the commercial impaired loan total of $119,755,000 included $69,448,000 in loans acquired from CFS.

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge offs, (iii) non-performing loans and (iv) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

• Pass - Loans that are considered to be of acceptable credit quality.

• Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification. The key distinctions of this category's classification are that it is indicative of an unwarranted level of risk; and weaknesses are considered “potential”, not “defined”, impairments to the primary source of repayment. Examples include businesses that may be suffering from inadequate management, loss of key personnel or significant customer or litigation.

• Substandard - A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Other characteristics may include:

o the likelihood that a loan will be paid from the primary source of repayment is uncertain or financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss,

o the primary source of repayment is gone, and the Corporation is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees,

o loans have a distinct possibility that the Corporation will sustain some loss if deficiencies are not corrected,

o unusual courses of action are needed to maintain a high probability of repayment,

o the borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments,

o the Corporation is forced into a subordinated or unsecured position due to flaws in documentation,

o loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms,

o the Corporation is seriously contemplating foreclosure or legal action due to the apparent deterioration of the loan, and

o there is significant deterioration in market conditions to which the borrower is highly vulnerable.

• Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable. Other credit characteristics may include the primary source of repayment is gone or there is considerable doubt as to the quality of the secondary sources of repayment. The possibility of loss is high, but because of certain important pending factors that may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

• Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical not desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the years indicated.  Consumer non-performing loans include accruing consumer loans 90 plus days delinquent and consumer non-accrual loans.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.

	December 31, 2015
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	962,340	$	48,432	$	45,984	$	319						$	1,057,075
Agriculture production financing and other loans to farmers	77,884		6,665		13,162									97,711
Real estate loans:
Construction	345,449		1,271		1,790					$	18,114	$	80	366,704
Commercial and farmland	1,679,141		46,442		77,338									1,802,921
Residential	171,576		3,107		10,428					593,533		7,461		786,105
Home equity	8,218		48		600					337,718		2,029		348,613
Individuals' loans for household and other personal expenditures										74,491		226		74,717
Lease financing receivables, net of unearned income	495				93									588
Other commercial loans	159,388													159,388
Loans	$	3,404,491	$	105,965	$	149,395	$	319		$	1,023,856	$	9,796	$	4,693,822

	December 31, 2014
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	823,732	$	24,455	$	48,226	$	275						$	896,688
Agriculture production financing and other loans to farmers	96,155		1,195		7,577									104,927
Real estate loans:
Construction	185,394		3,164		2,928					$	15,588	$	147	207,221
Commercial and farmland	1,552,781		29,484		90,161							235		1,672,661
Residential	149,430		6,321		10,918					470,972		9,674		647,315
Home equity	6,368		12		690					277,571		1,888		286,529
Individuals' loans for household and other personal expenditures										73,165		235		73,400
Lease financing receivables, net of unearned income	998				108									1,106
Other commercial loans	35,018													35,018
Loans	$	2,849,876	$	64,631	$	160,608	$	275		$	837,296	$	12,179	$	3,924,865

The following tables illustrate the past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	December 31, 2015
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	1,052,275	$	166					$	4,634	$	4,800	$	1,057,075
Agriculture production financing and other loans to farmers	96,884								827		827		97,711
Real estate loans:
Construction	362,084		3,884						736		4,620		366,704
Commercial and farmland	1,786,092		5,552						11,277		16,829		1,802,921
Residential	765,634		6,090		$	2,061	$	502	11,818		20,471		786,105
Home equity	344,344		1,433		560		324		1,952		4,269		348,613
Individuals' loans for household and other personal expenditures	73,990		445		56		81		145		727		74,717
Lease financing receivables, net of unearned income	588												588
Other commercial loans	159,324				64						64		159,388
Loans	$	4,641,215	$	17,570	$	2,741	$	907	$	31,389	$	52,607	$	4,693,822

	December 31, 2014
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	882,596	$	4,006	$	53	$	2,985	$	7,048	$	14,092	$	896,688
Agriculture production financing and other loans to farmers	98,236		891						5,800		6,691		104,927
Real estate loans:
Construction	204,683		1,017		82				1,439		2,538		207,221
Commercial and farmland	1,642,016		9,846		778		$	671	19,350		30,645		1,672,661
Residential	626,821		4,876		1,831		854		12,933		20,494		647,315
Home equity	282,828		1,213		352		148		1,988		3,701		286,529
Individuals' loans for household and other personal expenditures	72,853		258		53		5		231		547		73,400
Lease financing receivables, net of unearned income	1,106												1,106
Other commercial loans	35,018												35,018
Loans	$	3,846,157	$	22,107	$	3,149	$	4,663	$	48,789	$	78,708	$	3,924,865

See the information regarding the analysis of loan loss experience in the “Loan Quality" and "Provision And Allowance For Loan Losses" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

On occasion, borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays including debt payments. Concurrently, in an effort to preserve and protect its earning assets, specifically troubled loans, the Corporation is working to maintain its relationship with certain customers who are experiencing financial difficulty by contractually modifying the borrower's debt agreement with the Corporation. In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a trouble debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be paid.

The following tables summarize troubled debt restructurings that occurred during the periods ended December 31, 2015 and 2014:

	December 31, 2015
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Commercial and industrial loans	$	4,111	$	2,115	7
Real estate loans:
Construction	79		80		1
Commercial and farmland	1,281		3,024		3
Residential	200		1,113		10
Home equity	263		242		1
Individuals' loans for household and other personal expenditures	26		27		1
Total	$	5,960	$	6,601	23

	December 31, 2014
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Real estate loans:
Commercial and farmland	$	259	$	259	1
Residential	632		622		9
Home equity	320		350		11
Individuals' loans for household and other personal expenditures	26		26		2
Total	$	1,237	$	1,257	23

The following tables show the recorded investment of troubled debt restructurings, by modification type, that occurred during the years indicated:

	December 31, 2015
	Term Modification		Rate Modification		Combination		Total Modification
Commercial and industrial loans	$	761			$	1,053	$	1,814
Real estate loans:
Commercial and farmland	1,231				1,026		2,257
Residential	823		$	170	45		1,038
Home equity			242				242
Individuals' loans for household and other personal expenditures			27				27
Total	$	2,815	$	439	$	2,124	$	5,378

	December 31, 2014
	Term Modification		Rate Modification		Combination		Total Modification
Real estate loans:
Commercial and farmland	$	288					$	288
Residential	31		$	218	$	360	609
Home equity			100		243		343
Individuals' loans for household and other personal expenditures					23		23
Total	$	319	$	318	$	626	$	1,263

Loans secured by commercial and farmland real estate made up 46 percent of the post-modification balances of the troubled debt restructured loans during the twelve months ending December 31, 2015.  The second largest class of troubled debt restructurings during 2015 was commercial and industrial loans, which accounted for 32 percent of the total post modification balances.

The following tables summarize troubled debt restructures that occurred during the twelve months ended December 31, 2015 and 2014, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due.

	Twelve Months Ended December 31, 2015
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	21
Total	1	$	21

	Twelve Months Ended December 31, 2014
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	70
Total	1	$	70

For potential consumer loan restructures, impairment evaluation occurs prior to modification. Any subsequent impairment is typically addressed through the charge off process, or may be addressed through a specific reserve. Consumer troubled debt restructurings are generally included in the general historical allowance for loan loss at the post modification balance. Consumer non-accrual and delinquent troubled debt restructurings are also considered in the calculation of the non-accrual and delinquency trend environmental allowance allocation. Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for impairment under ASC 310. Any resulting specific reserves are included in the allowance for loan losses. Commercial 30 - 89 day delinquent troubled debt restructurings are included in the calculation of the delinquency trend environmental allowance allocation. All commercial non-impaired loans, including non-accrual and 90+ day delinquents, are included in the ASC 450 loss migration analysis.

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Accounting for Certain Loans Acquired in a Purchase

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Accounting for Certain Loans Acquired in a Purchase

ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A PURCHASE

The Bank acquired loans in a purchase during the years ended December 31, 2015, 2014, 2013 and 2012. The acquired loans detailed in the tables below are included in Note 5. LOANS AND ALLOWANCE, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. As described in Note 5, loans purchased after December 31, 2008 are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable portion of the fair value discount or premium. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. All other loans not accounted for under ASC 310-30 are accounted for under ASC 310-20 which allows the remaining fair value adjustment to be accreted into income over the remaining life of the loans.

The following table includes the outstanding balance and carrying amount of all the performing and non-performing acquired loans, which are included in the Corporation's balance sheet at December 31, 2015 and 2014.

	December 31, 2015
	Ameriana		C Financial		Community		CFS		SCB		Total
Outstanding Balance:
Commercial and industrial loans	$	21,888	$	104	$	6,769	$	52,060	$	4,620	$	85,441
Agricultural production financing and other loans to farmers					1,761				1,288		3,049
Real estate loans:
Construction	23,365		6,214		10,436		976				40,991
Commercial and farmland	144,514		27,838		49,997		189,372		13,293		425,014
Residential	123,231		55,856		21,886		118,105		6,063		325,141
Home Equity	14,261		9,144		8,231		31,986		13,431		77,053
Individuals' loans for household and other personal expenditures	1,731		10		461		443		48		2,693
Other commercial loans	1,928						72				2,000
Total	$	330,918	$	99,166	$	99,541	$	393,014	$	38,743	$	961,382
Carrying Amount	$	319,664	$	96,829	$	93,355	$	373,649	$	34,092	$	917,589
Allowance					4		149				153
Carrying Amount Net of Allowance	$	319,664	$	96,829	$	93,351	$	373,500	$	34,092	$	917,436

	December 31, 2014
	Community		CFS		SCB		Total
Outstanding Balance:
Commercial and industrial loans	$	8,168	$	64,897	$	6,059	$	79,124
Agricultural production financing and other loans to farmers	1,100				893		1,993
Real estate loans:
Construction	19,063		9,113				28,176
Commercial and farmland	74,600		251,002		15,593		341,195
Residential	28,863		144,396		7,384		180,643
Home Equity	9,881		39,244		15,758		64,883
Individuals' loans for household and other personal expenditures	1,314		922		121		2,357
Other commerical loans			86				86
Total	$	142,989	$	509,660	$	45,808	$	698,457
Carrying Amount	$	134,198	$	484,949	$	39,324	$	658,471
Allowance			650				650
Carrying Amount Net of Allowance	$	134,198	$	484,299	$	39,324	$	657,821

Certain purchased credit impaired loans with subsequent deterioration since acquisition required an allowance for loan losses and corresponding provision expense of $153,000 and $650,000 at December 31, 2015 and 2014, respectively.

As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield, are identified in the table below.

	Twelve Months Ended December 31, 2015
	Ameriana		C Financial			Community			CFS			SCB			Total
Beginning balance						$	2,122		$	2,400		$	868		$	5,390
Additions	$	2,848	$	145											2,993
Accretion			(31		)	(723		)	(4,050		)	(1,046		)	(5,850		)
Reclassification from nonaccretable						249			2,854			822			3,925
Disposals						(140		)	(16		)	(2		)	(158		)
Ending balance	$	2,848	$	114		$	1,508		$	1,188		$	642		$	6,300

	Twelve Months Ended December 31, 2014
	Community			CFS			SCB			Total
Beginning balance				$	4,164		$	1,388		$	5,552
Additions	$	2,234								2,234
Accretion	(231		)	(4,146		)	(1,062		)	(5,439		)
Reclassification from nonaccretable	119			2,553			577			3,249
Disposals				(171		)	(35		)	(206		)
Ending balance	$	2,122		$	2,400		$	868		$	5,390

	Twelve Months Ended December 31, 2013
	CFS			SCB			Total
Beginning balance				$	1,715		$	1,715
Additions	$	3,502					3,502
Accretion	(10		)	(463		)	(473		)
Reclassification from nonaccretable	672			177			849
Disposals				(41		)	(41		)
Ending balance	$	4,164		$	1,388		$	5,552

The following table presents loans acquired during the periods ending December 31, 2015 and 2014, for which it was probable at acquisition that all contractually required payments would not be collected:

	2015						2014
	Ameriana		C Financial		Total		Community
Contractually required payments receivable at acquisition date	$	29,093	$	2,632	$	31,725	$	26,032
Nonaccretable difference	13,728		637		14,365		3,498
Expected cash flows at acquisition date	15,365		1,995		17,360		22,534
Accretable difference	2,848		145		2,993		2,234
Basis in loans at acquisition date	$	12,517	$	1,850	$	14,367	$	20,300

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Premises and Equipment

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Premises and Equipment

PREMISES AND EQUIPMENT

The following table summarizes the Corporation's premises and equipment as of December 31, 2015 and 2014:

	2015			2014
Cost at December 31:
Land	$	26,510		$	19,373
Buildings and Leasehold Improvements	115,461			99,451
Equipment	64,892			56,606
Total Cost	206,863			175,430
Accumulated Depreciation and Amortization	(109,215		)	(97,739		)
Net	$	97,648		$	77,691

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in additions to premises and equipment of $14,491,000 and $7,290,000, respectively. Additionally, on November 7, 2014, the Community acquisition resulted in an addition to premises and equipment of $3,610,000. Details regarding the acquisitions are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The Corporation is committed under various non-cancelable lease contracts for certain subsidiary office facilities and equipment. Total lease expense for 2015, 2014 and 2013 was $3,456,000, $3,258,000 and $2,608,000, respectively. The future minimum rental commitments required under the operating leases in effect at December 31, 2015, expiring at various dates through the year 2035 are as follows for the years ending December 31:

	Future Minimum Rental Commitments
2016	$	3,076
2017	2,353
2018	1,419
2019	1,222
2020	1,060
After 2020	6,629
Total Future Minimum Obligations	$	15,759

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Goodwill

12 Months Ended

Dec. 31, 2015

Goodwill Disclosure [Abstract]

Goodwill

GOODWILL

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in goodwill of $37,753,000 and $11,126,000, respectively. On June 12, 2015, the sale of FMIG resulted in a goodwill reduction of $8,474,000. Additionally, on November 7, 2014, the Community acquisition resulted in goodwill of $13,776,000. Details regarding the acquisitions and sale are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

No impairment loss was recorded in 2015 or 2014. The Corporation tested goodwill for impairment during 2015 and 2014. In both valuations, the fair value exceeded the Corporation’s carrying value; therefore, it was concluded goodwill is not impaired. For additional details related to impairment testing, see the “GOODWILL” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 7 of this Annual Report on Form 10-K.

	2015			2014
Balance, January 1	$	202,724		$	188,948
Goodwill acquired	48,879			13,776
Goodwill reduction	$	(8,474	)
Balance, December 31	$	243,129		$	202,724

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Core Deposit and Other Intangibles

12 Months Ended

Dec. 31, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Core Deposit and Other Intangibles

CORE DEPOSIT AND OTHER INTANGIBLES

The Ameriana acquisition on December 31, 2015 and the C Financial acquisition on April 17, 2015 resulted in a core deposit intangible of $3,200,000 and $981,000, respectively. On June 12, 2015, the sale of FMIG resulted in an other intangible reduction of $742,000. Additionally, on November 7, 2014, the Community acquisition resulted in a core deposit intangible of $4,658,000. Details regarding the acquisitions and sale are discussed in Note 2. ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

The carrying basis and accumulated amortization of recognized core deposit and other intangibles are noted below.

	2015			2014
Gross carrying amount	$	58,360		$	53,702
Core deposit intangible and other intangibles acquired	4,181			4,658
Accumulated amortization	(45,164		)	(42,329		)
Core deposit intangible and other intangibles reduction	(742		)
Core Deposit and Other Intangibles	$	16,635		$	16,031

Amortization expense for the years ended December 31, 2015, 2014 and 2013, was $2,835,000, $2,445,000 and $1,649,000, respectively.

Estimated future amortization expense is summarized as follows:

	Amortization Expense
2016	$	3,055
2017	3,017
2018	1,904
2019	1,676
2020	1,618
After 2020	5,365
Total Future Minimum Obligations	$	16,635

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Deposits

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Deposits

DEPOSITS

The composition of the deposit portfolio is included in the table below for the years indicated:

	December 31, 2015		December 31, 2014
Demand deposits	$	2,576,283	$	2,146,492
Savings deposits	1,518,722		1,376,707
Certificates and other time deposits of $100,000 or more	323,698		260,685
Other certificates and time deposits	556,476		523,010
Brokered deposits	314,468		333,800
Total deposits	$	5,289,647	$	4,640,694

At December 31, 2015, the contractual maturities of time deposits are summarized as follows:

	Certificates and Other Time Deposits
2016	$	600,551
2017	272,652
2018	126,929
2019	74,750
2020	55,187
After 2020	64,573
	$	1,194,642

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Transfers Accounted for as Secured Borrowings

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Transfers Accounted for as Secured Borrowings

TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of December 31, 2015 were:

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	131,537	$	5,680	$	8,892	$	9,216	$	155,325

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Borrowings

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Borrowings

BORROWINGS

The following table summarizes the Corporation's borrowings as of December 31, 2015 and 2014:

	December 31, 2015		December 31, 2014
Federal funds purchased	$	49,721	$	15,381
Securities sold under repurchase agreements	155,325		124,539
Federal Home Loan Bank advances	235,652		145,264
Subordinated debentures and term loans	127,846		126,810
Total Borrowings	$	568,544	$	411,994

Securities sold under repurchase agreements consist of obligations of the Bank to other parties. The obligations are secured by U.S. Treasury and U.S. Government-Sponsored Enterprise obligations, certain municipal securities and mortgage loans. The maximum amount of outstanding agreements at any month-end during 2015 and 2014 totaled $163,128,000 and $155,941,000, respectively, and the average of such agreements totaled $143,491,000 and $130,910,000 during 2015 and 2014, respectively.

Maturities of borrowings as of December 31, 2015, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2016	$	49,721	$	155,325	$	91,441	$	183
2017					37,222
2018					26,851
2019					13,828
2020					31,310
After 2020					35,000		132,012
ASC 805 fair value adjustments at acquisition							(4,349		)
	$	49,721	$	155,325	$	235,652	$	127,846

The terms of a security agreement with the FHLB require the Corporation to pledge, as collateral for advances, qualifying first mortgage loans, investment securities and multi-family loans in an amount equal to at least 146 percent of these advances depending on the type of collateral pledged. Advances, with interest rates from 0 to 6.81 percent, are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at December 31, 2015, was $388,176,000. As of December 31, 2015, the Corporation had $25,000,000 putable advances with the FHLB. Additionally as part of the Ameriana acquisition on December 31, 2015, the Corporation assumed approximately $24,938,000 of Federal Home Loan Bank Advances. The C Financial acquisition on April 17, 2015 resulted in an additional $18,958,000 of Federal Home Loan Bank advances at acquisition, of which approximately $7,361,000 matured during 2015 and $11,597,000 remained at December 31, 2015.

Subordinated Debentures and Term Loans. As of December 31, 2015, subordinated debentures and term loans totaled $127,846,000.

• First Merchants Capital Trust II. The subordinated debenture was entered into on July 2, 2007 for $56,702,000. On August 10, 2015, the Corporation completed the cancellation of $5 million of subordinated debentures at a gain of $1,250,000. As of December 31, 2015, $51,702,000 of subordinated debentures remain outstanding with a maturity date of September 15, 2037. The Corporation could not redeem the debenture prior to September 15, 2012, and redemption is subject to the prior approval of the Board of Governors of the Federal Reserve System, as required by law or regulation. Interest was fixed at 6.495 percent for the period from the date of issuance through September 15, 2012; interest is now an annual floating rate equal to the three-month LIBOR plus 1.56 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2015 was 2.1 percent. The Corporation holds all of the outstanding common securities of First Merchants Capital Trust II.

• Ameriana Capital Trust I. On December 31, 2015 the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. The subordinated debentures of Ameriana Capital Trust I were entered into in March 2007 for $10,310,000 and have a maturity of March 2036. The interest rate is equal to the three-month LIBOR plus 1.50 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2015 was 2.0 percent. The Corporation holds all of the outstanding common securities of Ameriana Capital Trust I.

• On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the "Senior Debt") and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the "Subordinated Debt"). The interest rate on the Senior Debt and Subordinated Debt remains fixed for the first ten (10) years and will become floating thereafter. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants.

Line of Credit. As of December 31, 2015, there was no outstanding balance on the line of credit.

• U.S. Bank, N.A. On April 11, 2014, the Corporation entered into a line of credit agreement with U.S. Bank, N.A. with a maximum borrowing capacity of $20 million. As of December 31, 2015, there was no outstanding balance on the line of credit. Interest is payable quarterly based on one-month LIBOR plus 2.00 percent. The line of credit has a quarterly facility fee of 0.25 percent on the unused balance. The line of credit agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2015, the Corporation was in compliance with these covenants. The line of credit was renewed on April 9, 2015 and will mature on April 8, 2016.

Subordinated Debentures and Term Loans. As of December 31, 2014, subordinated debentures and term loans totaled $126,810,000.

• First Merchants Capital Trust II. The subordinated debenture, entered into on July 2, 2007, for $56,702,000 will mature on September 15, 2037. The Corporation could not redeem the debenture prior to September 15, 2012, and redemption is subject to the prior approval of the Board of Governors of the Federal Reserve System, as required by law or regulation. Interest was fixed at 6.495 percent for the period from the date of issuance through September 15, 2012; interest is now an annual floating rate equal to the three-month LIBOR plus 1.56 percent, reset quarterly. Interest is payable in March, June, September and December of each year. The interest rate at December 31, 2014 was 1.8 percent. The Corporation holds all of the outstanding common securities of First Merchants Capital Trust II.

• On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the "Senior Debt") and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the "Subordinated Debt"). The interest rate on the Senior Debt and Subordinated Debt remains fixed for the first ten (10) years and will become floating thereafter. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2014, the Corporation was in compliance with these covenants. The net proceeds of the placement were used to pay off the Corporation's $55 million credit facility with Bank of America, N.A. which was scheduled to mature on February 15, 2015.

Line of Credit. As of December 31, 2014, there was no outstanding balance on the line of credit.

• U. S. Bank, N.A. On April 11, 2014, the Corporation entered into a line of credit agreement with the U. S. Bank, N.A. with a maximum borrowing capacity of $20 million. As of December 31, 2014, there was no outstanding balance on the line of credit. Interest is payable quarterly based on one-month LIBOR plus 2.00 percent. The line of credit has a quarterly facility fee of 0.25 percent on the unused balance. The maturity date for the line of credit is April 10, 2015. The line of credit agreement contains certain customary representations and warranties and financial and negative covenants. As of December 31, 2014, the Corporation was in compliance with these covenants.

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Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Corporation is exposed to certain risks arising from both its business operations and economic conditions.  The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments.  Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities.  The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities.  The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2015 and December 31, 2014.

Asset Derivatives

Liability Derivatives

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

36

Other Assets

$

137

Other Liabilities

$

2,921

Other Liabilities

$

2,650

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

4,938

Other Assets

$

3,730

Other Liabilities

$

5,149

Other Liabilities

$

3,887

Cash Flow Hedges of Interest Rate Risk

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.  As of December 31, 2015 and 2014, the Corporation had five interest rate swaps with a notional amount of $56.0 million and one interest rate cap with a notional amount of $13.0 million.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2015, $26.0 million of the interest rate swaps and the $13.0 million interest rate cap were used to hedge the variable cash outflows (LIBOR-based) associated with existing trust preferred securities when the outflows converted from a fixed rate to variable rate in September 2012.  In addition, the remaining $30.0 million of interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with three Federal Home Loan Bank advances. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2015 and 2014, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation’s variable-rate liabilities.  During the next twelve months, the Corporation expects to reclassify $1,157,000 from accumulated other comprehensive income to interest expense.

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of December 31, 2015, the notional amount of customer-facing swaps was approximately $192,759,000.  This amount is offset with third party counterparties, as described above. 

Effect of Derivative Instruments on the Income Statement

The tables below present the effect of the Corporation’s derivative financial instruments on the Income Statement for the years ended December 31, 2015, 2014 and 2013.

Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2015			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2014			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2013
Interest rate contracts	Other income	$	(53	)	$	(73	)	$	247

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) For the Year Ended						Location of Loss Reclassified from Accumulated Other Comprehensive Income (Effective Portion)	Amount of Loss Reclassified from Other Comprehensive Income into Income (Effective Portion) For the Year Ended
	2015			2014				2015			2014			2013
Interest rate products	$	(1,681	)	$	(3,996	)	Interest expense	$	(1,427	)	$	(1,411	)	$	(935	)

The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties.  The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s, at or above investment grade.  The Corporation’s control of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging.

Credit-Risk-Related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well/adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of December 31, 2015, the termination value of derivatives in a net liability position related to these agreements was $8,367,000. As of December 31, 2015, the Corporation has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $11,690,000. If the Corporation had breached any of these provisions at December 31, 2015, it could have been required to settle its obligations under the agreements at their termination value.

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Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Values of Financial Instruments

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation used fair value measurements to record fair value adjustments, to certain assets, and liabilities and to determine fair value disclosures. The accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  ASC 820 applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances.

As defined in ASC 820, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. The Corporation values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).

Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of the Corporation. Unobservable inputs are assumptions based on the Corporation’s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs for which there is little or no market activity (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted prices for similar assets; (ii) observable inputs for the asset or liability, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation considers an input to be significant if it drives 10 percent or more of the total fair value of a particular asset or liability.

RECURRING MEASUREMENTS

Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted, market prices are available in an active market and securities are classified within Level 1 of the valuation hierarchy. There are no securities classified within Level 1 of the hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include agencies, government-sponsored mortgage backs, state and municipal and equity securities and certificates of deposit. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal, corporate obligations and equity securities. Level 3 fair value on state and municipal, corporate obligations and equity securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3.

Interest Rate Derivative Agreements

See information regarding the Corporation’s interest rate derivative products in Note 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820-10 fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	104		$	104
State and municipal	305,911			300,014		$	5,897
U.S. Government-sponsored mortgage-backed securities	346,266			346,266
Certificates of deposit	2,176			2,176
Corporate obligations	31					31
Equity securities	3,912			3,908		4
Interest rate swap asset	4,938			4,938
Interest rate cap	36			36
Interest rate swap liability	8,070			8,070

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	109		$	109
State and municipal	228,593			221,982		$	6,611
U.S. Government-sponsored mortgage-backed securities	319,104			319,104
Corporate obligations	31					31
Equity securities	1,706			1,702		4
Interest rate swap asset	3,730			3,730
Interest rate cap	137			137
Interest rate swap liability	6,537			6,537

LEVEL 3 RECONCILIATION

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for year ended December 31, 2015 and 2014.

	Available for Sale Securities
	For The Year Ended
	December 31, 2015			December 31, 2014
Beginning Balance	$	6,646		$	9,977
Included in other comprehensive income	199			3,656
Principal payments	(913		)	(6,987		)
Ending balance	$	5,932		$	6,646

There were no gains or losses for the period included in earnings that were attributable to the changes in unrealized gains or losses related to assets or liabilities held at December 31, 2015 or 2014.

TRANSFERS BETWEEN LEVELS

There were no transfers in or out of Level 3 during 2015 or 2014.

NONRECURRING MEASUREMENTS

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for year ended December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	7,066			$	7,066
Other real estate owned	$	5,529			$	5,529

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	17,134			$	17,134
Other real estate owned	$	5,155			$	5,155

Impaired Loans (collateral dependent)

Loans for which it is probable that the Corporation will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. During 2015, certain impaired loans were partially charged off or re-evaluated. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Other Real Estate Owned

The fair value for impaired loans and other real estate owned is measured based on the value of the collateral securing those loans or real estate and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of,  asset appraisals, accounts receivable aging reports, inventory listings andor customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

UNOBSERVABLE (LEVEL 3) INPUTS

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at December 31, 2015 and 2014.

December 31, 2015	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	5,897	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .80% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	7,066	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (2%)
Other real estate owned	$	5,529	Appraisals	Discount to reflect current market conditions	0% - 20% (2%)

December 31, 2014	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	6,611	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .90% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	17,134	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (3%)
Other real estate owned	$	5,155	Appraisals	Discount to reflect current market conditions	0% - 20% (7%)

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

State and Municipal Securities, Corporate Obligations and Equity Securities

The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities, corporate obligations and equity securities are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Corporation's financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

	2015
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	102,170	$	102,170
Interest-bearing time deposits	32,315		32,315
Investment securities available for sale	658,400				$	652,468	$	5,932
Investment securities held to maturity	618,599				598,082		34,298
Loans held for sale	9,894				9,894
Loans	4,631,369						4,539,940
Federal Reserve and Federal Home Loan Bank stock	37,633				37,633
Interest rate swap asset	4,974				4,974
Interest receivable	24,415				24,415
Liabilities at December 31:
Deposits	$	5,289,647	$	4,095,004	$	1,177,142
Borrowings:
Federal funds purchased	49,721				49,721
Securities sold under repurchase agreements	155,325				155,325
Federal Home Loan Bank advances	235,652				236,375
Subordinated debentures and term loans	127,846				103,643
Interest rate swap liability	8,070				8,070
Interest payable	3,092				3,092

	2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	118,616	$	118,616
Interest-bearing time deposits	47,520		47,520
Investment securities available for sale	549,543				$	542,897	$	6,646
Investment securities held to maturity	631,088				614,457		33,266
Loans held for sale	7,235				7,235
Loans	3,860,901						3,810,912
Federal Reserve and Federal Home Loan Bank stock	41,353				41,353
Interest rate swap asset	3,867				3,867
Interest receivable	19,984				19,984
Liabilities at December 31:
Deposits	$	4,640,694	$	3,532,199	$	1,099,610
Borrowings:
Federal funds purchased	15,381				15,381
Securities sold under repurchase agreements	124,539				124,539
Federal Home Loan Bank advances	145,264				146,669
Subordinated debentures and term loans	126,810				92,802
Interest rate swap liability	6,537				6,537
Interest payable	3,201				3,201

The following methods were used to estimate the fair value of all other financial instruments recognized in the Consolidated Condensed Balance Sheets at amounts other than fair value.

Cash and cash equivalents:  The fair value of cash and cash equivalents approximates carrying value.

Interest-bearing time deposits:  The fair value of interest-bearing time deposits approximates carrying value.

Investment securities:  Fair value is based on quoted market prices, if available.  If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The fair value of certain Level III securities is estimated using discounted cash flow analysis, using interest rates currently being offered on investments with similar maturities and investment quality.

Loans held for sale:  The carrying amount approximates fair value due to the short duration between origination and date of sale.

Loans:  The fair value for loans is estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  See Impaired Loans above.

Federal Reserve and Federal Home Loan Bank stock:  The fair value of Federal Reserve Bank and Federal Home Loan Bank stock is based on the price which it may be resold to the Federal Reserve and Federal Home Loan Bank.

Derivative instruments:  The fair value of interest rate swaps reflect the estimated amounts that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.  Interest rate caps are valued using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rate of the caps.  The projected cash receipts on the caps are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities.

Interest receivable and Interest payable:  The fair value of interest receivable/payable approximates carrying value.

Deposits:  The fair values of noninterest-bearing and interest-bearing demand accounts and savings deposits are equal to the amount payable on demand at the balance sheet date. The carrying amounts for variable rate, fixed-term certificates of deposit approximate their fair values at the balance sheet date. Fair values for fixed-rate certificates of deposit and other time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to a schedule of aggregated expected monthly maturities on such time deposits.

Borrowings:  The fair value of Federal Funds purchased approximates the carrying amount. The fair value of all other borrowings is estimated using a discounted cash flow calculation, based on current rates for similar debt.

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Commitments and Contingent Liabilities

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business there are outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying financial statements.  The Corporation's exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments.  The Bank uses the same credit policies in making such commitments as they do for instruments that are included in the consolidated balance sheets.

Financial instruments, whose contract amount represents credit risk as of December 31, were as follows:

	2015		2014
Amounts of commitments:
Loan commitments to extend credit	$	1,547,048	$	1,617,552
Standby letters of credit	$	46,734	$	52,655

Commitments to extend credit are agreements to lend to a customer, as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation.  Collateral held varies, but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.

The Corporation and subsidiaries are also subject to claims and lawsuits, which arise primarily in the ordinary course of business.  It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Corporation.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS' EQUITY

National banking laws restrict the maximum amount of dividends that a bank may pay in any calendar year.  National banks are limited to the bank’s retained net income (as defined) for the current year plus those for the previous two years.  The amount at December 31, 2015, available for 2016 dividends from the Corporation’s subsidiaries (both banking and non-banking) was $29,812,000.

Total stockholders' equity for all subsidiaries at December 31, 2015, was $930,360,000 of which $900,548,000 was restricted from dividend distribution to the Corporation.

The Corporation has a Dividend Reinvestment and Stock Purchase Plan, enabling stockholders to elect to have their cash dividends on all shares automatically reinvested in additional shares of the Corporation’s common stock. In addition, stockholders may elect to make optional cash payments up to an aggregate of $2,500 per quarter for the purchase of additional shares of common stock.  The stock is credited to participant accounts at fair market value.  Dividends are reinvested on a quarterly basis.

Preferred Stock

On September 22, 2011, the Corporation entered into a Securities Purchase Agreement with the Treasury, pursuant to which the Corporation issued 90,782.94 shares of the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”), having a liquidation amount per share equal to $1,000, for a total purchase price of $90,782,940. The Purchase Agreement was entered into, and the Series B Preferred Stock was issued, pursuant to the SBLF program, a $30 billion fund established under the Small Business Jobs Act of 2010, that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion.

On January 3, 2013, the Corporation redeemed 22,695.94 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $22,695,940 plus accrued but unpaid dividends. Following the redemption, the Treasury held 68,087 shares of the Series B Preferred Stock representing a remaining liquidation amount of approximately $68 million.

On July 2, 2013, the Corporation redeemed an additional 34,044 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,044,000 plus accrued but unpaid dividends. Following the redemption, the Treasury held 34,043 shares of the Series B Preferred Stock representing a remaining liquidation amount of approximately $34 million.

On November 22, 2013, the Corporation redeemed the final 34,043 shares of the Series B Preferred Stock held by the Treasury at an aggregate redemption price of $34,043,000 plus accrued but unpaid dividends. There are no shares of the Corporation's Series B Preferred Stock currently outstanding.

CFS Acquisition

On November 12, 2013, the Corporation acquired 100 percent of CFS Bancorp, Inc. ("CFS") in an all stock transaction. Pursuant to the merger agreement, the shareholders of CFS received 0.65 percent of a share of the Corporation's common stock for each share of CFS Bancorp common stock held. The Corporation issued approximately 7.1 million shares of common stock, which was valued at approximately $135.6 million.

Community Acquisition

On November 7, 2014, the Corporation acquired 100 percent of Community Bancshares, Inc. ("Community"). Pursuant to the merger agreement, each outstanding share of common stock of Community was converted into the right to receive either (a) 4.0926 shares of First Merchants' common stock, plus cash in lieu of fractional shares; or (b) $85.94 in cash, based upon shareholder elections. The Corporation paid $14.2 million in cash and issued approximately 1.6 million shares of common stock, valued at approximately $35.0 million, for a total purchase price of approximately $49.2 million.

Ameriana Acquisition

On December 31, 2015, the Corporation acquired 100 percent of Ameriana Bancorp, Inc., ("Ameriana"). Pursuant to the merger agreement, each Ameriana shareholder received 0.9037 of a share of First Merchants common stock for each outstanding share of Ameriana Bancorp common stock held. The Corporation issued approximately 2.8 million shares of common stock, which was valued at approximately $70.4 million.

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of December 31, 2015 and 2014:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale			Unrealized Gains (Losses) on Securities Available for Sale for which a Portion of Other-Than-Temporary Impairment has been Recognized in Income			Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Defined Benefit Plans			Total
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)
Other comprehensive income before reclassifications	(37		)				(1,093		)	2,404			1,274
Amounts reclassified from accumulated other comprehensive income	(1,736		)				928			(198		)	(1,006		)
Period change	(1,773		)	—			(165		)	2,206			268
Balance at December 31, 2015	$	12,325		$	—		$	(2,347	)	$	(11,340	)	$	(1,362	)
Balance at December 31, 2013	$	1,566		$	(1,847	)	$	(501	)	$	(5,628	)	$	(6,410	)
Other comprehensive income before reclassifications	14,860			1,847			(2,599		)	(7,580		)	6,528
Amounts reclassified from accumulated other comprehensive income	(2,328		)				918			(338		)	(1,748		)
Period change	12,532			1,847			(1,681		)	(7,918		)	4,780
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the twelve months ended December 31, 2015, 2014 and 2013:

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2015			2014			2013			Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	2,670		$	3,581		$	487		Other income - net realized gains on sales of available for sale securities
Related income tax expense	(934		)	(1,253		)	(170		)	Income tax expense
	$	1,736		$	2,328		$	317
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(1,427	)	$	(1,411	)	$	(935	)	Interest expense - subordinated debentures and term loans
Related income tax benefit	499			493			327			Income tax expense
	$	(928	)	$	(918	)	$	(608	)
Unrealized gains (losses) on defined benefit plans
Amortization of net loss and prior service costs	$	305		$	520		$	(1,765	)	Other expenses - salaries and employee benefits
Related income tax benefit (expense)	(107		)	(182		)	618			Income tax expense
	$	198		$	338		$	(1,147	)
Total reclassifications for the period, net of tax	$	1,006		$	1,748		(1,438		)

⁽¹⁾ For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive income see Note 4. INVESTMENT SECURITIES.

⁽²⁾ For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see Note 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.

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Regulatory Capital

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Regulatory Capital

REGULATORY CAPITAL

Capital adequacy is an important indicator of financial stability and performance.  The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category.  The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 capital, and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity.  The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.  

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations.  Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels.  The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice.  Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III was effective for the Corporation on January 1, 2015. Basel III requires the Corporation and the Bank to maintain minimum amounts and ratio of common equity tier 1 capital to risk weighted assets, as defined in the regulation. Under the new Basel III rules, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a capital conservation buffer above the adequately capitalized common equity tier 1 capital to risk-weighted assets ratio. The capital conservation buffer is being phased in from zero percent to 2.50 percent by 2019. Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. Regulatory capital ratios at December 31, 2015, were calculated under Basel III while regulatory capital ratios at December 31, 2014, were calculated under Basel I.

As of December 31, 2015, the Bank met all capital adequacy requirements to be considered well capitalized. There is no threshold for well capitalized status for bank holding companies. The Corporation's and Bank's actual and required capital ratios as of December 31, 2015 and December 31, 2014 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	783,776	14.94	%	$	419,809	8.00	%	N/A		N/A
First Merchants Bank	739,793		13.98		423,242		8.00		$	529,052	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	656,323	12.51	%	$	314,857	6.00	%	N/A		N/A
First Merchants Bank	677,340		12.80		317,431		6.00		$	423,242	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	603,063	11.49	%	$	236,143	4.50	%	N/A		N/A
First Merchants Bank	677,340		12.80		238,074		4.50		$	343,884	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	656,323	10.85	%	$	242,001	4.00	%	N/A		N/A
First Merchants Bank	677,340		11.22		241,423		4.00		$	301,779	5.00	%
					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	685,507	15.34	%	$	357,581	8.00	%	N/A		N/A
First Merchants Bank	653,169		14.64		356,884		8.00		$	446,105	10.00	%
Tier 1 capital to risk weighted assets
First Merchants Corporation	$	564,535	12.63	%	$	178,791	4.00	%	N/A		N/A
First Merchants Bank	597,305		13.39		178,442		4.00		$	267,663	6.00	%
Tier 1 capital to average assets
First Merchants Corporation	$	564,535	10.15	%	$	222,533	4.00	%	N/A		N/A
First Merchants Bank	597,305		10.56		226,339		4.00		$	282,953	5.00	%

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Loan Servicing

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Loan Servicing

LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets.  The loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Fannie Mae, and Federal Home Loan Bank of Indianapolis, and the unpaid balances totaled $312,204,000, $254,223,000 and $271,871,000 at December 31, 2015, 2014 and 2013, respectively.  The amount of capitalized servicing assets is considered immaterial.

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Share-Based Compensation

12 Months Ended

Dec. 31, 2015

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

Share-Based Compensation

SHARE-BASED COMPENSATION

Stock options and restricted stock awards ("RSAs") have been issued to directors, officers and other management employees under the Corporation's 1999 Long-term Equity Incentive Plan and the 2009 Long-term Equity Incentive Plan.  The stock options, which have a ten-year life, become 100 percent vested ranging from six months to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant.  RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSA's vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. RSAs for employees and non-employee directors retired from the Corporation are either immediately vested at retirement or continue to vest after retirement, depending on the plan under which the shares were granted. Deferred stock units ("DSUs") can be credited to non-employee directors who elect to defer payment of compensation under the Corporation's 2008 Equity Compensation Plan for Non-employee Directors.  DSUs credited are equal to the restricted shares that the non-employee director would have received under the plan.  As of December 31, 2015, the Corporation did not have any outstanding DSUs.

The Corporation’s 2009 Employee Stock Purchase Plan (“ESPP”) provides eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $25,000.

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings. Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the years ended December 31, 2015, 2014, and 2013 was $2,270,000, $2,177,000, and $1,773,000, respectively, and has been recognized as a component of salaries and benefits expense in the accompanying CONSOLIDATED STATEMENTS OF INCOME.

There were no stock options granted in 2015. The estimated fair value of the stock options granted during 2014 and 2013 was calculated using a Black-Scholes option pricing model.  The following summarizes the assumptions used in the Black-Scholes model for those options granted in 2014 and 2013:

	2014			2013
Risk-free interest rate	2.41	%		1.25	%
Expected price volatility	45.05	%		45.68	%
Dividend yield	2.73	%		2.96	%
Forfeiture rate	5.46	%		4.73	%
Weighted-average expected life, until exercise	7.74		years	7.27		years

The Black-Scholes model incorporates assumptions used to value share-based awards. The risk-free rate of interest, for periods equal to the expected life of the option, is based on a U.S. government instrument over a similar contractual term of the equity instrument. Expected price volatility is based on historical volatility of the Corporation’s common stock.  In addition, the Corporation generally uses historical information to determine the dividend yield and weighted-average expected life of the options until exercise. Separate groups of employees that have similar historical exercise behavior with regard to option exercise timing and forfeiture rates are considered separately for valuation and attribution purposes.

Share-based compensation expense recognized in the CONSOLIDATED STATEMENTS OF INCOME is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 5.5 percent for the year ended December 31, 2015, based on historical experience.

The following table summarizes the components of the Corporation's share-based compensation awards recorded as expense:

	Year Ended December 31,			Year Ended December 31,			Year Ended December 31,
	2015			2014			2013
Stock and ESPP Options
Pre-tax compensation expense	$	101		$	237		$	253
Income tax expense (benefit)	4			(47		)	(16		)
Stock and ESPP option expense, net of income taxes	$	105		$	190		$	237
Restricted Stock Awards
Pre-tax compensation expense	$	2,169		$	1,940		$	1,520
Income tax benefit	(749		)	(679		)	(531		)
Restricted stock awards expense, net of income taxes	$	1,420		$	1,261		$	989
Total Share-Based Compensation:
Pre-tax compensation expense	$	2,270		$	2,177		$	1,773
Income tax benefit	(745		)	(726		)	(547		)
Total share-based compensation expense, net of income taxes	$	1,525		$	1,451		$	1,226

As of December 31, 2015, unrecognized compensation expense related to RSAs was $3,269,000 and is expected to be recognized over weighted-average period of 1.28 years. The Corporation did not have any unrecognized compensation expense related to stock options as of December 31, 2015.

Stock option activity under the Corporation's stock option plans, as of December 31, 2015, and changes during the year ended December 31, 2015, were as follows:

	Number of Shares		Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2015	737,931		$	20.99
Exercised	(96,066	)	$	15.21
Canceled	(199,853	)	$	25.99
Outstanding December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Vested and Expected to Vest at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Exercisable at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319

There were no options granted during the year ended December 31, 2015. The weighted-average grant date fair value was $8.13 and $5.73 for stock options granted during the years ended December 31, 2014 and 2013, respectively.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on December 31, 2015.  The amount of aggregate intrinsic value will change based on the fair market value of the Corporation's common stock.  

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2015 and 2014 was $921,000 and $392,000, respectively. Cash receipts of stock options exercised during 2015 and 2014 were $1,461,000 and $504,000, respectively.

The following table summarizes information on unvested RSAs outstanding as of December 31, 2015:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2015	385,450		$	15.65
Granted	125,050		$	23.48
Forfeited	(6,419	)	$	17.99
Vested	(149,577	)	$	11.88
Unvested RSAs at December 31, 2015	354,504		$	19.65

The grant date fair value of ESPP options was estimated at the beginning of the October 1, 2015, quarterly offering period of approximately $23,000. The ESPP options vested during the three months ending December 31, 2015, leaving no unrecognized compensation expense related to unvested ESPP options at December 31, 2015.

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Pension and Other Post Retirement Benefit Plans

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Post Retirement Benefit Plans

PENSION AND OTHER POST RETIREMENT BENEFIT PLANS

The Corporation’s defined-benefit pension plans cover approximately 20 percent of the Corporation’s employees. In 2005, the Board of Directors of the Corporation approved the curtailment of the accumulation of defined benefits for future services provided by certain participants in the First Merchants Corporation Retirement Plan. No additional pension benefits have been earned by any employees who had not attained both the age of 55 and accrued at least 10 years of vesting service as of March 1, 2005. The benefits are based primarily on years of service and employees’ pay near retirement. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. The Corporation also maintains post retirement benefit plans that provide health insurance benefits to retirees. The plans allow retirees to be carried under the Corporation’s health insurance plan, generally from ages 55 to 65. The retirees pay 100 percent of the premiums due for their coverage. The table below sets forth the plans’ funded status and amounts recognized in the consolidated balance sheets at December 31, using measurement dates of December 31, 2015 and 2014.

	2015			2014
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	80,650		$	62,270
Service cost	55			73
Interest cost	3,087			3,235
Actuarial loss (gain)	(5,617		)	12,968
Benefits paid	(6,428		)	(5,541		)
Net transfers in from CFS acquisition				7,645
Benefit obligation at end of year	$	71,747		$	80,650
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	77,139		$	69,871
Actual return on plan assets	153			5,232
Employer contributions	532			504
Benefits paid	(6,428		)	(5,541		)
CFS acquisition				7,073
End of year	71,396			77,139
Funded status at end of year	$	(351	)	$	(3,511	)
Assets and Liabilities Recognized in the Balance Sheets:
Deferred tax asset	$	7,461		$	8,541
Assets	$	4,006		$	1,329
Liabilities	$	4,357		$	4,840
Amounts Recognized in Accumulated Other Comprehensive Income Not Yet Recognized as Components of Net Periodic (Benefit) Cost Consist of:
Accumulated loss	$	(13,857	)	$	(15,863	)
Prior service credit	(305		)	(346		)
	$	(14,162	)	$	(16,209	)

The actuarial gain recognized in 2015 was primarily due to an increase in the discount rate assumption from 4.00% at December 31, 2014 to 4.50% at December 31, 2015. The actuarial loss recognized in 2014 was primarily due to two factors. The first factor was a decrease in the discount rate assumption from 4.80% at December 31, 2013 to 4.00% at December 31, 2014. The second factor contributing to the loss was the Corporation's adoption of the Society of Actuaries new mortality tables.

Ameriana participated in the Pentegra Defined Benefit Plan for Financial Institutions (the "Pentegra Plan”), an industry-wide, tax-qualified defined-benefit pension plan. The Pentegra Plan operated as a multi-employer plan for accounting purposes and as a multiple employer plan under ERISA and the Internal Revenue Code. On November 20, 2015, Ameriana provided Pentegra a 60-day written notice of withdrawal as a Participating Employer in the Pentegra Plan. Upon completion of the withdrawal from the Pentegra Plan, the assets and liabilities will be merged into the First Merchants Corporation Retirement Plan. A liability of $5,435,000 has been recorded as the estimated final contribution to the Pentegra Plan to complete the withdrawal. The merging of the plan assets and liabilities is expected to occur in early 2016.

The accumulated benefit obligation for all defined benefit plans was $71,747,000 and $80,650,000 at December 31, 2015 and 2014, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets is included in the table below.

	December 31, 2015		December 31, 2014
Projected benefit obligation	$	4,357	$	4,840
Accumulated benefit obligation	$	4,357	$	4,840
Fair value of plan assets

The following table shows the components of net periodic pension costs:

	December 31, 2015			December 31, 2014			December 31, 2013
Service cost	$	55		$	73		$	131
Interest cost	3,087			3,235			2,670
Expected return on plan assets	(4,471		)	(4,467		)	(4,265		)
Amortization of prior service costs	64			81			25
Amortization of net loss	1,722			478			2,131
Net periodic pension (benefit) cost	$	457		$	(600	)	$	692

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

	December 31, 2015		December 31, 2014			December 31, 2013
Net periodic pension (benefit) cost	$	457	$	(600	)	$	692
Net gain (loss)	1,299		(12,203		)	11,942
Amortization of loss	1,722		478			2,131
Amortization of prior service cost	64		81			25
Total recognized in other comprehensive income (loss)	3,085		(11,644		)	14,098
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	2,628	$	(11,044	)	$	13,406

The estimated net loss and transition obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic pension cost over the next fiscal year are:

	December 31, 2015			December 31, 2014			December 31, 2013
Amortization of net loss	$	(1,505	)	$	(1,770	)	$	(533	)
Amortization of prior service cost	(61		)	(64		)	(25		)
Total	$	(1,566	)	$	(1,834	)	$	(558	)

Significant assumptions include:

	December 31, 2015		December 31, 2014		December 31, 2013
Weighted-average Assumptions Used to Determine Benefit Obligation:
Discount rate	4.50	%	4.00	%	4.80	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%
Weighted-average Assumptions Used to Determine Cost:
Discount rate	4.00	%	4.80	%	4.00	%
Expected return on plan assets	6.00	%	6.00	%	7.00	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%

At December 31, 2015 and 2014, the Corporation based its estimate of the expected long-term rate of return on analysis of the historical returns of the plans and current market information available. The plans’ investment strategies are to provide for preservation of capital with an emphasis on long-term growth without undue exposure to risk. The assets of the plans’ are invested in accordance with the plans’ Investment Policy Statement, subject to strict compliance with Employee Retirement Income Security Act of 1974 ("ERISA") and any other applicable statutes.

The plans’ risk management practices include quarterly evaluations of investment managers, including reviews of compliance with investment manager guidelines and restrictions; ability to exceed performance objectives; adherence to the investment philosophy and style; and ability to exceed the performance of other investment managers. The evaluations are reviewed by management with appropriate follow-up and actions taken, as deemed necessary. The Investment Policy Statement generally allows investments in cash and cash equivalents, real estate, fixed income debt securities and equity securities, and specifically prohibits investments in derivatives, options, futures, private placements, short selling, non-marketable securities and purchases of non-investment grade bonds.

At December 31, 2015, the maturities of the plans’ debt securities ranged from 15 days to 9.04 years, with a weighted average maturity of 4.47 years. At December 31, 2014, the maturities of the plans’ debt securities ranged from 15 days to 9.59 years, with a weighted average maturity of 5.02 years.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as of December 31, 2015. The minimum contribution required in 2016 will likely be zero but the Corporation may decide to make a discretionary contribution during the year.

2016	$	4,814
2017	4,729
2018	4,657
2019	4,838
2020	4,772
After 2020	24,440
	$	48,250

Plan assets are re-balanced quarterly. At December 31, 2015 and 2014, plan assets by category are as follows:

	December 31, 2015				December 31, 2014
	Actual		Target		Actual		Target
Cash and cash equivalents	2.2	%	2.0	%	2.6	%	2.0	%
Equity securities	58.1		60.0		58.7		60.0
Debt securities	37.4		36.0		36.5		36.0
Alternative investments	2.3		2.0		2.2		2.0
	100.0	%	100.0	%	100.0	%	100.0	%

The First Merchants Corporation Retirement and Income Savings Plan (the “Savings Plan”), a Section 401(k) qualified defined contribution plan, was amended on March 1, 2005 to provide enhanced retirement benefits, including employer and matching contributions, for eligible employees of the Corporation and its subsidiaries. The Corporation matches employees’ contributions primarily at the rate of 50 percent for the first 6 percent of base salary contributed by participants.

Beginning in 2005, employees who have completed 1000 hours of service and are an active employee on the last day of the year receive an additional retirement contribution after year-end. Employees hired after January 1, 2010 do not participate in the additional retirement contribution. Effective January 1, 2013, the additional retirement contribution was fixed at 2 percent. Full vesting occurs after five years of service. The Corporation’s expense for the Savings Plan, including the additional retirement contribution, was $3,526,000, $3,396,000 and $3,138,000 for 2015, 2014 and 2013, respectively.

The Corporation maintains post retirement benefit plans that provide health insurance benefits to retirees. The plans allow retirees to be carried under the Corporation’s health insurance plan, generally from ages 55 to 65. The retirees pay 100 percent of the premiums due for their coverage. The obligations payable under the plans totaled $1,403,000 and $1,811,000 at December 31, 2015 and 2014, respectively. Post retirement plan expense totaled $(127,000), $97,000 and $519,000 for the years ending December 31, 2015, 2014 and 2013, respectively.

Pension Plan Assets

Following is a description of the valuation methodologies used for pension plan assets measured at fair value on a recurring basis, as well as the general classification of pension plan assets pursuant to the valuation hierarchy.

Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation hierarchy.  Level 1 plan assets total $52,433,000 and include cash and cash equivalents, common stocks, mutual funds and corporate bonds and notes.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of plan assets with similar characteristics or discounted cash flows.  Level 2 plan assets total $18,963,000 and include governmental agencies, taxable municipals, common collective trust investments (which are classified below as Party-in-Interest investments -- common bond fund and common equity fund) and certificates of deposit.  In certain cases where Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy.  There are no assets classified within Level 3 of the hierarchy at December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	1,608	$	1,608
Corporate Bonds and Notes	9,113		9,113
Government Agency and Municipal Bonds and Notes	6,993				$	6,993
Certificates of Deposit	1,511				1,511
Party-in-Interest Investments
Common Stock	1,538		1,538
Common Bond Fund	4,647				4,647
Common Equity Fund	5,812				5,812
Mutual Funds
Taxable Bond	4,536		4,536
Large Cap Equity	18,528		18,528
Mid Cap Equity	8,537		8,537
Small Cap Equity	3,578		3,578
International Equity	3,353		3,353
Specialty Alternative Equity	1,642		1,642
	$	71,396	$	52,433	$	18,963

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	2,032	$	2,032
Corporate Bonds and Notes	9,384		9,384
Government Agency and Municipal Bonds and Notes	8,252				$	8,252
Certificates of Deposit	1,001				1,001
Party-in-Interest Investments
Common Stock	1,376		1,376
Common Bond Fund	4,615				4,615
Common Equity Fund	5,858				5,858
Mutual Funds
Taxable Bond	4,987		4,987
Large Cap Equity	21,185		21,185
Mid Cap Equity	9,434		9,434
Small Cap Equity	3,872		3,872
International Equity	3,474		3,474
Specialty Alternative Equity	1,669		1,669
	$	77,139	$	57,413	$	19,726

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Income Tax

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax

INCOME TAX

The reconciliation between the statutory and actual income tax expense (benefit) is summarized in the following table for the years indicated:

	2015			2014			2013
Income Tax Expense for the Year Ended December 31:
Currently Payable:
Federal	$	21,221		$	7,075		$	13,737
State
Deferred:
Federal	3,952			14,538			2,147
State	492			510
Total Income Tax Expense	$	25,665		$	22,123		$	15,884
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 35%	$	31,867		$	28,800		$	21,145
Tax-exempt Interest Income	(7,083		)	(5,148		)	(3,923		)
Basis Difference on Sale of Insurance Subsidiary	2,252
Stock Compensation	34			36			50
Earnings on Life Insurance	(1,012		)	(1,271		)	(905		)
Tax Credits	(583		)	(911		)	(857		)
Other	190			617			374
Actual Tax Expense	$	25,665		$	22,123		$	15,884

Tax expense applicable to security gains and losses, including unrealized losses relating to other-than-temporary impairment charges, for the years ended December 31, 2015, 2014 and 2013, was $435,000, $760,000 and $157,000, respectively.

The Corporation or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  With a few exceptions, the Corporation is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2012.

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	2015			2014
Deferred Tax Asset at December 31:
Assets:
Differences in Accounting for Loan Losses	$	25,867		$	26,665
Differences in Accounting for Loan Fees	762			747
Differences in Accounting for Loans and Securities	9,359			9,910
Deferred Compensation	5,100			5,234
Difference in Accounting for Pensions and Other Employee Benefits	2,247			1,084
Federal & State Income Tax Loss Carryforward and Credits	23,737			23,977
Other	9,310			8,535
Total Assets	76,382			76,152
Liabilities:
Differences in Depreciation Methods	7,742			8,220
State Income Tax	591			591
Net Unrealized Gain on Securities Available for Sale	6,636			7,591
Gain on FDIC Modified Whole Bank Transaction	1,405			1,694
Other	717			1,096
Total Liabilities	17,091			19,192
Net Deferred Tax Asset Before Valuation Allowance	59,291			56,960
Valuation allowance:
Beginning Balance	(17,568		)	(17,171		)
Decrease/(Increase) During the Year	1,832			(397		)
Ending Balance	(15,736		)	(17,568		)
Net Deferred Tax Asset	$	43,555		$	39,392

The $4,163,000 increase in the Corporation’s net deferred tax asset was primarily driven by a $9,262,000 increase resulting from the Ameriana acquisition. The largest offsetting deferred tax asset decreases not related to the Ameriana acquisition were associated with accounting for loans, federal net operating loss carryforwards, deferred compensation, and allowance for loan losses of $1,873,000, $1,662,000, $857,000 and $789,000, respectively. The deferred tax asset decreases were partially offset by a decline in the deferred tax liability associated with the accounting for unrealized gains on available for sale securities of $955,000.

The Corporation has recorded a valuation allowance of $15,736,000 related to deferred state taxes as it does not anticipate having future state taxable income sufficient to fully utilize the deferred state tax asset.  This is primarily due to the Corporation’s current tax structure as discussed in the “INCOME TAXES” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included as item 7 of this Annual Report on Form 10-K.

As of December 31, 2015, the Corporation had approximately $121,626,000 of state tax loss carryforward available to offset future state taxes.  This state loss carryforward has a valuation allowance of approximately $120,369,000.

The Corporation has additional paid-in capital that is considered restricted resulting from the acquisitions of CFS and Ameriana of approximately $13,393,000 and $11,883,000, respectively. CFS and Ameriana qualified as a banks under provisions of the Internal Revenue Code which permitted them to deduct from taxable income an allowance for bad debts which differed from the provision for losses charged to income. No provision for income taxes had been provided. If in the future this portion of additional paid-in capital is distributed, or the Corporation no longer qualifies as a bank for income tax purposes, income taxes may be imposed at the then applicable tax rates. The unrecorded deferred tax liability at December 31, 2015, would have been approximately $8,847,000.

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Net Income Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Net Income Per Share

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average shares outstanding during the reporting period. Diluted net income per share is computed by dividing net income by the combination of all dilutive common share equivalents, comprised of shares issuable under the Corporation’s share-based compensation plans, and the weighted-average shares outstanding during the reporting period.

Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of share-based awards, the amount of compensation expense, if any, for future service that the Corporation has not yet recognized, and the amount of estimated tax benefits that would be recorded in additional paid-in capital when share-based awards are exercised, are assumed to be used to repurchase common stock in the current period.

The following table reconciles basic and diluted net income per share for the years indicated:

	2015					2014					2013
			Weighted-Average Shares					Weighted-Average Shares						Weighted-Average Shares
Basic net income per share:	$	65,384				$	60,162				$	44,530
Preferred stock dividends											(2,380		)
Net income available to common stockholders	65,384		37,816,399	$	1.73	60,162		36,266,356	$	1.66	42,150			29,731,420	$	1.42
Effect of dilutive stock options and warrants			271,834					288,253						276,960
Diluted net income per share:
Net income available to common stockholders	$	65,384	38,088,233	$	1.72	$	60,162	36,554,609	$	1.65	$	42,150		30,008,380	$	1.41

Options to purchase 286,119, 543,514, and 800,674 shares of common stock with weighted average exercise prices of $19.99, $20.99, and $21.32 at December 31, 2015, 2014 and 2013 respectively, were excluded from the computation of diluted net income per share because the options exercise price was greater than the average market price of the common stock.

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following table sets forth certain quarterly results for the years ended December 31, 2015 and 2014:

	2015								2014
	First		Second		Third		Fourth		First		Second		Third		Fourth
Interest income	$	52,944	$	55,202	$	56,538	$	56,514	$	51,009	$	51,527	$	53,290	$	53,053
Interest expense	5,968		6,171		6,215		6,440		5,117		5,408		5,424		5,893
Net interest income	46,976		49,031		50,323		50,074		45,892		46,119		47,866		47,160
Provision for loan losses			417										1,600		960
Net interest income after provision for loan losses	46,976		48,614		50,323		50,074		45,892		46,119		46,266		46,200
Non-interest income	16,232		24,633		16,899		14,767		15,434		16,179		18,412		16,375
Non-interest expense	41,202		46,423		43,598		46,246		43,089		41,250		42,576		41,677
Income before income tax expense	22,006		26,824		23,624		18,595		18,237		21,048		22,102		20,898
Income tax expense	5,834		8,856		6,557		4,418		4,617		5,888		5,980		5,638
Net income available to common stockholders	$	16,172	$	17,968	$	17,067	$	14,177	$	13,620	$	15,160	$	16,122	$	15,260
Basic EPS	$	0.43	$	0.47	$	0.46	$	0.37	$	0.38	$	0.42	$	0.45	$	0.41
Diluted EPS	$	0.43	$	0.47	$	0.45	$	0.37	$	0.38	$	0.41	$	0.45	$	0.41
Average Shares Outstanding:
Basic	37,709,883		37,793,448		37,850,827		37,908,873		35,956,436		36,026,763		36,054,867		37,018,014
Diluted	38,000,074		38,043,359		38,118,199		38,190,694		36,260,624		36,294,149		36,328,981		37,323,276

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Condensed Financial Information (parent company only)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information (parent company only)

CONDENSED FINANCIAL INFORMATION (parent company only)

Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Corporation.

Condensed Balance Sheets

	December 31, 2015		December 31, 2014
Assets
Cash	$	43,622	$	36,044
Investment in subsidiaries	932,372		820,123
Goodwill	448		448
Other assets	9,668		6,281
Total assets	$	986,110	$	862,896
Liabilities
Borrowings	$	127,663	$	126,702
Other liabilities	7,938		9,367
Total liabilities	135,601		136,069
Stockholders' equity	850,509		726,827
Total liabilities and stockholders' equity	$	986,110	$	862,896

Condensed Statements of Income and Comprehensive Income

	December 31, 2015			December 31, 2014		December 31, 2013
Income
Dividends from subsidiaries	$	39,032		$	53,231	$	63,732
Gain on the sale of insurance subsidiary	8,265
Gain on cancellation of subordinated debentures	1,250
Other income	197			538		45
Total income	48,744			53,769		63,777
Expenses
Interest expense	6,661			6,616		3,531
Salaries and employee benefits	3,023			3,128		3,284
Net occupancy and equipment expenses	464			442		258
Other outside services	1,455			458		1,141
Professional services	636			409		648
Other expenses	1,234			1,132		870
Total expenses	13,473			12,185		9,732
Income before income tax benefit (expense) and equity in undistributed income of subsidiaries	35,271			41,584		54,045
Income tax benefit (expense)	(974		)	3,999		3,153
Income before equity in undistributed income of subsidiaries	34,297			45,583		57,198
Equity in undistributed (distributions in excess of) income of subsidiaries	31,087			14,579		(12,668		)
Net income	65,384			60,162		44,530
Preferred stock dividends and discount accretion						(2,380		)
Net income available to common stockholders	$	65,384		$	60,162	$	42,150
Net income	$	65,384		$	60,162	$	44,530
Other comprehensive income (loss)	268			4,780		(911		)
Comprehensive income	$	65,652		$	64,942	$	43,619

Condensed Statement of Cash Flows

	Year Ended December 31,
	2015			2014			2013
Cash Flow From Operating Activities:
Net income	$	65,384		$	60,162		$	44,530
Adjustments to Reconcile Net Income to Net Cash:
Share-based compensation	843			887			778
Distributions in excess of (equity in undistributed) income of subsidiaries	(31,087		)	(14,579		)	12,668
Gain on sale of insurance subsidiary	(8,265		)
Gain on cancellation of subordinated debentures	(1,250		)
Net Change in:
Other assets	(441		)	2,425			(1,354		)
Other liabilities	(1,486		)	1,466			(8,438		)
Investment in subsidiaries - operating activities	197			(4,517		)	12,991
Net cash provided by operating activities	23,895			45,844			61,175
Cash Flow From Investing Activities:
Net cash paid in acquisition	(14,500		)	(12,832		)
Proceeds from business divestitures	16,000
Other	575						240
Net cash provided (used) in investing activities	2,075			(12,832		)	240
Cash Flow From Financing Activities:
Cash dividends	(15,654		)	(10,694		)	(7,992		)
Repayment of borrowings	(3,750		)				(55,000		)
Proceeds from issuance of long-term debt							70,000
Preferred stock redemption under small business lending fund							(90,783		)
Stock issued under employee benefit plans	460			478			479
Stock issued under dividend reinvestment and stock purchase plan	661			523			325
Stock options exercised	1,531			564			115
Stock redeemed	(1,640		)	(1,067		)	(491		)
Net cash used by financing activities	(18,392		)	(10,196		)	(83,347		)
Cash, beginning of the year	36,044			13,228			35,160
Cash, end of year	$	43,622		$	36,044		$	13,228

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Accounting Matters

12 Months Ended

Dec. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Accounting Matters

ACCOUNTING MATTERS

FASB Accounting Standards Updates No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): recognition and Measurement of Financial Assets and Financial Liabilities

The FASB has issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities.

The new guidance makes targeted improvements to existing U.S. GAAP by:

Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;

• Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;

• Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;

• Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;

• Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and

• Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. In addition, the new guidance permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

FASB ACCOUNTING STANDARDS Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.

The FASB has issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments.

U.S. GAAP currently requires that during the measurement period, the acquirer retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. Those adjustments are required when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The acquirer also must revise comparative information for prior periods presented in financial statements as needed, including revising depreciation, amortization, or other income effects as a result of changes made to provisional amounts.

The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

The amendments require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

The only disclosures required at transition should be the nature of and reason for the change in accounting principle. An entity should disclose that information in the first annual period of adoption and in the interim periods within the first annual period if there is a measurement-period adjustment during the first annual period in which the changes are effective.

FASB Accounting Standards Update No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.

The FASB has issued Accounting Standards Update (ASU) No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements.

Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This ASU was effective upon issuance (August 18, 2015) and adoption did not have a significant effect on the Corporation’s consolidated financial statements.

FASB Accounting Standards Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

The FASB has issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.

The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability).

For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that have not been previously issued. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

FASB Accounting Standards Update No. 2015-01, Eliminating the Concept of Extraordinary Items

The FASB has issued Accounting Standards Update (ASU) No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements.

This ASU eliminates from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.

If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item.

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Adoption of the ASU is not expected to have a significant effect on the Corporation’s consolidated financial statements.

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General Litigation

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

General Litigation

GENERAL LITIGATION

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

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Subsequent Events

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On February 9, 2016, the Board of Directors of the Corporation approved a stock repurchase program of up to $15 million of the outstanding shares of the Corporation’s common stock.  At the February 9, 2016 trading price of the shares, this amount would represent approximately 1.7% of the number of shares outstanding.  The shares may be purchased from time to time in open market transactions at prevailing market prices in accordance with federal securities laws.  The Corporation is not obligated to purchase any shares under the program, and the program may be discontinued at any time.  The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Corporation at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

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Nature of Operations and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Accounting

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.

Consolidation

CONSOLIDATION of the Corporation's financial statements include the accounts of the Corporation and all its subsidiaries, after elimination of all material intercompany transactions.

Business Combinations

BUSINESS COMBINATIONS are accounted for under the acquisition method of accounting. Under the acquisition method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition.

Available for Sale Securities

AVAILABLE FOR SALE SECURITIES are recorded at fair value on a recurring basis with the unrealized gains and losses, net of applicable income taxes, recorded in other comprehensive income. Realized gains and losses are recorded in earnings and the prior fair value adjustments are reclassified within stockholders' equity. Gains and losses on sales of securities are determined on the specific-identification method. Amortization of premiums and accretion of discounts are recorded as interest income from securities.

Available for sale and held to maturity securities are evaluated for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interest, including certain non-agency government-sponsored mortgage-backed securities, asset-backed securities and collateralized debt obligations are evaluated using the model outlined in ASC 325-10.

In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether a decline exists that is other-than-temporary, involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When the Corporation does not intend to sell a debt security, and it is more likely than not, the Corporation will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable income taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

If the intent is to sell or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis, less any recognized credit loss, the OTTI is recognized in earnings equal to the entire difference between the investment’s amortized cost basis, less any recognized credit loss, and its fair value at the balance sheet date.

Held to Maturity Securities

HELD TO MATURITY SECURITIES are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Securities held to maturity are carried at amortized cost.  For held to maturity debt securities, the amount of an OTTI recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

Loans Held for Sale

LOANS HELD FOR SALE are carried at the principal amount outstanding. The carrying amount approximates fair value due to the short duration between origination and the date of sale.

Loans

LOANS held in the Corporation’s portfolio are carried at the principal amount outstanding, net of unearned income. Certain non-accrual and substantially delinquent loans may be considered to be impaired. A loan is impaired when, based on current information or events, it is probable that the Bank will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. In applying the provisions of ASC 310, the Corporation considers its investment in one-to-four family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. Interest income is accrued on the principal balances of loans, except for installment loans with add-on interest, for which a method that approximates the level yield method is used. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectable. Interest income accrued in the prior year, if any, is charged to the allowance for loan losses. Interest income is subsequently recognized only to the extent cash payments are received and the loan is returned to accruing status. Certain loan fees and direct costs are being deferred and amortized as an adjustment of yield on the loans.

Impaired loans are carried at the present value of estimated future cash flows using the loan’s existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. The valuation would be considered Level 3, consisting of appraisals of underlying collateral and discounted cash flow analysis.

Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses which limit the Bank’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.

Loans Acquired in Business Combinations

LOANS ACQUIRED IN BUSINESS COMBINATIONS with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of purchase dates may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30). These loans are initially measured at fair value based upon expected cash flows without anticipation of prepayments and includes estimated future credit losses expected to be incurred over the life of the loans. As a result, related discounts are recognized subsequently through accretion based on the expected cash flows of the acquired loans. For purposes of applying ASC 310-30, loans acquired in business combinations are aggregated into pools of loans with common risk characteristics for the initial fair value measurement. Accordingly, allowances for credit losses related to these loans are not carried over and recorded at the acquisition date.

The expected cash flows of the acquired loans in excess of the fair values recorded is referred to as the accretable yield and is recognized in interest income over the remaining estimated lives of the loans. The Corporation will continually evaluate the fair value of the loans including cash flows expected to be collected.

Allowance for Loan Losses

ALLOWANCE FOR LOAN LOSSES is maintained to absorb losses inherent in the loan portfolio and is based on ongoing, quarterly assessments of the probable losses inherent in the loan portfolio. The allowance is increased by the provision for loan losses, which is charged against current operating results. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The Corporation’s strategy for credit risk management includes conservative credit policies and underwriting criteria for all loans, as well as an overall credit limit for each customer significantly below legal lending limits. The strategy also emphasizes diversification on a regional geographic, industry and customer level, regular credit quality reviews and management reviews of large credit exposures and loans experiencing deterioration of credit quality.

The Corporation’s methodology for assessing the appropriateness of the allowance consists of three key elements – the determination of the appropriate reserves for specifically identified loans, probable losses estimated from historical loss rates, and probable losses resulting from economic, environmental, qualitative or other deterioration above and beyond what is reflected in the first two components of the allowance.

Larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. Where appropriate, reserves are allocated to individual loans based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to the Corporation. Included in the review of individual loans are those that are impaired as provided in ASC 310. Any allowances for impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or fair value of the underlying collateral. The Corporation evaluates the collectability of both principal and interest when assessing the need for a loss accrual. Historical loss rates are applied to other commercial loans not subject to specific reserve allocations.

The historical allocation for commercial loans graded pass are established by loan segments using loss rates based on the Corporation’s migration analysis. This migration analysis shows the loss rates for each segment of loans based on the loan grades at the beginning of the twelve month period. This loss rate is then applied to the current portfolio of loans in each respective loan segment.

Homogenous loans, such as consumer installment and residential mortgage loans, are not individually risk graded. Reserves are established for each segment of loans using loss rates based on charge offs for the same period as the migration analysis used for commercial loans.

Historical loss allocations for commercial and consumer loans may be adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Factors which management considers in the analysis include the effects of the national and local economies, trends in loan growth and charge-off rates, changes in mix, concentration of loans in specific industries, asset quality trends (delinquencies, charge offs and non-accrual loans), risk management and loan administration, changes in the internal lending policies and credit standards, examination results from bank regulatory agencies and the Corporation’s internal loan review.

Pension

PENSION benefits are provided to the Corporation’s employees. Its accounting policies related to pensions and other post retirement benefits reflect the guidance in ASC 715, Compensation – Retirement Benefits. The Corporation does not consolidate the assets and liabilities associated with the pension plan. Instead, the Corporation recognizes the funded status of the plan in the consolidated balance sheets. The measurement of the funded status and the annual pension expense involves actuarial and economic assumptions. Various statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liabilities related to the plans. Key factors include assumptions on the expected rates of return on plan assets, discount rates, expected rates of salary increases and health care costs and trends. The Corporation considers market conditions, including changes in investment returns and interest rates in making these assumptions. The primary assumptions used in determining the Corporation’s pension and post retirement benefit obligations and related expenses are presented in Note 21. PENSION AND OTHER POST RETIREMENT BENEFIT PLANS, in the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K.

Premises and Equipment

PREMISES AND EQUIPMENT is carried at cost net of accumulated depreciation. Depreciation is computed using the straight-line and declining balance methods based on the estimated useful lives of the assets ranging from three to forty years. Maintenance and repairs are expensed as incurred, while major additions and improvements, which extend the useful life, are capitalized. Gains and losses on dispositions are included in current operations.

Federal Reserve and Federal Home Loan Bank Stock

FEDERAL RESERVE AND FEDERAL HOME LOAN BANK STOCK are required investments for institutions that are members of the Federal Reserve Bank (“FRB”) and Federal Home Loan Bank systems. The required investment in the common stock is based on a predetermined formula based on the level of borrowings and other factors. These investments are carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Intangible Assets

INTANGIBLE ASSETS that are subject to amortization, including core deposit intangibles, are being amortized on both the straight-line and accelerated basis over three to twenty years. Intangible assets are periodically evaluated as to the recoverability of their carrying value.

Goodwill

GOODWILL is maintained by applying the provisions of ASC 350. For purchase acquisitions, the Corporation is required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates or other relevant factors. In addition, the determination of the useful lives for which an intangible asset will be amortized is subjective.

Under ASC 350, Intangibles – Goodwill and Other, the Corporation is required to evaluate goodwill for impairment on an annual basis, as well as on an interim basis, if events or changes indicate that the asset may be impaired, indicating that the carrying value may not be recoverable. The Corporation has historically elected to test for goodwill impairment as of October 1 of each year and has determined that no impairment exists.

Bank Owned Life Insurance

BANK OWNED LIFE INSURANCE has been purchased on certain employees and directors of the Corporation. The Corporation records the life insurance at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement.

Other Real Estate Owned

OTHER REAL ESTATE OWNED consists of assets acquired through, or in lieu of, loan foreclosure and are held for sale. They are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.  Revenue and expenses from operations and changes in the valuation are included in net income or expense from foreclosed assets. Other real estate owned also includes bank premises formerly, but no longer used for banking. Bank premises are transferred at the lower of carrying value or fair value less cost to sell.

Derivative Instruments

DERIVATIVE INSTRUMENTS are carried at the fair value of the derivatives and reflects the estimated amounts that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.

As part of the asset/liability management program, the Corporation will utilize, from time to time, interest rate floors, caps or swaps to reduce its sensitivity to interest rate fluctuations. These are derivative instruments, which are recorded as assets or liabilities in the consolidated balance sheets at fair value. Changes in the fair values of derivatives are reported in the consolidated statements of operations or other comprehensive income (“OCI”) depending on the use of the derivative and whether the instrument qualifies for hedge accounting. The key criterion for the hedge accounting is that the hedged relationship must be highly effective in achieving offsetting changes in those cash flows that are attributable to the hedged risk, both at inception of the hedge and on an ongoing basis.

Derivatives that qualify for the hedge accounting treatment are designated as either: a hedge of the fair value of the recognized asset or liability or of an unrecognized firm commitment (a fair value hedge) or a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge). To date, the Corporation has only entered into a cash flow hedge. For cash flow hedges, changes in the fair values of the derivative instruments are reported in OCI to the extent the hedge is effective. The gains and losses on derivative instruments that are reported in OCI are reflected in the consolidated statements of income in the periods in which the results of operations are impacted by the variability of the cash flows of the hedged item. Generally, net interest income is increased or decreased by amounts receivable or payable with respect to the derivatives, which qualify for hedge accounting. At inception of the hedge, the Corporation establishes the method it uses for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The ineffective portion of the hedge, if any, is recognized currently in the consolidated statements of operations. The Corporation excludes the time value expiration of the hedge when measuring ineffectiveness.

The Corporation offers interest rate derivative products (e.g. interest rate swaps) to certain of its high-quality commercial borrowers. This product allows customers to enter into an agreement with the Corporation to swap their variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the risk of changes in the borrower’s interest rate or market price risk. The extension of credit incurred through the execution of these derivative products is subject to the same approvals and rigorous underwriting standards as the related traditional credit product. The Corporation limits its risk exposure to these products by entering into a mirror-image, offsetting swap agreement with a separate, well-capitalized and rated counterparty previously approved by the Credit and Asset Liability Committee. By using these interest rate swap arrangements, the Corporation is also better insulated from the interest rate risk associated with underwriting fixed-rate loans. These derivative contracts are not designated against specific assets or liabilities under ASC 815, Derivatives and Hedging, and, therefore, do not qualify for hedge accounting. The derivatives are recorded on the balance sheet at fair value and changes in fair value of both the customer and the offsetting swap agreements are recorded (and essentially offset) in non-interest income. The fair value of the derivative instruments incorporates a consideration of credit risk (in accordance with ASC 820), resulting in some volatility in earnings each period.

Income Tax

INCOME TAX in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes. The Corporation files consolidated income tax returns with its subsidiaries.

The Corporation adopted the provisions of the ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740, the Corporation did not identify any uncertain tax positions that it believes should be recognized in the financial statements. The tax years still subject to examination by taxing authorities are years subsequent to 2011.

Stock Option and Restricted Stock Award Plans

STOCK OPTION AND RESTRICTED STOCK AWARD PLANS are maintained by the Corporation. The compensation costs are recognized for stock options and restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options.  The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Compensation expense is recognized over the appropriate service period, which is generally two or three years.

Transfers of Financial Assets

TRANSFERS OF FINANCIAL ASSETS are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation and put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Net Income Per Share

NET INCOME PER SHARE is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding, plus the dilutive effect of outstanding stock options and nonvested restricted stock.

Reclassifications

RECLASSIFICATIONS have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income.

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Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2015

Business Acquisition [Line Items]

Schedule of Pro Forma Information from Acquisition

The following schedule includes pro forma results for the periods ended December 31, 2015, 2014 and 2013 as if the Ameriana, Community and CFS acquisitions had occurred as of the beginning of the comparable prior annual reporting period. Pro forma financial information of the C Financial acquisition is not included in the table below as it is deemed immaterial.

	2015		2014		2013
Total revenue (net interest income plus other income)	$	291,614	$	284,890	$	253,668
Net income	$	60,497	$	64,174	$	39,979
Net income available to common shareholders	$	60,497	$	64,174	$	37,559
Earnings per share:
Basic	$	1.49	$	1.58	$	0.98
Diluted	$	1.48	$	1.57	$	0.97

Merger with Ameriana Bancorp

Business Acquisition [Line Items]

Schedule of Preliminary Valuations of the Fair Value of Assets Acquired and Liabilities Assumed

Based on preliminary valuations 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 Ameriana acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	4,068
Interest-bearing time deposits	8,790
Investment securities	60,365
Loans	319,664
Premises and equipment	14,491
Federal Home Loan Bank stock	2,693
Other real estate owned	5,719
Interest receivable	1,306
Cash surrender value of life insurance	28,188
Other assets	7,086
Deposits	(382,547		)
Interest payable	(24		)
Federal Home Loan Bank Advances	(24,938		)
Subordinated Debentures	(5,961		)
Other liabilities	(9,451		)
Net tangible assets acquired	29,449
Core deposit intangible	3,200
Goodwill	37,753
Purchase price	$	70,402

Merger with C Financial Corporation

Business Acquisition [Line Items]

Schedule of Preliminary Valuations of the Fair Value of Assets Acquired and Liabilities Assumed

Based on preliminary valuations 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 C Financial acquisition is detailed in the following table. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

	Fair Value
Cash and cash equivalents	$	2,496
Federal Funds sold	7,018
Interest-bearing time deposits	922
Loans	110,625
Premises and equipment	7,290
Federal Home Loan Bank stock	855
Interest receivable	292
Other assets	119
Deposits	(105,326		)
Interest payable	(29		)
Federal Home Loan Bank Advances	(18,958		)
Other liabilities	(2,911		)
Net tangible assets acquired	2,393
Core deposit intangible	981
Goodwill	11,126
Purchase price	$	14,500

Merger with Community Bancshares, Inc.

Business Acquisition [Line Items]

Schedule of Preliminary Valuations of the Fair Value of Assets Acquired and Liabilities Assumed

The purchase price of the Community acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	4,124
Interest -bearing time deposits	16,526
Investment Securities, available for sale	76,807
Loans	145,064
Premises and equipment	3,610
Federal Home Loan Bank stock	1,950
Interest Receivable	767
Cash surrender value of life insurance	3,266
Other real estate owned	6,662
Taxes, deferred and receivable	3,348
Other assets	167
Deposits	(228,424		)
Interest payable	(98		)
Other liabilities	(3,014		)
Net tangible assets acquired	$	30,755
Core deposit intangible	4,658
Goodwill	13,776
Purchase price	$	49,189

Merger with CFS Bancorp, Inc.

Business Acquisition [Line Items]

Schedule of Preliminary Valuations of the Fair Value of Assets Acquired and Liabilities Assumed

The purchase price for the CFS acquisition was allocated as follows:

	Fair Value
Cash and cash equivalents	$	10,992
Interest-bearing time deposits	213,379
Investment securities available for sale	15,913
Investment securities held to maturity	14,372
Mortgage loans held for sale	189
Loans	603,114
Premises and equipment	19,643
Federal Home Loan Bank stock	6,188
Interest receivable	1,770
Cash surrender value of life insurance	36,555
Other real estate owned	12,857
Tax asset, deferred and receivable	30,717
Other assets	111,656
Deposits	(955,432		)
Securities sold under repurchase agreements	(9,830		)
Federal Home Loan Bank advances	(15,000		)
Interest payable	(294		)
Other liabilities	(16,033		)
Net tangible assets acquired	$	80,756
Core deposit intangible	7,313
Goodwill	47,573
Purchase price	$	135,642

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Approximate Market Value of Securities

The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2015
U.S. Government-sponsored agency securities	$	100	$	4			$	104
State and municipal	291,730		14,241		$	60	305,911
U.S. Government-sponsored mortgage-backed securities	342,550		4,234		518		346,266
Corporate obligations	31						31
Equity securities	3,912						3,912
Certificates of deposit	2,176						2,176
Total available for sale	640,499		18,479		578		658,400
Held to maturity at December 31, 2015
State and municipal	219,767		6,982		15		226,734
U.S. Government-sponsored mortgage-backed securities	398,832		7,601		787		405,646
Total held to maturity	618,599		14,583		802		632,380
Total Investment Securities	$	1,259,098	$	33,062	$	1,380	$	1,290,780
Available for sale at December 31, 2014
U.S. Government-sponsored agency securities	$	100	$	9			$	109
State and municipal	216,915		11,801		$	123	228,593
U.S. Government-sponsored mortgage-backed securities	310,460		8,771		127		319,104
Corporate obligations	31						31
Equity securities	1,706						1,706
Total available for sale	529,212		20,581		250		549,543
Held to maturity at December 31, 2014
State and municipal	204,443		5,716		96		210,063
U.S. Government-sponsored mortgage-backed securities	426,645		11,527		512		437,660
Total held to maturity	631,088		17,243		608		647,723
Total Investment Securities	$	1,160,300	$	37,824	$	858	$	1,197,266

Debt Securities Credit Loss Recognized in Income, and Other Losses Recorded in Other Comprehensive Income

The following table provides information about debt securities for which only a credit loss was recognized in income and other losses were recorded in other comprehensive income.

	Accumulated Credit Losses in			Accumulated Credit Losses in
	2015			2014
Credit losses on debt securities held:
Balance, January 1	$	500		$	11,355
Reductions for previous other-than-temporary losses realized on securities sold during the year	(500		)	$	(10,855	)
Balance, December 31	$	—		$	500

Investments' Gross Unrealized Losses and Fair Value Aggregated by Investment Category and Length of Time in Continuous Unrealized Loss Position

The following table shows the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2015 and 2014: 

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2015
State and municipal	$	7,558	$	60					$	7,558	$	60
U.S. Government-sponsored mortgage-backed securities	83,396		445		$	2,101	$	73	85,497		518
Total Temporarily Impaired Available for Sale Securities	90,954		505		2,101		73		93,055		578
Temporarily Impaired Held to Maturity Securities at December 31, 2015
State and municipal					1,982		15		1,982		15
U.S. Government-sponsored mortgage-backed securities	69,641		519		12,906		268		82,547		787
Total Temporarily Impaired Held to Maturity Securities	69,641		519		14,888		283		84,529		802
Total Temporarily Impaired Investment Securities	$	160,595	$	1,024	$	16,989	$	356	$	177,584	$	1,380
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2014
State and municipal	$	1,256	$	7	$	9,850	$	116	$	11,106	$	123
U.S. Government-sponsored mortgage-backed securities	2,186		13		5,447		114		7,633		127
Total Temporarily Impaired Available for Sale Securities	3,442		20		15,297		230		18,739		250
Temporarily Impaired Held to Maturity Securities at December 31, 2014
State and municipal	5,119		96		250				5,369		96
U.S. Government-sponsored mortgage-backed securities	9,791		82		38,491		430		48,282		512
Total Temporarily Impaired Held to Maturity Securities	14,910		178		38,741		430		53,651		608
Total Temporarily Impaired Investment Securities	$	18,352	$	198	$	54,038	$	660	$	72,390	$	858

Amortized Cost and Fair Value of Available for Sale Securities and Held to Maturity Securities by Contractual Maturity

Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2015
Due in one year or less	$	4,658	$	4,704	$	4,144	$	4,148
Due after one through five years	13,725		14,295		28,054		29,175
Due after five through ten years	52,878		55,375		81,483		83,646
Due after ten years	220,600		231,672		106,086		109,765
	291,861		306,046		219,767		226,734
U.S. Government-sponsored mortgage-backed securities	342,550		346,266		398,832		405,646
Equity securities	3,912		3,912
Certificates of deposit	2,176		2,176
Total Investment Securities	$	640,499	$	658,400	$	618,599	$	632,380

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Loans and Allowance (Tables)

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Composition of Loan Portfolio by Loan Class

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the years indicated:

	December 31, 2015			December 31, 2014
Commercial and industrial loans	$	1,057,075		$	896,688
Agricultural production financing and other loans to farmers	97,711			104,927
Real estate loans:
Construction	366,704			207,221
Commercial and farmland	1,802,921			1,672,661
Residential	786,105			647,315
Home equity	348,613			286,529
Individuals' loans for household and other personal expenditures	74,717			73,400
Lease financing receivables, net of unearned income	588			1,106
Other commercial loans	159,388			35,018
Loans	4,693,822			3,924,865
Allowance for loan losses	(62,453		)	(63,964		)
Net Loans	$	4,631,369		$	3,860,901

Changes in Allowance for Loan Losses

The following table summarizes changes in the allowance for loan losses by loan segment for the twelve months ended December 31, 2015, 2014 and 2013:

	Twelve Months Ended December 31, 2015
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964
Provision for losses	(1,901		)	1,710			299			310			(1		)	417
Recoveries on loans	1,911			2,545			352			1,536						6,344
Loans charged off	(2,356		)	(1,437		)	(620		)	(3,859		)				(8,272		)
Balances, December 31, 2015	$	26,478		$	22,145		$	2,689		$	11,139		$	2		$	62,453

	Twelve Months Ended December 31, 2014
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870
Provision for losses	3,459			(464		)	423			(839		)	$	(19	)	2,560
Recoveries on loans	5,435			3,297			377			1,783			24			10,916
Loans charged off	(7,246		)	(6,608		)	(657		)	(2,869		)	(2		)	(17,382		)
Balances, December 31, 2014	$	28,824		$	19,327		$	2,658		$	13,152		$	3		$	63,964

	Twelve Months Ended December 31, 2013
	Commercial			Commercial Real Estate			Consumer			Residential			Finance Leases			Total
Allowance for loan losses:
Balances, January 1	$	25,913		$	26,703		$	2,593		$	14,157					$	69,366
Provision for losses	2,794			340			(11		)	3,514			$	11		6,648
Recoveries on loans	4,586			3,552			556			1,292			4			9,990
Loans charged off	(6,117		)	(7,493		)	(623		)	(3,886		)	(15		)	(18,134		)
Balances, December 31, 2013	$	27,176		$	23,102		$	2,515		$	15,077					$	67,870

Allowance for Credit Losses and Loan Portfolio by Loan Segment

The following tables show the Corporation’s allowance for loan losses and loan portfolio by loan segment for the years indicated:

	December 31, 2015
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,277	$	243			$	169			$	1,689
Collectively evaluated for impairment	25,201		21,753		$	2,689	10,966		$	2	60,611
Loans acquired with deteriorated credit quality			149				4				153
Total Allowance for Loan Losses	$	26,478	$	22,145	$	2,689	$	11,139	$	2	$	62,453
Loan balances:
Individually evaluated for impairment	$	7,877	$	16,670			$	4,020			$	28,567
Collectively evaluated for impairment	1,298,988		2,096,089		$	74,717	1,125,316		$	588	4,595,698
Loans acquired with deteriorated credit quality	7,309		56,866				5,382				69,557
Loans	$	1,314,174	$	2,169,625	$	74,717	$	1,134,718	$	588	$	4,693,822

	December 31, 2014
	Commercial		Commercial Real Estate		Consumer		Residential		Finance Leases		Total
Allowance balances:
Individually evaluated for impairment	$	1,455	$	470			$	194			$	2,119
Collectively evaluated for impairment	27,369		18,207		$	2,658	12,958		$	3	61,195
Loans acquired with deteriorated credit quality			650								650
Total Allowance for Loan Losses	$	28,824	$	19,327	$	2,658	$	13,152	$	3	$	63,964
Loan balances:
Individually evaluated for impairment	$	16,108	$	23,963			$	4,022			$	44,093
Collectively evaluated for impairment	1,011,122		1,796,797		$	73,400	925,282		$	1,106	3,807,707
Loans acquired with deteriorated credit quality	9,403		59,122				4,540				73,065
Loans	$	1,036,633	$	1,879,882	$	73,400	$	933,844	$	1,106	$	3,924,865

Summary of Non-Accrual Loans by Loan class

The following table summarizes the Corporation’s non-accrual loans by loan class for the years indicated:

	December 31, 2015		December 31, 2014
Commercial and industrial loans	$	4,634	$	7,048
Agriculture production financing and other loans to farmers	827		5,800
Real estate loans:
Construction	736		1,439
Commercial and farmland	11,277		19,350
Residential	11,818		12,933
Home equity	1,952		1,988
Individuals' loans for household and other personal expenditures	145		231
Total	$	31,389	$	48,789

Composition of Impaired Loans by Loan Class

The following tables show the composition of the Corporation’s commercial impaired loans by loan class for the years indicated:

	December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	22,151	$	11,669			$	12,578	$	488
Agriculture production financing and other loans to farmers	370		361				439
Real estate loans:
Construction	4,551		2,336				3,662		157
Commercial and farmland	95,930		69,024				71,569		3,328
Residential	11,262		7,338				7,926		244
Home equity	297		247				249
Other commercial loans	20
Total	$	134,581	$	90,975			$	96,423	$	4,217
Impaired loans with related allowance:
Commercial and industrial loans	$	3,043	$	2,690	$	1,247	$	2,752	$	38
Agriculture production financing and other loans to farmers	466		466		30		538
Real estate loans:
Commercial and farmland	2,144		1,933		392		1,868
Residential	2,300		1,463		173		1,787
Total	$	7,953	$	6,552	$	1,842	$	6,945	$	38
Total Impaired Loans	$	142,534	$	97,527	$	1,842	$	103,368	$	4,255

	December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,514	$	18,029			$	18,711	$	362
Agriculture production financing and other loans to farmers	26		22				26
Real estate loans:
Construction	12,956		9,318				9,837		427
Commercial and farmland	95,856		68,187				70,844		3,389
Residential	10,591		6,839				6,987		119
Home equity	3,590		398				402
Other commercial loans	30
Total	$	158,563	$	102,793			$	106,807	$	4,297
Impaired loans with related allowance:
Commercial and industrial loans	$	1,766	$	1,684	$	1,055	$	1,721	$	40
Agriculture production financing and other loans to farmers	6,777		5,777		400		8,044		1
Real estate loans:
Commercial and farmland	7,159		4,971		1,120		4,999		24
Residential	1,001		998		194		1,000
Total	$	16,703	$	13,430	$	2,769	$	15,764	$	65
Total Impaired Loans	$	175,266	$	116,223	$	2,769	$	122,571	$	4,362

	December 31, 2013
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	35,066	$	16,371			$	19,209	$	192
Agriculture production financing and other loans to farmers	32		30				32
Real estate loans:
Construction	16,109		10,625				11,621		117
Commercial and farmland	128,073		83,033				84,057		1,663
Residential	6,746		3,910				4,236		75
Home equity	3,299		112				225
Other commercial loans	454		172				181		1
Total	$	189,779	$	114,253			$	119,561	$	2,048
Impaired loans with related allowance:
Commercial and industrial loans	$	1,390	$	1,216	$	683	$	1,240	$	9
Real estate loans:
Commercial and farmland	4,657		4,215		894		4,291		9
Residential	74		71		6		76
Total	$	6,121	$	5,502	$	1,583	$	5,607	$	18
Total Impaired Loans	$	195,900	$	119,755	$	1,583	$	125,168	$	2,066

Credit Quality of Loan Portfolio by Loan Class

The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the years indicated.  Consumer non-performing loans include accruing consumer loans 90 plus days delinquent and consumer non-accrual loans.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.

	December 31, 2015
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	962,340	$	48,432	$	45,984	$	319						$	1,057,075
Agriculture production financing and other loans to farmers	77,884		6,665		13,162									97,711
Real estate loans:
Construction	345,449		1,271		1,790					$	18,114	$	80	366,704
Commercial and farmland	1,679,141		46,442		77,338									1,802,921
Residential	171,576		3,107		10,428					593,533		7,461		786,105
Home equity	8,218		48		600					337,718		2,029		348,613
Individuals' loans for household and other personal expenditures										74,491		226		74,717
Lease financing receivables, net of unearned income	495				93									588
Other commercial loans	159,388													159,388
Loans	$	3,404,491	$	105,965	$	149,395	$	319		$	1,023,856	$	9,796	$	4,693,822

	December 31, 2014
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss	Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	823,732	$	24,455	$	48,226	$	275						$	896,688
Agriculture production financing and other loans to farmers	96,155		1,195		7,577									104,927
Real estate loans:
Construction	185,394		3,164		2,928					$	15,588	$	147	207,221
Commercial and farmland	1,552,781		29,484		90,161							235		1,672,661
Residential	149,430		6,321		10,918					470,972		9,674		647,315
Home equity	6,368		12		690					277,571		1,888		286,529
Individuals' loans for household and other personal expenditures										73,165		235		73,400
Lease financing receivables, net of unearned income	998				108									1,106
Other commercial loans	35,018													35,018
Loans	$	2,849,876	$	64,631	$	160,608	$	275		$	837,296	$	12,179	$	3,924,865

Past Due Aging of Loan Portfolio by Loan Class

The following tables illustrate the past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	December 31, 2015
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	1,052,275	$	166					$	4,634	$	4,800	$	1,057,075
Agriculture production financing and other loans to farmers	96,884								827		827		97,711
Real estate loans:
Construction	362,084		3,884						736		4,620		366,704
Commercial and farmland	1,786,092		5,552						11,277		16,829		1,802,921
Residential	765,634		6,090		$	2,061	$	502	11,818		20,471		786,105
Home equity	344,344		1,433		560		324		1,952		4,269		348,613
Individuals' loans for household and other personal expenditures	73,990		445		56		81		145		727		74,717
Lease financing receivables, net of unearned income	588												588
Other commercial loans	159,324				64						64		159,388
Loans	$	4,641,215	$	17,570	$	2,741	$	907	$	31,389	$	52,607	$	4,693,822

	December 31, 2014
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans > 90 Days And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	882,596	$	4,006	$	53	$	2,985	$	7,048	$	14,092	$	896,688
Agriculture production financing and other loans to farmers	98,236		891						5,800		6,691		104,927
Real estate loans:
Construction	204,683		1,017		82				1,439		2,538		207,221
Commercial and farmland	1,642,016		9,846		778		$	671	19,350		30,645		1,672,661
Residential	626,821		4,876		1,831		854		12,933		20,494		647,315
Home equity	282,828		1,213		352		148		1,988		3,701		286,529
Individuals' loans for household and other personal expenditures	72,853		258		53		5		231		547		73,400
Lease financing receivables, net of unearned income	1,106												1,106
Other commercial loans	35,018												35,018
Loans	$	3,846,157	$	22,107	$	3,149	$	4,663	$	48,789	$	78,708	$	3,924,865

Schedules of Troubled Debt Restructuring

The following tables summarize troubled debt restructures that occurred during the twelve months ended December 31, 2015 and 2014, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due.

	Twelve Months Ended December 31, 2015
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	21
Total	1	$	21

	Twelve Months Ended December 31, 2014
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	70
Total	1	$	70

The following tables summarize troubled debt restructurings that occurred during the periods ended December 31, 2015 and 2014:

	December 31, 2015
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Commercial and industrial loans	$	4,111	$	2,115	7
Real estate loans:
Construction	79		80		1
Commercial and farmland	1,281		3,024		3
Residential	200		1,113		10
Home equity	263		242		1
Individuals' loans for household and other personal expenditures	26		27		1
Total	$	5,960	$	6,601	23

	December 31, 2014
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Real estate loans:
Commercial and farmland	$	259	$	259	1
Residential	632		622		9
Home equity	320		350		11
Individuals' loans for household and other personal expenditures	26		26		2
Total	$	1,237	$	1,257	23

The following tables show the recorded investment of troubled debt restructurings, by modification type, that occurred during the years indicated:

	December 31, 2015
	Term Modification		Rate Modification		Combination		Total Modification
Commercial and industrial loans	$	761			$	1,053	$	1,814
Real estate loans:
Commercial and farmland	1,231				1,026		2,257
Residential	823		$	170	45		1,038
Home equity			242				242
Individuals' loans for household and other personal expenditures			27				27
Total	$	2,815	$	439	$	2,124	$	5,378

	December 31, 2014
	Term Modification		Rate Modification		Combination		Total Modification
Real estate loans:
Commercial and farmland	$	288					$	288
Residential	31		$	218	$	360	609
Home equity			100		243		343
Individuals' loans for household and other personal expenditures					23		23
Total	$	319	$	318	$	626	$	1,263

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Accounting for Certain Loans Acquired in a Purchase (Tables)

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Schedule of Outstanding Balance and Carrying Amount of Acquired Loans

The following table includes the outstanding balance and carrying amount of all the performing and non-performing acquired loans, which are included in the Corporation's balance sheet at December 31, 2015 and 2014.

	December 31, 2015
	Ameriana		C Financial		Community		CFS		SCB		Total
Outstanding Balance:
Commercial and industrial loans	$	21,888	$	104	$	6,769	$	52,060	$	4,620	$	85,441
Agricultural production financing and other loans to farmers					1,761				1,288		3,049
Real estate loans:
Construction	23,365		6,214		10,436		976				40,991
Commercial and farmland	144,514		27,838		49,997		189,372		13,293		425,014
Residential	123,231		55,856		21,886		118,105		6,063		325,141
Home Equity	14,261		9,144		8,231		31,986		13,431		77,053
Individuals' loans for household and other personal expenditures	1,731		10		461		443		48		2,693
Other commercial loans	1,928						72				2,000
Total	$	330,918	$	99,166	$	99,541	$	393,014	$	38,743	$	961,382
Carrying Amount	$	319,664	$	96,829	$	93,355	$	373,649	$	34,092	$	917,589
Allowance					4		149				153
Carrying Amount Net of Allowance	$	319,664	$	96,829	$	93,351	$	373,500	$	34,092	$	917,436

Schedule of Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement

The accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield, are identified in the table below.

	Twelve Months Ended December 31, 2015
	Ameriana		C Financial			Community			CFS			SCB			Total
Beginning balance						$	2,122		$	2,400		$	868		$	5,390
Additions	$	2,848	$	145											2,993
Accretion			(31		)	(723		)	(4,050		)	(1,046		)	(5,850		)
Reclassification from nonaccretable						249			2,854			822			3,925
Disposals						(140		)	(16		)	(2		)	(158		)
Ending balance	$	2,848	$	114		$	1,508		$	1,188		$	642		$	6,300

	Twelve Months Ended December 31, 2014
	Community			CFS			SCB			Total
Beginning balance				$	4,164		$	1,388		$	5,552
Additions	$	2,234								2,234
Accretion	(231		)	(4,146		)	(1,062		)	(5,439		)
Reclassification from nonaccretable	119			2,553			577			3,249
Disposals				(171		)	(35		)	(206		)
Ending balance	$	2,122		$	2,400		$	868		$	5,390

	Twelve Months Ended December 31, 2013
	CFS			SCB			Total
Beginning balance				$	1,715		$	1,715
Additions	$	3,502					3,502
Accretion	(10		)	(463		)	(473		)
Reclassification from nonaccretable	672			177			849
Disposals				(41		)	(41		)
Ending balance	$	4,164		$	1,388		$	5,552

Schedule of Loans Acquired for which Contractually Required Payments would not be Collected

The following table presents loans acquired during the periods ending December 31, 2015 and 2014, for which it was probable at acquisition that all contractually required payments would not be collected:

	2015						2014
	Ameriana		C Financial		Total		Community
Contractually required payments receivable at acquisition date	$	29,093	$	2,632	$	31,725	$	26,032
Nonaccretable difference	13,728		637		14,365		3,498
Expected cash flows at acquisition date	15,365		1,995		17,360		22,534
Accretable difference	2,848		145		2,993		2,234
Basis in loans at acquisition date	$	12,517	$	1,850	$	14,367	$	20,300

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Premises and Equipment

The following table summarizes the Corporation's premises and equipment as of December 31, 2015 and 2014:

	2015			2014
Cost at December 31:
Land	$	26,510		$	19,373
Buildings and Leasehold Improvements	115,461			99,451
Equipment	64,892			56,606
Total Cost	206,863			175,430
Accumulated Depreciation and Amortization	(109,215		)	(97,739		)
Net	$	97,648		$	77,691

Schedule of Future Minimum Rental Payments for Operating Leases

The future minimum rental commitments required under the operating leases in effect at December 31, 2015, expiring at various dates through the year 2035 are as follows for the years ending December 31:

	Future Minimum Rental Commitments
2016	$	3,076
2017	2,353
2018	1,419
2019	1,222
2020	1,060
After 2020	6,629
Total Future Minimum Obligations	$	15,759

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2015

Goodwill Disclosure [Abstract]

Schedule of Goodwill

	2015			2014
Balance, January 1	$	202,724		$	188,948
Goodwill acquired	48,879			13,776
Goodwill reduction	$	(8,474	)
Balance, December 31	$	243,129		$	202,724

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Core Deposit and Other Intangibles (Tables)

12 Months Ended

Dec. 31, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of Core Deposit and Other Intangibles

The carrying basis and accumulated amortization of recognized core deposit and other intangibles are noted below.

	2015			2014
Gross carrying amount	$	58,360		$	53,702
Core deposit intangible and other intangibles acquired	4,181			4,658
Accumulated amortization	(45,164		)	(42,329		)
Core deposit intangible and other intangibles reduction	(742		)
Core Deposit and Other Intangibles	$	16,635		$	16,031

Schedule of Estimated Future Amortization Expense

Estimated future amortization expense is summarized as follows:

	Amortization Expense
2016	$	3,055
2017	3,017
2018	1,904
2019	1,676
2020	1,618
After 2020	5,365
Total Future Minimum Obligations	$	16,635

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Deposits (Tables)

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Schedule of Deposits

The composition of the deposit portfolio is included in the table below for the years indicated:

	December 31, 2015		December 31, 2014
Demand deposits	$	2,576,283	$	2,146,492
Savings deposits	1,518,722		1,376,707
Certificates and other time deposits of $100,000 or more	323,698		260,685
Other certificates and time deposits	556,476		523,010
Brokered deposits	314,468		333,800
Total deposits	$	5,289,647	$	4,640,694

Summary of Contractual Maturities of Time Deposits

At December 31, 2015, the contractual maturities of time deposits are summarized as follows:

	Certificates and Other Time Deposits
2016	$	600,551
2017	272,652
2018	126,929
2019	74,750
2020	55,187
After 2020	64,573
	$	1,194,642

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Transfers Accounted for as Secured Borrowings (Tables)

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Schedule of Collateral Pledged for all Repurchase Agreements Accounted for as Secured Borrowings

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of December 31, 2015 were:

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	131,537	$	5,680	$	8,892	$	9,216	$	155,325

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of Debt

The following table summarizes the Corporation's borrowings as of December 31, 2015 and 2014:

	December 31, 2015		December 31, 2014
Federal funds purchased	$	49,721	$	15,381
Securities sold under repurchase agreements	155,325		124,539
Federal Home Loan Bank advances	235,652		145,264
Subordinated debentures and term loans	127,846		126,810
Total Borrowings	$	568,544	$	411,994

Schedule of Maturities of Long-term Debt

Maturities of borrowings as of December 31, 2015, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2016	$	49,721	$	155,325	$	91,441	$	183
2017					37,222
2018					26,851
2019					13,828
2020					31,310
After 2020					35,000		132,012
ASC 805 fair value adjustments at acquisition							(4,349		)
	$	49,721	$	155,325	$	235,652	$	127,846

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Derivative Instruments and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Financial Instruments and Classification on the Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2015 and December 31, 2014.

Asset Derivatives

Liability Derivatives

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

36

Other Assets

$

137

Other Liabilities

$

2,921

Other Liabilities

$

2,650

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

4,938

Other Assets

$

3,730

Other Liabilities

$

5,149

Other Liabilities

$

3,887

Effect of Derivative Financial Instruments on the Income Statement

The tables below present the effect of the Corporation’s derivative financial instruments on the Income Statement for the years ended December 31, 2015, 2014 and 2013.

Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2015			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2014			Amount of Gain (Loss) Recognized in Income on Derivative for the Year Ended December 31, 2013
Interest rate contracts	Other income	$	(53	)	$	(73	)	$	247

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) For the Year Ended						Location of Loss Reclassified from Accumulated Other Comprehensive Income (Effective Portion)	Amount of Loss Reclassified from Other Comprehensive Income into Income (Effective Portion) For the Year Ended
	2015			2014				2015			2014			2013
Interest rate products	$	(1,681	)	$	(3,996	)	Interest expense	$	(1,427	)	$	(1,411	)	$	(935	)

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Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements of Assets and Liabilities Recognized in the Balance Sheets Measured at Fair Value on Recurring Basis

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820-10 fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	104		$	104
State and municipal	305,911			300,014		$	5,897
U.S. Government-sponsored mortgage-backed securities	346,266			346,266
Certificates of deposit	2,176			2,176
Corporate obligations	31					31
Equity securities	3,912			3,908		4
Interest rate swap asset	4,938			4,938
Interest rate cap	36			36
Interest rate swap liability	8,070			8,070

			Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	109		$	109
State and municipal	228,593			221,982		$	6,611
U.S. Government-sponsored mortgage-backed securities	319,104			319,104
Corporate obligations	31					31
Equity securities	1,706			1,702		4
Interest rate swap asset	3,730			3,730
Interest rate cap	137			137
Interest rate swap liability	6,537			6,537

Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements Recognized in the Balance Sheets using Significant Unobservable Level 3 Inputs

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable Level 3 inputs for year ended December 31, 2015 and 2014.

	Available for Sale Securities
	For The Year Ended
	December 31, 2015			December 31, 2014
Beginning Balance	$	6,646		$	9,977
Included in other comprehensive income	199			3,656
Principal payments	(913		)	(6,987		)
Ending balance	$	5,932		$	6,646

Description of Valuation Methodologies Used for Instruments Measured at Fair Value on a Non-Recurring Basis and Recognized in the Balance Sheets

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for year ended December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	7,066			$	7,066
Other real estate owned	$	5,529			$	5,529

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)	(Level 2)	(Level 3)
Impaired Loans (collateral dependent)	$	17,134			$	17,134
Other real estate owned	$	5,155			$	5,155

Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements Other than Goodwill

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at December 31, 2015 and 2014.

December 31, 2015	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	5,897	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .80% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	7,066	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (2%)
Other real estate owned	$	5,529	Appraisals	Discount to reflect current market conditions	0% - 20% (2%)

December 31, 2014	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	6,611	Discounted cash flow	Maturity Call Date US Muni BQ curve Discount rate	1 month to 15 years A- to BBB- .90% - 5%
Corporate obligations and Equity securities	$	35	Discounted cash flow	Risk free rate plus Premium for illiquidity	3 month LIBOR plus 200 bps
Impaired loans (collateral dependent)	$	17,134	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 50% (3%)
Other real estate owned	$	5,155	Appraisals	Discount to reflect current market conditions	0% - 20% (7%)

Estimated Fair Values of Financial Instruments

The following table presents estimated fair values of the Corporation's financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014.

	2015
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	102,170	$	102,170
Interest-bearing time deposits	32,315		32,315
Investment securities available for sale	658,400				$	652,468	$	5,932
Investment securities held to maturity	618,599				598,082		34,298
Loans held for sale	9,894				9,894
Loans	4,631,369						4,539,940
Federal Reserve and Federal Home Loan Bank stock	37,633				37,633
Interest rate swap asset	4,974				4,974
Interest receivable	24,415				24,415
Liabilities at December 31:
Deposits	$	5,289,647	$	4,095,004	$	1,177,142
Borrowings:
Federal funds purchased	49,721				49,721
Securities sold under repurchase agreements	155,325				155,325
Federal Home Loan Bank advances	235,652				236,375
Subordinated debentures and term loans	127,846				103,643
Interest rate swap liability	8,070				8,070
Interest payable	3,092				3,092

	2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at December 31:
Cash and cash equivalents	$	118,616	$	118,616
Interest-bearing time deposits	47,520		47,520
Investment securities available for sale	549,543				$	542,897	$	6,646
Investment securities held to maturity	631,088				614,457		33,266
Loans held for sale	7,235				7,235
Loans	3,860,901						3,810,912
Federal Reserve and Federal Home Loan Bank stock	41,353				41,353
Interest rate swap asset	3,867				3,867
Interest receivable	19,984				19,984
Liabilities at December 31:
Deposits	$	4,640,694	$	3,532,199	$	1,099,610
Borrowings:
Federal funds purchased	15,381				15,381
Securities sold under repurchase agreements	124,539				124,539
Federal Home Loan Bank advances	145,264				146,669
Subordinated debentures and term loans	126,810				92,802
Interest rate swap liability	6,537				6,537
Interest payable	3,201				3,201

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Commitments and Contingent Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Financial Instruments which Contract Amount Represents Credit Risk

Financial instruments, whose contract amount represents credit risk as of December 31, were as follows:

	2015		2014
Amounts of commitments:
Loan commitments to extend credit	$	1,547,048	$	1,617,552
Standby letters of credit	$	46,734	$	52,655

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of December 31, 2015 and 2014:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale			Unrealized Gains (Losses) on Securities Available for Sale for which a Portion of Other-Than-Temporary Impairment has been Recognized in Income			Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Defined Benefit Plans			Total
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)
Other comprehensive income before reclassifications	(37		)				(1,093		)	2,404			1,274
Amounts reclassified from accumulated other comprehensive income	(1,736		)				928			(198		)	(1,006		)
Period change	(1,773		)	—			(165		)	2,206			268
Balance at December 31, 2015	$	12,325		$	—		$	(2,347	)	$	(11,340	)	$	(1,362	)
Balance at December 31, 2013	$	1,566		$	(1,847	)	$	(501	)	$	(5,628	)	$	(6,410	)
Other comprehensive income before reclassifications	14,860			1,847			(2,599		)	(7,580		)	6,528
Amounts reclassified from accumulated other comprehensive income	(2,328		)				918			(338		)	(1,748		)
Period change	12,532			1,847			(1,681		)	(7,918		)	4,780
Balance at December 31, 2014	$	14,098		$	—		$	(2,182	)	$	(13,546	)	$	(1,630	)

Reclassification out of Accumulated Other Comprehensive Income (Loss)

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the twelve months ended December 31, 2015, 2014 and 2013:

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2015			2014			2013			Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	2,670		$	3,581		$	487		Other income - net realized gains on sales of available for sale securities
Related income tax expense	(934		)	(1,253		)	(170		)	Income tax expense
	$	1,736		$	2,328		$	317
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(1,427	)	$	(1,411	)	$	(935	)	Interest expense - subordinated debentures and term loans
Related income tax benefit	499			493			327			Income tax expense
	$	(928	)	$	(918	)	$	(608	)
Unrealized gains (losses) on defined benefit plans
Amortization of net loss and prior service costs	$	305		$	520		$	(1,765	)	Other expenses - salaries and employee benefits
Related income tax benefit (expense)	(107		)	(182		)	618			Income tax expense
	$	198		$	338		$	(1,147	)
Total reclassifications for the period, net of tax	$	1,006		$	1,748		(1,438		)

⁽¹⁾ For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive income see Note 4. INVESTMENT SECURITIES.

⁽²⁾ For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see Note 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.

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Regulatory Capital (Tables)

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Schedule of Actual and Required Capital Amounts and Ratios

The Corporation's and Bank's actual and required capital ratios as of December 31, 2015 and December 31, 2014 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	783,776	14.94	%	$	419,809	8.00	%	N/A		N/A
First Merchants Bank	739,793		13.98		423,242		8.00		$	529,052	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	656,323	12.51	%	$	314,857	6.00	%	N/A		N/A
First Merchants Bank	677,340		12.80		317,431		6.00		$	423,242	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	603,063	11.49	%	$	236,143	4.50	%	N/A		N/A
First Merchants Bank	677,340		12.80		238,074		4.50		$	343,884	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	656,323	10.85	%	$	242,001	4.00	%	N/A		N/A
First Merchants Bank	677,340		11.22		241,423		4.00		$	301,779	5.00	%
					Prompt Corrective Action Thresholds
	Actual				Adequately Capitalized				Well Capitalized
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	685,507	15.34	%	$	357,581	8.00	%	N/A		N/A
First Merchants Bank	653,169		14.64		356,884		8.00		$	446,105	10.00	%
Tier 1 capital to risk weighted assets
First Merchants Corporation	$	564,535	12.63	%	$	178,791	4.00	%	N/A		N/A
First Merchants Bank	597,305		13.39		178,442		4.00		$	267,663	6.00	%
Tier 1 capital to average assets
First Merchants Corporation	$	564,535	10.15	%	$	222,533	4.00	%	N/A		N/A
First Merchants Bank	597,305		10.56		226,339		4.00		$	282,953	5.00	%

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2015

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

Summary of Assumptions Used in Black Scholes Model

The following summarizes the assumptions used in the Black-Scholes model for those options granted in 2014 and 2013:

	2014			2013
Risk-free interest rate	2.41	%		1.25	%
Expected price volatility	45.05	%		45.68	%
Dividend yield	2.73	%		2.96	%
Forfeiture rate	5.46	%		4.73	%
Weighted-average expected life, until exercise	7.74		years	7.27		years

Components of Share Based Compensation Awards

The following table summarizes the components of the Corporation's share-based compensation awards recorded as expense:

	Year Ended December 31,			Year Ended December 31,			Year Ended December 31,
	2015			2014			2013
Stock and ESPP Options
Pre-tax compensation expense	$	101		$	237		$	253
Income tax expense (benefit)	4			(47		)	(16		)
Stock and ESPP option expense, net of income taxes	$	105		$	190		$	237
Restricted Stock Awards
Pre-tax compensation expense	$	2,169		$	1,940		$	1,520
Income tax benefit	(749		)	(679		)	(531		)
Restricted stock awards expense, net of income taxes	$	1,420		$	1,261		$	989
Total Share-Based Compensation:
Pre-tax compensation expense	$	2,270		$	2,177		$	1,773
Income tax benefit	(745		)	(726		)	(547		)
Total share-based compensation expense, net of income taxes	$	1,525		$	1,451		$	1,226

Stock Option Activity Under Stock Option Plans

Stock option activity under the Corporation's stock option plans, as of December 31, 2015, and changes during the year ended December 31, 2015, were as follows:

	Number of Shares		Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2015	737,931		$	20.99
Exercised	(96,066	)	$	15.21
Canceled	(199,853	)	$	25.99
Outstanding December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Vested and Expected to Vest at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319
Exercisable at December 31, 2015	442,012		$	19.99	3.11	$	2,599,319

Summary of Unvested RSAs Outstanding

The following table summarizes information on unvested RSAs outstanding as of December 31, 2015:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2015	385,450		$	15.65
Granted	125,050		$	23.48
Forfeited	(6,419	)	$	17.99
Vested	(149,577	)	$	11.88
Unvested RSAs at December 31, 2015	354,504		$	19.65

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Pension and Other Post Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Schedule of Plans' Funded Status and Amounts Recognized in the Balance Sheets

The table below sets forth the plans’ funded status and amounts recognized in the consolidated balance sheets at December 31, using measurement dates of December 31, 2015 and 2014.

	2015			2014
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	80,650		$	62,270
Service cost	55			73
Interest cost	3,087			3,235
Actuarial loss (gain)	(5,617		)	12,968
Benefits paid	(6,428		)	(5,541		)
Net transfers in from CFS acquisition				7,645
Benefit obligation at end of year	$	71,747		$	80,650
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	77,139		$	69,871
Actual return on plan assets	153			5,232
Employer contributions	532			504
Benefits paid	(6,428		)	(5,541		)
CFS acquisition				7,073
End of year	71,396			77,139
Funded status at end of year	$	(351	)	$	(3,511	)
Assets and Liabilities Recognized in the Balance Sheets:
Deferred tax asset	$	7,461		$	8,541
Assets	$	4,006		$	1,329
Liabilities	$	4,357		$	4,840
Amounts Recognized in Accumulated Other Comprehensive Income Not Yet Recognized as Components of Net Periodic (Benefit) Cost Consist of:
Accumulated loss	$	(13,857	)	$	(15,863	)
Prior service credit	(305		)	(346		)
	$	(14,162	)	$	(16,209	)

Schedule of Accumulated Benefit Obligation in Excess of Plan Assets

Information for pension plans with an accumulated benefit obligation in excess of plan assets is included in the table below.

	December 31, 2015		December 31, 2014
Projected benefit obligation	$	4,357	$	4,840
Accumulated benefit obligation	$	4,357	$	4,840
Fair value of plan assets

Schedule of Net Periodic Pension Costs

The following table shows the components of net periodic pension costs:

	December 31, 2015			December 31, 2014			December 31, 2013
Service cost	$	55		$	73		$	131
Interest cost	3,087			3,235			2,670
Expected return on plan assets	(4,471		)	(4,467		)	(4,265		)
Amortization of prior service costs	64			81			25
Amortization of net loss	1,722			478			2,131
Net periodic pension (benefit) cost	$	457		$	(600	)	$	692

Schedule of Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

	December 31, 2015		December 31, 2014			December 31, 2013
Net periodic pension (benefit) cost	$	457	$	(600	)	$	692
Net gain (loss)	1,299		(12,203		)	11,942
Amortization of loss	1,722		478			2,131
Amortization of prior service cost	64		81			25
Total recognized in other comprehensive income (loss)	3,085		(11,644		)	14,098
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	2,628	$	(11,044	)	$	13,406

Schedule of Amounts in Accumulated Other Comprehensive Income to be Recognized over Next Fiscal Year

The estimated net loss and transition obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic pension cost over the next fiscal year are:

	December 31, 2015			December 31, 2014			December 31, 2013
Amortization of net loss	$	(1,505	)	$	(1,770	)	$	(533	)
Amortization of prior service cost	(61		)	(64		)	(25		)
Total	$	(1,566	)	$	(1,834	)	$	(558	)

Schedule of Assumptions Used

Significant assumptions include:

	December 31, 2015		December 31, 2014		December 31, 2013
Weighted-average Assumptions Used to Determine Benefit Obligation:
Discount rate	4.50	%	4.00	%	4.80	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%
Weighted-average Assumptions Used to Determine Cost:
Discount rate	4.00	%	4.80	%	4.00	%
Expected return on plan assets	6.00	%	6.00	%	7.00	%
Rate of compensation increase for accruing active participants	3.00	%	3.00	%	3.00	%

Schedule of Expected Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as of December 31, 2015. The minimum contribution required in 2016 will likely be zero but the Corporation may decide to make a discretionary contribution during the year.

2016	$	4,814
2017	4,729
2018	4,657
2019	4,838
2020	4,772
After 2020	24,440
	$	48,250

Schedule of Allocation of Plan Assets

Following is a description of the valuation methodologies used for pension plan assets measured at fair value on a recurring basis, as well as the general classification of pension plan assets pursuant to the valuation hierarchy.

Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation hierarchy.  Level 1 plan assets total $52,433,000 and include cash and cash equivalents, common stocks, mutual funds and corporate bonds and notes.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of plan assets with similar characteristics or discounted cash flows.  Level 2 plan assets total $18,963,000 and include governmental agencies, taxable municipals, common collective trust investments (which are classified below as Party-in-Interest investments -- common bond fund and common equity fund) and certificates of deposit.  In certain cases where Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy.  There are no assets classified within Level 3 of the hierarchy at December 31, 2015 and 2014.

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2015	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	1,608	$	1,608
Corporate Bonds and Notes	9,113		9,113
Government Agency and Municipal Bonds and Notes	6,993				$	6,993
Certificates of Deposit	1,511				1,511
Party-in-Interest Investments
Common Stock	1,538		1,538
Common Bond Fund	4,647				4,647
Common Equity Fund	5,812				5,812
Mutual Funds
Taxable Bond	4,536		4,536
Large Cap Equity	18,528		18,528
Mid Cap Equity	8,537		8,537
Small Cap Equity	3,578		3,578
International Equity	3,353		3,353
Specialty Alternative Equity	1,642		1,642
	$	71,396	$	52,433	$	18,963

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2014	Fair Value		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	2,032	$	2,032
Corporate Bonds and Notes	9,384		9,384
Government Agency and Municipal Bonds and Notes	8,252				$	8,252
Certificates of Deposit	1,001				1,001
Party-in-Interest Investments
Common Stock	1,376		1,376
Common Bond Fund	4,615				4,615
Common Equity Fund	5,858				5,858
Mutual Funds
Taxable Bond	4,987		4,987
Large Cap Equity	21,185		21,185
Mid Cap Equity	9,434		9,434
Small Cap Equity	3,872		3,872
International Equity	3,474		3,474
Specialty Alternative Equity	1,669		1,669
	$	77,139	$	57,413	$	19,726

Plan assets are re-balanced quarterly. At December 31, 2015 and 2014, plan assets by category are as follows:

	December 31, 2015				December 31, 2014
	Actual		Target		Actual		Target
Cash and cash equivalents	2.2	%	2.0	%	2.6	%	2.0	%
Equity securities	58.1		60.0		58.7		60.0
Debt securities	37.4		36.0		36.5		36.0
Alternative investments	2.3		2.0		2.2		2.0
	100.0	%	100.0	%	100.0	%	100.0	%

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Income Tax (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Reconciliation of Statutory and Actual Income Tax Expense (Benefit)

The reconciliation between the statutory and actual income tax expense (benefit) is summarized in the following table for the years indicated:

	2015			2014			2013
Income Tax Expense for the Year Ended December 31:
Currently Payable:
Federal	$	21,221		$	7,075		$	13,737
State
Deferred:
Federal	3,952			14,538			2,147
State	492			510
Total Income Tax Expense	$	25,665		$	22,123		$	15,884
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 35%	$	31,867		$	28,800		$	21,145
Tax-exempt Interest Income	(7,083		)	(5,148		)	(3,923		)
Basis Difference on Sale of Insurance Subsidiary	2,252
Stock Compensation	34			36			50
Earnings on Life Insurance	(1,012		)	(1,271		)	(905		)
Tax Credits	(583		)	(911		)	(857		)
Other	190			617			374
Actual Tax Expense	$	25,665		$	22,123		$	15,884

Deferred Tax Assets and Liabilities

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	2015			2014
Deferred Tax Asset at December 31:
Assets:
Differences in Accounting for Loan Losses	$	25,867		$	26,665
Differences in Accounting for Loan Fees	762			747
Differences in Accounting for Loans and Securities	9,359			9,910
Deferred Compensation	5,100			5,234
Difference in Accounting for Pensions and Other Employee Benefits	2,247			1,084
Federal & State Income Tax Loss Carryforward and Credits	23,737			23,977
Other	9,310			8,535
Total Assets	76,382			76,152
Liabilities:
Differences in Depreciation Methods	7,742			8,220
State Income Tax	591			591
Net Unrealized Gain on Securities Available for Sale	6,636			7,591
Gain on FDIC Modified Whole Bank Transaction	1,405			1,694
Other	717			1,096
Total Liabilities	17,091			19,192
Net Deferred Tax Asset Before Valuation Allowance	59,291			56,960
Valuation allowance:
Beginning Balance	(17,568		)	(17,171		)
Decrease/(Increase) During the Year	1,832			(397		)
Ending Balance	(15,736		)	(17,568		)
Net Deferred Tax Asset	$	43,555		$	39,392

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Net Income Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Net Income Per Share

The following table reconciles basic and diluted net income per share for the years indicated:

	2015					2014					2013
			Weighted-Average Shares					Weighted-Average Shares						Weighted-Average Shares
Basic net income per share:	$	65,384				$	60,162				$	44,530
Preferred stock dividends											(2,380		)
Net income available to common stockholders	65,384		37,816,399	$	1.73	60,162		36,266,356	$	1.66	42,150			29,731,420	$	1.42
Effect of dilutive stock options and warrants			271,834					288,253						276,960
Diluted net income per share:
Net income available to common stockholders	$	65,384	38,088,233	$	1.72	$	60,162	36,554,609	$	1.65	$	42,150		30,008,380	$	1.41

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Results of Operations (Unaudited)

The following table sets forth certain quarterly results for the years ended December 31, 2015 and 2014:

	2015								2014
	First		Second		Third		Fourth		First		Second		Third		Fourth
Interest income	$	52,944	$	55,202	$	56,538	$	56,514	$	51,009	$	51,527	$	53,290	$	53,053
Interest expense	5,968		6,171		6,215		6,440		5,117		5,408		5,424		5,893
Net interest income	46,976		49,031		50,323		50,074		45,892		46,119		47,866		47,160
Provision for loan losses			417										1,600		960
Net interest income after provision for loan losses	46,976		48,614		50,323		50,074		45,892		46,119		46,266		46,200
Non-interest income	16,232		24,633		16,899		14,767		15,434		16,179		18,412		16,375
Non-interest expense	41,202		46,423		43,598		46,246		43,089		41,250		42,576		41,677
Income before income tax expense	22,006		26,824		23,624		18,595		18,237		21,048		22,102		20,898
Income tax expense	5,834		8,856		6,557		4,418		4,617		5,888		5,980		5,638
Net income available to common stockholders	$	16,172	$	17,968	$	17,067	$	14,177	$	13,620	$	15,160	$	16,122	$	15,260
Basic EPS	$	0.43	$	0.47	$	0.46	$	0.37	$	0.38	$	0.42	$	0.45	$	0.41
Diluted EPS	$	0.43	$	0.47	$	0.45	$	0.37	$	0.38	$	0.41	$	0.45	$	0.41
Average Shares Outstanding:
Basic	37,709,883		37,793,448		37,850,827		37,908,873		35,956,436		36,026,763		36,054,867		37,018,014
Diluted	38,000,074		38,043,359		38,118,199		38,190,694		36,260,624		36,294,149		36,328,981		37,323,276

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Condensed Financial Information (parent company only) (Tables)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Parent Company Information, Condensed Balance Sheets

Condensed Balance Sheets

	December 31, 2015		December 31, 2014
Assets
Cash	$	43,622	$	36,044
Investment in subsidiaries	932,372		820,123
Goodwill	448		448
Other assets	9,668		6,281
Total assets	$	986,110	$	862,896
Liabilities
Borrowings	$	127,663	$	126,702
Other liabilities	7,938		9,367
Total liabilities	135,601		136,069
Stockholders' equity	850,509		726,827
Total liabilities and stockholders' equity	$	986,110	$	862,896

Schedule of Parent Company Information, Condensed Statements of Income and Comprehensive Income

Condensed Statements of Income and Comprehensive Income

	December 31, 2015			December 31, 2014		December 31, 2013
Income
Dividends from subsidiaries	$	39,032		$	53,231	$	63,732
Gain on the sale of insurance subsidiary	8,265
Gain on cancellation of subordinated debentures	1,250
Other income	197			538		45
Total income	48,744			53,769		63,777
Expenses
Interest expense	6,661			6,616		3,531
Salaries and employee benefits	3,023			3,128		3,284
Net occupancy and equipment expenses	464			442		258
Other outside services	1,455			458		1,141
Professional services	636			409		648
Other expenses	1,234			1,132		870
Total expenses	13,473			12,185		9,732
Income before income tax benefit (expense) and equity in undistributed income of subsidiaries	35,271			41,584		54,045
Income tax benefit (expense)	(974		)	3,999		3,153
Income before equity in undistributed income of subsidiaries	34,297			45,583		57,198
Equity in undistributed (distributions in excess of) income of subsidiaries	31,087			14,579		(12,668		)
Net income	65,384			60,162		44,530
Preferred stock dividends and discount accretion						(2,380		)
Net income available to common stockholders	$	65,384		$	60,162	$	42,150
Net income	$	65,384		$	60,162	$	44,530
Other comprehensive income (loss)	268			4,780		(911		)
Comprehensive income	$	65,652		$	64,942	$	43,619

Schedule of Parent Company Information, Condensed Statement of Cash Flows

Condensed Statement of Cash Flows

	Year Ended December 31,
	2015			2014			2013
Cash Flow From Operating Activities:
Net income	$	65,384		$	60,162		$	44,530
Adjustments to Reconcile Net Income to Net Cash:
Share-based compensation	843			887			778
Distributions in excess of (equity in undistributed) income of subsidiaries	(31,087		)	(14,579		)	12,668
Gain on sale of insurance subsidiary	(8,265		)
Gain on cancellation of subordinated debentures	(1,250		)
Net Change in:
Other assets	(441		)	2,425			(1,354		)
Other liabilities	(1,486		)	1,466			(8,438		)
Investment in subsidiaries - operating activities	197			(4,517		)	12,991
Net cash provided by operating activities	23,895			45,844			61,175
Cash Flow From Investing Activities:
Net cash paid in acquisition	(14,500		)	(12,832		)
Proceeds from business divestitures	16,000
Other	575						240
Net cash provided (used) in investing activities	2,075			(12,832		)	240
Cash Flow From Financing Activities:
Cash dividends	(15,654		)	(10,694		)	(7,992		)
Repayment of borrowings	(3,750		)				(55,000		)
Proceeds from issuance of long-term debt							70,000
Preferred stock redemption under small business lending fund							(90,783		)
Stock issued under employee benefit plans	460			478			479
Stock issued under dividend reinvestment and stock purchase plan	661			523			325
Stock options exercised	1,531			564			115
Stock redeemed	(1,640		)	(1,067		)	(491		)
Net cash used by financing activities	(18,392		)	(10,196		)	(83,347		)
Cash, beginning of the year	36,044			13,228			35,160
Cash, end of year	$	43,622		$	36,044		$	13,228

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Nature of Operations and Summary of Significant Accounting Policies - Allowance for Loan Losses (Details)	12 Months Ended
	Dec. 31, 2015 key_element
Accounting Policies [Abstract]
Number of key element used in assessing the appropriateness of the allowance for loan losses	3

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Nature of Operations and Summary of Significant Accounting Policies - Premises and Equipment (Details)	12 Months Ended
	Dec. 31, 2015
Minimum
Premises and Equipment [Line Items]
Estimated useful lives of assets	3 years
Maximum
Premises and Equipment [Line Items]
Estimated useful lives of assets	40 years

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Nature of Operations and Summary of Significant Accounting Policies - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2015
Minimum
Intangible Assets [Abstract]
Estimated useful lives of intangible assets	3 years
Maximum
Intangible Assets [Abstract]
Estimated useful lives of intangible assets	20 years

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Nature of Operations and Summary of Significant Accounting Policies - Requisite Service Period, Stock Award Plans (Details)	12 Months Ended
	Dec. 31, 2015
Minimum
Schedule of Stock Options and Restricted Stock Award Plans [Line Items]
Requisite service period	2 years
Maximum
Schedule of Stock Options and Restricted Stock Award Plans [Line Items]
Requisite service period	3 years

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Acquisitions and Divestitures - Narrative (Details) $ / shares in Units, $ in Thousands					12 Months Ended
	Dec. 31, 2015 USD ($) bank shares	Apr. 17, 2015 USD ($) bank $ / shares	Nov. 07, 2014 USD ($) bank $ / shares shares	Nov. 12, 2013 USD ($) bank shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($) shares	Dec. 31, 2013 USD ($) shares
Business Acquisition [Line Items]
Value of stock issued as a part of acquisition					$ 70,402	$ 34,981	$ 135,642
Cash paid in acquisition					14,500	$ 14,208
Pro forma nonrecurring expense					$ 12,000
Common Stock
Business Acquisition [Line Items]
Stock issued as a part of acquisition (in shares) | shares					2,769,568	1,574,298	7,079,457
Value of stock issued as a part of acquisition					$ 346	$ 197	$ 885
Merger with Ameriana Bancorp
Business Acquisition [Line Items]
Percentage of interest acquired	100.00%				100.00%
Number of banking centers acquired | bank	13
Stock issued as a part of acquisition (in shares) | shares	2,800,000
Value of stock issued as a part of acquisition	$ 70,400
Core deposit intangible	$ 3,200				$ 3,200
Acquired intangible asset, expected useful life	10 years
Total purchase price	$ 70,402				$ 70,402
Merger with Ameriana Bancorp | Common Stock
Business Acquisition [Line Items]
Number of shares of common stock	0.9037				0.9037
Merger with C Financial Corporation
Business Acquisition [Line Items]
Percentage of interest acquired		100.00%
Number of banking centers acquired | bank		6
Core deposit intangible		$ 981
Acquired intangible asset, expected useful life		10 years
Total purchase price		$ 14,500
Cash received by shareholders for each share of common stock held (in dollars per share) | $ / shares		$ 6.738
Merger with Community Bancshares, Inc.
Business Acquisition [Line Items]
Percentage of interest acquired			100.00%
Number of banking centers acquired | bank			10
Number of shares of common stock			4.0926
Stock issued as a part of acquisition (in shares) | shares			1,600,000
Value of stock issued as a part of acquisition			$ 35,000
Core deposit intangible			$ 4,658
Acquired intangible asset, expected useful life			10 years
Total purchase price			$ 49,189
Share price (in dollars per share) | $ / shares			$ 85.94
Cash paid in acquisition			$ 14,200
Pro forma nonrecurring expense						1,800
Pro forma revenue						$ 1,600
Merger with Community Bancshares, Inc. | Common Stock
Business Acquisition [Line Items]
Number of shares of common stock			4.0926
Merger with CFS Bancorp, Inc.
Business Acquisition [Line Items]
Percentage of interest acquired				100.00%
Number of banking centers acquired | bank				20
Stock issued as a part of acquisition (in shares) | shares				7,100,000
Value of stock issued as a part of acquisition				$ 135,600
Core deposit intangible				$ 7,313
Acquired intangible asset, expected useful life				10 years
Total purchase price				$ 135,642
Percentage of common stock received per shares owned through acquisition				0.65%
Pro forma nonrecurring expense							9,500
Pro forma revenue							$ 4,900

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Acquisitions and Divestitures - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Apr. 17, 2015	Dec. 31, 2014	Nov. 07, 2014	Dec. 31, 2013	Nov. 12, 2013
Business Acquisition [Line Items]
Loans	$ 430,289
Goodwill	243,129		$ 202,724		$ 188,948
Merger with Ameriana Bancorp
Business Acquisition [Line Items]
Cash and cash equivalents	4,068
Interest-bearing time deposits	8,790
Investment securities	60,365
Loans	319,664
Premises and equipment	14,491
Federal Home Loan Bank stock	2,693
Other real estate owned	5,719
Interest receivable	1,306
Cash surrender value of life insurance	28,188
Other assets	7,086
Deposits	(382,547)
Interest payable	(24)
Federal Home Loan Bank advances	(24,938)
Subordinated Debentures	(5,961)
Other liabilities	(9,451)
Net tangible assets acquired	29,449
Core deposit intangible	3,200
Goodwill	37,753
Purchase price	70,402
Merger with C Financial Corporation
Business Acquisition [Line Items]
Cash and cash equivalents		$ 2,496
Federal Funds sold		7,018
Interest-bearing time deposits		922
Loans		110,625
Premises and equipment		7,290
Federal Home Loan Bank stock		855
Interest receivable		292
Other assets		119
Deposits		(105,326)
Interest payable		(29)
Federal Home Loan Bank advances	$ (11,597)	(18,958)
Other liabilities		(2,911)
Net tangible assets acquired		2,393
Core deposit intangible		981
Goodwill		11,126
Purchase price		$ 14,500
Merger with Community Bancshares, Inc.
Business Acquisition [Line Items]
Cash and cash equivalents				$ 4,124
Interest-bearing time deposits				16,526
Investment securities				76,807
Loans				145,064
Premises and equipment				3,610
Federal Home Loan Bank stock				1,950
Other real estate owned				6,662
Interest receivable				767
Cash surrender value of life insurance				3,266
Tax asset, deferred and receivable				3,348
Other assets				167
Deposits				(228,424)
Interest payable				(98)
Other liabilities				(3,014)
Net tangible assets acquired				30,755
Core deposit intangible				4,658
Goodwill				13,776
Purchase price				$ 49,189
Merger with CFS Bancorp, Inc.
Business Acquisition [Line Items]
Cash and cash equivalents						$ 10,992
Interest-bearing time deposits						213,379
Investment securities						15,913
Investment securities held to maturity						14,372
Mortgage loans held for sale						189
Loans						603,114
Premises and equipment						19,643
Federal Home Loan Bank stock						6,188
Other real estate owned						12,857
Interest receivable						1,770
Cash surrender value of life insurance						36,555
Tax asset, deferred and receivable						30,717
Other assets						111,656
Deposits						(955,432)
Securities sold under repurchase agreements						(9,830)
Interest payable						(294)
Federal Home Loan Bank advances						(15,000)
Other liabilities						(16,033)
Net tangible assets acquired						80,756
Core deposit intangible						7,313
Goodwill						47,573
Purchase price						$ 135,642

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Acquisitions and Divestitures - First Merchants Insurance Services, Inc. Narrative (Details) - FMIG $ in Millions	Jun. 12, 2015 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Purchase price	$ 18.0
Amount paid at closing	16.0
Promissory note	$ 2.0
Term of promissory note (in years)	2 years
Gain on sale of subsidiary	$ 8.3

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Acquisitions and Divestitures - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Business Combinations [Abstract]
Total revenue (net interest income plus other income)	$ 291,614	$ 284,890	$ 253,668
Net income	60,497	64,174	39,979
Net income available to common shareholders	$ 60,497	$ 64,174	$ 37,559
Earnings per share:
Basic (in dollars per share)	$ 1.49	$ 1.58	$ 0.98
Diluted (in dollars per share)	$ 1.48	$ 1.57	$ 0.97

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Restriction on Cash and Due From Banks (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Restricted Cash and Cash Equivalents Items [Line Items]
Cash balance, Federal Home Loan Bank And Federal Reserve Bank	$ 14,546
Cash reserve with Federal Reserve Bank	19,288
Interest-bearing Deposits
Restricted Cash and Cash Equivalents Items [Line Items]
Cash amount that exceeded federally insured limits	$ 63,132

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Investment Securities - Amortized Cost and Approximate Fair Values of Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Total available for sale
Amortized Cost	$ 640,499	$ 529,212
Gross Unrealized Gains	18,479	20,581
Gross Unrealized Losses	578	250
Investment securities available for sale	658,400	549,543
Total held to maturity
Amortized Cost	618,599	631,088
Gross Unrealized Gains	14,583	17,243
Gross Unrealized Losses	802	608
Fair Value	632,380	647,723
Total Investment Securities
Amortized Cost	1,259,098	1,160,300
Gross Unrealized Gains	33,062	37,824
Gross Unrealized Losses	1,380	858
Fair Value	1,290,780	1,197,266
U.S. Government-sponsored agency securities
Total available for sale
Amortized Cost	100	100
Gross Unrealized Gains	$ 4	$ 9
Gross Unrealized Losses
Investment securities available for sale	$ 104	$ 109
State and municipal
Total available for sale
Amortized Cost	291,730	216,915
Gross Unrealized Gains	14,241	11,801
Gross Unrealized Losses	60	123
Investment securities available for sale	305,911	228,593
Total held to maturity
Amortized Cost	219,767	204,443
Gross Unrealized Gains	6,982	5,716
Gross Unrealized Losses	15	96
Fair Value	226,734	210,063
U.S. Government-sponsored mortgage-backed securities
Total available for sale
Amortized Cost	342,550	310,460
Gross Unrealized Gains	4,234	8,771
Gross Unrealized Losses	518	127
Investment securities available for sale	346,266	319,104
Total held to maturity
Amortized Cost	398,832	426,645
Gross Unrealized Gains	7,601	11,527
Gross Unrealized Losses	787	512
Fair Value	405,646	437,660
Corporate obligations
Total available for sale
Amortized Cost	$ 31	$ 31
Gross Unrealized Gains
Gross Unrealized Losses
Investment securities available for sale	$ 31	$ 31
Equity securities
Total available for sale
Amortized Cost	$ 3,912	$ 1,706
Gross Unrealized Gains
Gross Unrealized Losses
Investment securities available for sale	$ 3,912	$ 1,706
Certificates of deposit
Total available for sale
Amortized Cost	$ 2,176
Gross Unrealized Gains
Gross Unrealized Losses
Investment securities available for sale	$ 2,176

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Investment Securities - Narrative (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) security	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Fair value of investments	$ 177,584,000	$ 72,390,000
Unrealized losses on mortgage-backed securities portfolio	578,000	250,000
Unrealized losses in available for sale and held to maturity portfolios	802,000	608,000
Carrying value of securities pledged as collateral	637,358,000	449,408,000	$ 373,533,000
Gross gains on securities sold	2,770,000	3,581,000	487,000
Gross losses from sale of available for sale securities	100,000	0	$ 0
Investments in Debt and Equity Securities, Reported at Less than Historical Cost
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Historical cost	178,964,000	73,249,000
Fair value of investments	$ 177,584,000	$ 72,390,000
Percent of the Corporation's available for sale and held to maturity portfolio	13.90%	6.10%
U.S. Government-Sponsored Mortgage-backed Securities
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Unrealized losses on mortgage-backed securities portfolio	$ 518,000	$ 127,000
Available-for-sale, number of securities in unrealized loss positions | security	26
Unrealized losses in available for sale and held to maturity portfolios	$ 787,000	512,000
Held-to-maturity, number of securities in unrealized loss positions | security	22
State and Municipal Securities
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Unrealized losses on mortgage-backed securities portfolio	$ 60,000	123,000
Available-for-sale, number of securities in unrealized loss positions | security	22
Unrealized losses in available for sale and held to maturity portfolios	$ 15,000	$ 96,000
Held-to-maturity, number of securities in unrealized loss positions | security	7
Merger with Ameriana Bancorp
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Percentage of interest acquired	100.00%
Investment securities acquired	$ 60,365,000

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Investment Securities - Debt Securities Credit Loss Recognized in Income, and Other Losses Recorded in Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Credit losses on debt securities held:
Balance, beginning of the period	$ 500	$ 11,355
Reductions for previous other-than-temporary losses realized on securities sold during the year	(500)	(10,855)
Balance, end of period	$ 0	$ 500

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Investment Securities - Investments' Gross Unrealized Losses and Fair Value Aggregated by Investment Category and Length of Time in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	$ 90,954	$ 3,442
Less than 12 Months, Gross Unrealized Losses	505	20
12 Months or Longer, Fair Value	2,101	15,297
12 Months or Longer, Gross Unrealized Losses	73	230
Total, Fair Value	93,055	18,739
Total, Gross Unrealized Losses	578	250
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	69,641	14,910
Less than 12 Months, Gross Unrealized Losses	519	178
12 Months or Longer, Fair Value	14,888	38,741
12 Months or Longer, Gross Unrealized Losses	283	430
Total, Fair Value	84,529	53,651
Total, Gross Unrealized Losses	802	608
Available-for-sale Securities and Held-to-maturity Securities [Abstract]
Less than 12 Months, Fair Value	160,595	18,352
Less than 12 Months, Gross Unrealized Losses	1,024	198
12 Months or Longer, Fair Value	16,989	54,038
12 Months or Longer, Gross Unrealized Losses	356	660
Total, Fair Value	177,584	72,390
Total, Gross Unrealized Losses	1,380	858
State and municipal
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	7,558	1,256
Less than 12 Months, Gross Unrealized Losses	$ 60	7
12 Months or Longer, Fair Value		9,850
12 Months or Longer, Gross Unrealized Losses		116
Total, Fair Value	$ 7,558	11,106
Total, Gross Unrealized Losses	60	123
U.S. Government-sponsored mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	83,396	2,186
Less than 12 Months, Gross Unrealized Losses	445	13
12 Months or Longer, Fair Value	2,101	5,447
12 Months or Longer, Gross Unrealized Losses	73	114
Total, Fair Value	85,497	7,633
Total, Gross Unrealized Losses	$ 518	127
State and municipal
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value		5,119
Less than 12 Months, Gross Unrealized Losses		96
12 Months or Longer, Fair Value	$ 1,982	$ 250
12 Months or Longer, Gross Unrealized Losses	15
Total, Fair Value	1,982	$ 5,369
Total, Gross Unrealized Losses	15	96
U.S. Government-sponsored mortgage-backed securities
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	69,641	9,791
Less than 12 Months, Gross Unrealized Losses	519	82
12 Months or Longer, Fair Value	12,906	38,491
12 Months or Longer, Gross Unrealized Losses	268	430
Total, Fair Value	82,547	48,282
Total, Gross Unrealized Losses	$ 787	$ 512

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Investment Securities - Amortized Cost and Fair Value of Available for Sale Securities and Held to Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Available for Sale, Amortized Cost
Due in one year or less	$ 4,658
Due after one through five years	13,725
Due after five through ten years	52,878
Due after ten years	220,600
Amortized Cost	291,861
Total Investment Securities	640,499
Available for Sale, Fair Value
Due in one year or less	4,704
Due after one through five years	14,295
Due after five through ten years	55,375
Due after ten years	231,672
Fair Value	306,046
Total Investment Securities	658,400
Held to Maturity, Amortized Cost
Due in one year or less	4,144
Due after one through five years	28,054
Due after five through ten years	81,483
Due after ten years	106,086
Amortized Cost	219,767
Total Investment Securities	618,599	$ 631,088
Held to Maturity, Fair Value
Due in one year or less	4,148
Due after one through five years	29,175
Due after five through ten years	83,646
Due after ten years	109,765
Fair Value	226,734
Total Investment Securities	632,380	647,723
U.S. Government-sponsored mortgage-backed securities
Available for Sale, Amortized Cost
Without single maturity date	342,550
Available for Sale, Fair Value
Without single maturity date	346,266
Held to Maturity, Amortized Cost
Total Investment Securities	398,832	426,645
Held to Maturity, Fair Value
Total Investment Securities	405,646	$ 437,660
Equity securities
Available for Sale, Amortized Cost
Without single maturity date	3,912
Available for Sale, Fair Value
Without single maturity date	3,912
Certificates of deposit
Available for Sale, Amortized Cost
Without single maturity date	2,176
Available for Sale, Fair Value
Without single maturity date	$ 2,176

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Loans and Allowance - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Apr. 17, 2015	Nov. 07, 2014	Nov. 12, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 9,894				$ 7,235				$ 9,894	$ 7,235
Loans acquired through business combinations	430,289								430,289
Loans	4,693,822				3,924,865				4,693,822	3,924,865
Allowance for loan losses	62,453				63,964				62,453	63,964	$ 67,870				$ 69,366
Decrease in allowance for loan losses									1,511
Decrease in reserve on impaired loans									927
Reserve on impaired loans	$ 1,842				2,769				1,842	2,769	1,583
Net charge offs									1,928
Decrease in net charge offs									4,538
Provision for loan losses			$ 417		960	$ 1,600			417	2,560	6,648
Decrease in provision for loan losses									2,143
Commercial impaired loan total	$ 97,527				116,223				97,527	116,223	119,755
Merger with Ameriana Bancorp
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired through business combinations	319,664								319,664
Commercial impaired loan total	11,365								11,365
Merger with C Financial Corporation
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired through business combinations												$ 110,625
Commercial impaired loan total	1,841								1,841
Merger with Community Bancshares, Inc.
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired through business combinations													$ 145,064
Commercial impaired loan total					17,027					17,027
Merger with CFS Bancorp, Inc.
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired through business combinations														$ 603,114
Commercial impaired loan total											69,448
Other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	159,388				35,018				159,388	35,018
Increase in loans									124,370
Commercial and farmland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,802,921				1,672,661				1,802,921	1,672,661
Reserve on impaired loans	392				1,120				$ 392	1,120	894
Percentage of troubled debt restructured loans									46.00%
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	786,105				647,315				$ 786,105	647,315
Allowance for loan losses	11,139				13,152				11,139	13,152	15,077				$ 14,157
Reserve on impaired loans	173				194				173	194	6
Provision for loan losses									310	(839)	3,514
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,057,075				896,688				1,057,075	896,688
Reserve on impaired loans	$ 1,247				$ 1,055				$ 1,247	$ 1,055	$ 683
Percentage of troubled debt restructured loans									32.00%

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Loans and Allowance - Composition of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 4,693,822	$ 3,924,865
Allowance for loan losses	(62,453)	(63,964)	$ (67,870)	$ (69,366)
Net Loans	4,631,369	3,860,901
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,057,075	896,688
Agricultural production financing and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	97,711	104,927
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	366,704	207,221
Commercial and farmland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,802,921	1,672,661
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	786,105	647,315
Allowance for loan losses	(11,139)	(13,152)	(15,077)	(14,157)
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	348,613	286,529
Individuals' loans for household and other personal expenditures
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	74,717	73,400
Allowance for loan losses	(2,689)	(2,658)	$ (2,515)	$ (2,593)
Lease financing receivables, net of unearned income
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	588	1,106
Allowance for loan losses	(2)	(3)
Other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 159,388	$ 35,018

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Loans and Allowance - Changes in Allowance for Loan Losses by Loan Segment (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Allowance for loan losses:
Beginning balance				$ 63,964				$ 67,870	$ 63,964	$ 67,870	$ 69,366
Provision for losses			$ 417		$ 960	$ 1,600			417	2,560	6,648
Recoveries on loans									6,344	10,916	9,990
Loans charged off									(8,272)	(17,382)	(18,134)
Ending balance	$ 62,453				63,964				62,453	63,964	67,870
Commercial
Allowance for loan losses:
Beginning balance				$ 28,824				$ 27,176	28,824	27,176	25,913
Provision for losses									(1,901)	3,459	2,794
Recoveries on loans									1,911	5,435	4,586
Loans charged off									(2,356)	(7,246)	(6,117)
Ending balance	26,478				28,824				26,478	28,824	27,176
Commercial Real Estate
Allowance for loan losses:
Beginning balance				19,327				23,102	19,327	23,102	26,703
Provision for losses									1,710	(464)	340
Recoveries on loans									2,545	3,297	3,552
Loans charged off									(1,437)	(6,608)	(7,493)
Ending balance	22,145				19,327				22,145	19,327	23,102
Consumer
Allowance for loan losses:
Beginning balance				2,658				2,515	2,658	2,515	2,593
Provision for losses									299	423	(11)
Recoveries on loans									352	377	556
Loans charged off									(620)	(657)	(623)
Ending balance	2,689				2,658				2,689	2,658	2,515
Residential
Allowance for loan losses:
Beginning balance				13,152				$ 15,077	13,152	15,077	14,157
Provision for losses									310	(839)	3,514
Recoveries on loans									1,536	1,783	1,292
Loans charged off									(3,859)	(2,869)	(3,886)
Ending balance	11,139				13,152				11,139	$ 13,152	$ 15,077
Finance Leases
Allowance for loan losses:
Beginning balance				$ 3					3
Provision for losses									$ (1)	$ (19)	$ 11
Recoveries on loans										24	4
Loans charged off										(2)	$ (15)
Ending balance	$ 2				$ 3				$ 2	$ 3

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Loans and Allowance - Allowance for Credit Losses and Loan Portfolio by Loan Segment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Individually evaluated for impairment	$ 1,689	$ 2,119
Allowance balances - Collectively evaluated for impairment	60,611	61,195
Allowance balances - Loans Acquired with Deteriorated Credit Quality	153	650
Total Allowance for Loan Losses	62,453	63,964	$ 67,870	$ 69,366
Loan balances - Individually evaluated for impairment	28,567	44,093
Loan balances - Collectively evaluated for impairment	4,595,698	3,807,707
Loans	4,693,822	3,924,865
Loans acquired with deteriorated credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan balances - Loans Acquired with Deteriorated Credit Quality	69,557	73,065
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Individually evaluated for impairment	1,277	1,455
Allowance balances - Collectively evaluated for impairment	$ 25,201	$ 27,369
Allowance balances - Loans Acquired with Deteriorated Credit Quality
Total Allowance for Loan Losses	$ 26,478	$ 28,824	27,176	25,913
Loan balances - Individually evaluated for impairment	7,877	16,108
Loan balances - Collectively evaluated for impairment	1,298,988	1,011,122
Loans	1,314,174	1,036,633
Commercial | Loans acquired with deteriorated credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan balances - Loans Acquired with Deteriorated Credit Quality	7,309	9,403
Commercial Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Individually evaluated for impairment	243	470
Allowance balances - Collectively evaluated for impairment	21,753	18,207
Allowance balances - Loans Acquired with Deteriorated Credit Quality	149	650
Total Allowance for Loan Losses	22,145	19,327	23,102	26,703
Loan balances - Individually evaluated for impairment	16,670	23,963
Loan balances - Collectively evaluated for impairment	2,096,089	1,796,797
Loans	2,169,625	1,879,882
Commercial Real Estate | Loans acquired with deteriorated credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan balances - Loans Acquired with Deteriorated Credit Quality	56,866	59,122
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Collectively evaluated for impairment	2,689	2,658
Total Allowance for Loan Losses	2,689	2,658	2,515	2,593
Loan balances - Collectively evaluated for impairment	74,717	73,400
Loans	74,717	73,400
Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Individually evaluated for impairment	169	194
Allowance balances - Collectively evaluated for impairment	10,966	12,958
Allowance balances - Loans Acquired with Deteriorated Credit Quality	4
Total Allowance for Loan Losses	11,139	13,152	$ 15,077	$ 14,157
Loan balances - Individually evaluated for impairment	4,020	4,022
Loan balances - Collectively evaluated for impairment	1,125,316	925,282
Loans	1,134,718	933,844
Residential | Loans acquired with deteriorated credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan balances - Loans Acquired with Deteriorated Credit Quality	5,382	4,540
Finance Leases
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance balances - Collectively evaluated for impairment	$ 2	3
Allowance balances - Loans Acquired with Deteriorated Credit Quality
Total Allowance for Loan Losses	$ 2	3
Loan balances - Collectively evaluated for impairment	588	1,106
Loans	$ 588	$ 1,106

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Loans and Allowance - Summary of Non-Accrual Loans by Loan Class (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	$ 31,389	$ 48,789
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	4,634	7,048
Agriculture production financing and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	827	5,800
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	736	1,439
Commercial and farmland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	11,277	19,350
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	11,818	12,933
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	1,952	1,988
Individuals' loans for household and other personal expenditures
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	$ 145	$ 231

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Loans and Allowance - Composition of Impaired Loans by Loan Class (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Unpaid Principal Balance
Impaired loans with no related allowance	$ 134,581	$ 158,563	$ 189,779
Impaired loans with related allowance	7,953	16,703	6,121
Total Impaired Loans	142,534	175,266	195,900
Recorded Investment
Impaired loans with no related allowance	90,975	102,793	114,253
Impaired loans with related allowance	6,552	13,430	5,502
Total Impaired Loans	97,527	116,223	119,755
Related Allowance	1,842	2,769	1,583
Average Recorded Investment
Impaired loans with no related allowance	96,423	106,807	119,561
Impaired loans with related allowance	6,945	15,764	5,607
Total Impaired Loans	103,368	122,571	125,168
Interest Income Recognized
Impaired loans with no related allowance	4,217	4,297	2,048
Impaired loans with related allowance	38	65	18
Total Impaired Loans	4,255	4,362	2,066
Commercial and industrial loans
Unpaid Principal Balance
Impaired loans with no related allowance	22,151	35,514	35,066
Impaired loans with related allowance	3,043	1,766	1,390
Recorded Investment
Impaired loans with no related allowance	11,669	18,029	16,371
Impaired loans with related allowance	2,690	1,684	1,216
Related Allowance	1,247	1,055	683
Average Recorded Investment
Impaired loans with no related allowance	12,578	18,711	19,209
Impaired loans with related allowance	2,752	1,721	1,240
Interest Income Recognized
Impaired loans with no related allowance	488	362	192
Impaired loans with related allowance	38	40	9
Agriculture production financing and other loans to farmers
Unpaid Principal Balance
Impaired loans with no related allowance	370	26	32
Impaired loans with related allowance	466	6,777
Recorded Investment
Impaired loans with no related allowance	361	22	30
Impaired loans with related allowance	466	5,777
Related Allowance	30	400
Average Recorded Investment
Impaired loans with no related allowance	439	26	32
Impaired loans with related allowance	$ 538	8,044
Interest Income Recognized
Impaired loans with related allowance		1
Construction
Unpaid Principal Balance
Impaired loans with no related allowance	$ 4,551	12,956	16,109
Recorded Investment
Impaired loans with no related allowance	2,336	9,318	10,625
Average Recorded Investment
Impaired loans with no related allowance	3,662	9,837	11,621
Interest Income Recognized
Impaired loans with no related allowance	157	427	117
Commercial and farmland
Unpaid Principal Balance
Impaired loans with no related allowance	95,930	95,856	128,073
Impaired loans with related allowance	2,144	7,159	4,657
Recorded Investment
Impaired loans with no related allowance	69,024	68,187	83,033
Impaired loans with related allowance	1,933	4,971	4,215
Related Allowance	392	1,120	894
Average Recorded Investment
Impaired loans with no related allowance	71,569	70,844	84,057
Impaired loans with related allowance	1,868	4,999	4,291
Interest Income Recognized
Impaired loans with no related allowance	$ 3,328	3,389	1,663
Impaired loans with related allowance		24	9
Residential
Unpaid Principal Balance
Impaired loans with no related allowance	$ 11,262	10,591	6,746
Impaired loans with related allowance	2,300	1,001	74
Recorded Investment
Impaired loans with no related allowance	7,338	6,839	3,910
Impaired loans with related allowance	1,463	998	71
Related Allowance	173	194	6
Average Recorded Investment
Impaired loans with no related allowance	7,926	6,987	4,236
Impaired loans with related allowance	1,787	1,000	76
Interest Income Recognized
Impaired loans with no related allowance	$ 244	$ 119	$ 75
Impaired loans with related allowance
Home equity
Unpaid Principal Balance
Impaired loans with no related allowance	$ 297	$ 3,590	$ 3,299
Recorded Investment
Impaired loans with no related allowance	247	398	112
Average Recorded Investment
Impaired loans with no related allowance	$ 249	$ 402	$ 225
Interest Income Recognized
Impaired loans with no related allowance
Other commercial loans
Unpaid Principal Balance
Impaired loans with no related allowance	$ 20	$ 30	$ 454
Recorded Investment
Impaired loans with no related allowance			172
Average Recorded Investment
Impaired loans with no related allowance			181
Interest Income Recognized
Impaired loans with no related allowance			$ 1

XML

Loans and Allowance - Credit Quality of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 4,693,822	$ 3,924,865
Commercial and industrial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	1,057,075	896,688
Agricultural production financing and other loans to farmers
Financing Receivable, Recorded Investment [Line Items]
Loans	97,711	104,927
Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	366,704	207,221
Commercial and farmland
Financing Receivable, Recorded Investment [Line Items]
Loans	1,802,921	1,672,661
Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	786,105	647,315
Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	348,613	286,529
Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans	74,717	73,400
Finance Leases
Financing Receivable, Recorded Investment [Line Items]
Loans	588	1,106
Other commercial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	159,388	35,018
Commercial Pass
Financing Receivable, Recorded Investment [Line Items]
Loans	3,404,491	2,849,876
Commercial Pass | Commercial and industrial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	962,340	823,732
Commercial Pass | Agricultural production financing and other loans to farmers
Financing Receivable, Recorded Investment [Line Items]
Loans	77,884	96,155
Commercial Pass | Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	345,449	185,394
Commercial Pass | Commercial and farmland
Financing Receivable, Recorded Investment [Line Items]
Loans	1,679,141	1,552,781
Commercial Pass | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	171,576	149,430
Commercial Pass | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	8,218	6,368
Commercial Pass | Finance Leases
Financing Receivable, Recorded Investment [Line Items]
Loans	495	998
Commercial Pass | Other commercial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	159,388	35,018
Commercial Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans	105,965	64,631
Commercial Special Mention | Commercial and industrial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	48,432	24,455
Commercial Special Mention | Agricultural production financing and other loans to farmers
Financing Receivable, Recorded Investment [Line Items]
Loans	6,665	1,195
Commercial Special Mention | Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	1,271	3,164
Commercial Special Mention | Commercial and farmland
Financing Receivable, Recorded Investment [Line Items]
Loans	46,442	29,484
Commercial Special Mention | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	3,107	6,321
Commercial Special Mention | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	48	12
Commercial Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans	149,395	160,608
Commercial Substandard | Commercial and industrial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	45,984	48,226
Commercial Substandard | Agricultural production financing and other loans to farmers
Financing Receivable, Recorded Investment [Line Items]
Loans	13,162	7,577
Commercial Substandard | Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	1,790	2,928
Commercial Substandard | Commercial and farmland
Financing Receivable, Recorded Investment [Line Items]
Loans	77,338	90,161
Commercial Substandard | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	10,428	10,918
Commercial Substandard | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	600	690
Commercial Substandard | Finance Leases
Financing Receivable, Recorded Investment [Line Items]
Loans	93	$ 108
Commercial Substandard | Other commercial loans
Financing Receivable, Recorded Investment [Line Items]
Loans
Commercial Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans	319	$ 275
Commercial Doubtful | Commercial and industrial loans
Financing Receivable, Recorded Investment [Line Items]
Loans	319	$ 275
Commercial Doubtful | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans
Consumer Performing
Financing Receivable, Recorded Investment [Line Items]
Loans	1,023,856	$ 837,296
Consumer Performing | Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	18,114	15,588
Consumer Performing | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	593,533	470,972
Consumer Performing | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	337,718	277,571
Consumer Performing | Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans	74,491	73,165
Consumer Non Performing
Financing Receivable, Recorded Investment [Line Items]
Loans	9,796	12,179
Consumer Non Performing | Construction
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 80	147
Consumer Non Performing | Commercial and farmland
Financing Receivable, Recorded Investment [Line Items]
Loans		235
Consumer Non Performing | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 7,461	9,674
Consumer Non Performing | Home equity
Financing Receivable, Recorded Investment [Line Items]
Loans	2,029	1,888
Consumer Non Performing | Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 226	$ 235

XML

Loans and Allowance - Past Due Aging of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 4,641,215	$ 3,846,157
Loans 90 Days And Accruing	907	4,663
Non-Accrual	31,389	48,789
Total Past Due & Non-Accrual	52,607	78,708
Total	4,693,822	3,924,865
30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	17,570	22,107
60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2,741	3,149
Commercial and industrial loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 1,052,275	882,596
Loans 90 Days And Accruing		2,985
Non-Accrual	$ 4,634	7,048
Total Past Due & Non-Accrual	4,800	14,092
Total	1,057,075	896,688
Commercial and industrial loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 166	4,006
Commercial and industrial loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		53
Agricultural production financing and other loans to farmers
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 96,884	$ 98,236
Loans 90 Days And Accruing
Non-Accrual	827	$ 5,800
Total Past Due & Non-Accrual	827	6,691
Total	$ 97,711	104,927
Agricultural production financing and other loans to farmers | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		$ 891
Agricultural production financing and other loans to farmers | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due
Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 362,084	$ 204,683
Non-Accrual	736	1,439
Total Past Due & Non-Accrual	4,620	2,538
Total	366,704	207,221
Construction | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 3,884	1,017
Construction | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		82
Commercial and farmland
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 1,786,092	1,642,016
Loans 90 Days And Accruing		671
Non-Accrual	$ 11,277	19,350
Total Past Due & Non-Accrual	16,829	30,645
Total	1,802,921	1,672,661
Commercial and farmland | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 5,552	9,846
Commercial and farmland | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		778
Residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 765,634	626,821
Loans 90 Days And Accruing	502	854
Non-Accrual	11,818	12,933
Total Past Due & Non-Accrual	20,471	20,494
Total	786,105	647,315
Residential | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	6,090	4,876
Residential | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2,061	1,831
Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	344,344	282,828
Loans 90 Days And Accruing	324	148
Non-Accrual	1,952	1,988
Total Past Due & Non-Accrual	4,269	3,701
Total	348,613	286,529
Home equity | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,433	1,213
Home equity | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	560	352
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	73,990	72,853
Loans 90 Days And Accruing	81	5
Non-Accrual	145	231
Total Past Due & Non-Accrual	727	547
Total	74,717	73,400
Consumer | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	445	258
Consumer | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	56	53
Lease financing receivables, net of unearned income
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	588	$ 1,106
Non-Accrual
Total Past Due & Non-Accrual
Total	588	$ 1,106
Other commercial loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 159,324	$ 35,018
Non-Accrual
Total Past Due & Non-Accrual	$ 64
Total	159,388	$ 35,018
Other commercial loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 64

XML

Loans and Allowance - Summary of Troubled Debt Restructurings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) loan	Dec. 31, 2014 USD ($) loan
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 5,960	$ 1,237
Post-Modification Recorded Balance	$ 6,601	$ 1,257
Number of Loans | loan	23	23
Commercial and industrial loans
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 4,111
Post-Modification Recorded Balance	$ 2,115
Number of Loans | loan	7
Construction
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 79
Post-Modification Recorded Balance	$ 80
Number of Loans | loan	1
Commercial and farmland
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 1,281	$ 259
Post-Modification Recorded Balance	$ 3,024	$ 259
Number of Loans | loan	3	1
Residential
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 200	$ 632
Post-Modification Recorded Balance	$ 1,113	$ 622
Number of Loans | loan	10	9
Home equity
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 263	$ 320
Post-Modification Recorded Balance	$ 242	$ 350
Number of Loans | loan	1	11
Individuals' loans for household and other personal expenditures
Financing Receivable, Modifications [Line Items]
Pre-Modification Recorded Balance	$ 26	$ 26
Post-Modification Recorded Balance	$ 27	$ 26
Number of Loans | loan	1	2

XML

Loans and Allowance - Summary of Troubled Debt Restructurings by Modification (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Modifications [Line Items]
Total Modification	$ 5,378	$ 1,263
Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification	2,815	319
Rate Modification
Financing Receivable, Modifications [Line Items]
Total Modification	439	318
Combination
Financing Receivable, Modifications [Line Items]
Total Modification	2,124	626
Commercial and industrial loans
Financing Receivable, Modifications [Line Items]
Total Modification	1,814
Commercial and industrial loans | Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification	761
Commercial and industrial loans | Combination
Financing Receivable, Modifications [Line Items]
Total Modification	1,053
Commercial and farmland
Financing Receivable, Modifications [Line Items]
Total Modification	2,257	288
Commercial and farmland | Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification	1,231	$ 288
Commercial and farmland | Rate Modification
Financing Receivable, Modifications [Line Items]
Total Modification
Commercial and farmland | Combination
Financing Receivable, Modifications [Line Items]
Total Modification	1,026
Residential
Financing Receivable, Modifications [Line Items]
Total Modification	1,038	$ 609
Residential | Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification	823	31
Residential | Rate Modification
Financing Receivable, Modifications [Line Items]
Total Modification	170	218
Residential | Combination
Financing Receivable, Modifications [Line Items]
Total Modification	45	360
Home equity
Financing Receivable, Modifications [Line Items]
Total Modification	242	$ 343
Home equity | Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification
Home equity | Rate Modification
Financing Receivable, Modifications [Line Items]
Total Modification	$ 242	$ 100
Home equity | Combination
Financing Receivable, Modifications [Line Items]
Total Modification		243
Individuals' loans for household and other personal expenditures
Financing Receivable, Modifications [Line Items]
Total Modification	$ 27	$ 23
Individuals' loans for household and other personal expenditures | Term Modification
Financing Receivable, Modifications [Line Items]
Total Modification
Individuals' loans for household and other personal expenditures | Rate Modification
Financing Receivable, Modifications [Line Items]
Total Modification	$ 27
Individuals' loans for household and other personal expenditures | Combination
Financing Receivable, Modifications [Line Items]
Total Modification		$ 23

XML

Loans and Allowance - Subsequent Default (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) loan	Dec. 31, 2014 USD ($) loan
Financing Receivable, Impaired [Line Items]
Number of Loans | loan	1	1
Recorded Balance | $	$ 21	$ 70
Residential
Financing Receivable, Impaired [Line Items]
Number of Loans | loan	1	1
Recorded Balance | $	$ 21	$ 70

XML

Accounting for Certain Loans Acquired in a Purchase - Carrying Amount of Loans Included in Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 961,382	$ 698,457
Carrying Amount	917,589	658,471
Allowance	153	650
Carrying Amount	917,436	657,821
Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	330,918
Carrying Amount	319,664
Carrying Amount	319,664
C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	99,166
Carrying Amount	96,829
Carrying Amount	96,829
Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	99,541	142,989
Carrying Amount	93,355	134,198
Allowance	4
Carrying Amount	93,351	134,198
CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	393,014	509,660
Carrying Amount	373,649	484,949
Allowance	149	650
Carrying Amount	373,500	484,299
SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	38,743	45,808
Carrying Amount	$ 34,092	39,324
Allowance
Carrying Amount	$ 34,092	39,324
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	85,441	79,124
Commercial and industrial loans | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	21,888
Commercial and industrial loans | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	104
Commercial and industrial loans | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	6,769	8,168
Commercial and industrial loans | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	52,060	64,897
Commercial and industrial loans | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	4,620	6,059
Agriculture production financing and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	3,049	1,993
Agriculture production financing and other loans to farmers | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 1,761	1,100
Agriculture production financing and other loans to farmers | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance
Agriculture production financing and other loans to farmers | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 1,288	893
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	40,991	28,176
Construction | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	23,365
Construction | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	6,214
Construction | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	10,436	19,063
Construction | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 976	9,113
Construction | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance
Commercial and farmland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 425,014	341,195
Commercial and farmland | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	144,514
Commercial and farmland | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	27,838
Commercial and farmland | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	49,997	74,600
Commercial and farmland | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	189,372	251,002
Commercial and farmland | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	13,293	15,593
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	325,141	180,643
Residential | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	123,231
Residential | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	55,856
Residential | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	21,886	28,863
Residential | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	118,105	144,396
Residential | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	6,063	7,384
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	77,053	64,883
Home equity | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	14,261
Home equity | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	9,144
Home equity | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	8,231	9,881
Home equity | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	31,986	39,244
Home equity | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	13,431	15,758
Individuals' loans for household and other personal expenditures
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	2,693	2,357
Individuals' loans for household and other personal expenditures | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	1,731
Individuals' loans for household and other personal expenditures | C Financial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	10
Individuals' loans for household and other personal expenditures | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	461	1,314
Individuals' loans for household and other personal expenditures | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	443	922
Individuals' loans for household and other personal expenditures | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	48	121
Other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	2,000	86
Other commercial loans | Ameriana
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 1,928
Other commercial loans | Community
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance
Other commercial loans | CFS
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance	$ 72	$ 86
Other commercial loans | SCB
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding Balance

XML

Accounting for Certain Loans Acquired in a Purchase - Accretable Yield or Income Expected to be Collected (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance	$ 5,390	$ 5,552	$ 1,715
Additions	2,993	2,234	3,502
Accretion	(5,850)	(5,439)	(473)
Reclassification from nonaccretable	3,925	3,249	849
Disposals	(158)	(206)	(41)
Ending balance	$ 6,300	$ 5,390	$ 5,552
Ameriana
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance
Additions	$ 2,848
Ending balance	$ 2,848
C Financial
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance
Additions	$ 145
Accretion	(31)
Ending balance	114
Community
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance	2,122
Additions		$ 2,234
Accretion	(723)	(231)
Reclassification from nonaccretable	249	119
Disposals	(140)
Ending balance	1,508	2,122
CFS
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance	2,400	4,164
Additions			$ 3,502
Accretion	(4,050)	(4,146)	(10)
Reclassification from nonaccretable	2,854	2,553	672
Disposals	(16)	(171)
Ending balance	1,188	2,400	4,164
SCB
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning balance	868	1,388	$ 1,715
Additions
Accretion	(1,046)	(1,062)	$ (463)
Reclassification from nonaccretable	822	577	177
Disposals	(2)	(35)	(41)
Ending balance	$ 642	$ 868	$ 1,388

XML

Accounting for Certain Loans Acquired in a Purchase - Contractually Required Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required payments receivable at acquisition date	$ 31,725
Nonaccretable difference	14,365
Expected cash flows at acquisition date	17,360
Accretable difference	2,993
Basis in loans at acquisition date	14,367
Ameriana
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required payments receivable at acquisition date	29,093
Nonaccretable difference	13,728
Expected cash flows at acquisition date	15,365
Accretable difference	2,848
Basis in loans at acquisition date	12,517
C Financial
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required payments receivable at acquisition date	2,632
Nonaccretable difference	637
Expected cash flows at acquisition date	1,995
Accretable difference	145
Basis in loans at acquisition date	$ 1,850
Community
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required payments receivable at acquisition date		$ 26,032
Nonaccretable difference		3,498
Expected cash flows at acquisition date		22,534
Accretable difference		2,234
Basis in loans at acquisition date		$ 20,300

XML

Premises and Equipment - Summary of Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Premises and Equipment [Line Items]
Total Cost	$ 206,863	$ 175,430
Accumulated Depreciation and Amortization	(109,215)	(97,739)
Net	97,648	77,691
Land
Premises and Equipment [Line Items]
Total Cost	26,510	19,373
Buildings and Leasehold Improvements
Premises and Equipment [Line Items]
Total Cost	115,461	99,451
Equipment
Premises and Equipment [Line Items]
Total Cost	$ 64,892	$ 56,606

XML

Premises and Equipment - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Apr. 17, 2015	Nov. 07, 2014
Premises and Equipment [Line Items]
Rent expense	$ 3,456	$ 3,258	$ 2,608
Merger with Ameriana Bancorp
Premises and Equipment [Line Items]
Premises and equipment acquired	$ 14,491
Merger with C Financial Corporation
Premises and Equipment [Line Items]
Premises and equipment acquired				$ 7,290
Merger with Community Bancshares, Inc.
Premises and Equipment [Line Items]
Premises and equipment acquired					$ 3,610

XML

Premises and Equipment - Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Property, Plant and Equipment [Abstract]
2016	$ 3,076
2017	2,353
2018	1,419
2019	1,222
2020	1,060
After 2020	6,629
Total Future Minimum Obligations	$ 15,759

XML

Goodwill - Narrative (Details) - USD ($)		12 Months Ended
	Jun. 12, 2015	Dec. 31, 2015	Dec. 31, 2014	Apr. 17, 2015	Nov. 07, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill		$ 243,129,000	$ 202,724,000			$ 188,948,000
Goodwill reduction		8,474,000
Goodwill impairment loss		0	$ 0
FMIG
Business Acquisition [Line Items]
Goodwill reduction	$ 8,474,000
Merger with Ameriana Bancorp
Business Acquisition [Line Items]
Goodwill		$ 37,753,000
Merger with C Financial Corporation
Business Acquisition [Line Items]
Goodwill				$ 11,126,000
Merger with Community Bancshares, Inc.
Business Acquisition [Line Items]
Goodwill					$ 13,776,000

XML

Goodwill - Rollforward (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Goodwill [Roll Forward]
Beginning balance	$ 202,724	$ 188,948
Goodwill acquired	48,879	$ 13,776
Goodwill reduction	(8,474)
Ending balance	$ 243,129	$ 202,724

XML

Core Deposit and Other Intangibles - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Jun. 12, 2015	Apr. 17, 2015	Nov. 07, 2014
Business Acquisition [Line Items]
Core deposit intangible and other intangibles reduction	$ 742
Core deposit amortization	2,835	$ 2,445	$ 1,649
FMIG
Business Acquisition [Line Items]
Core deposit intangible and other intangibles reduction				$ 742
Merger with Ameriana Bancorp
Business Acquisition [Line Items]
Core deposit intangible	$ 3,200
Merger with C Financial Corporation
Business Acquisition [Line Items]
Core deposit intangible					$ 981
Merger with Community Bancshares, Inc.
Business Acquisition [Line Items]
Core deposit intangible						$ 4,658

XML

Core Deposit and Other Intangibles - Schedule of Core Deposit and Other Intangibles (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Gross carrying amount	$ 58,360	$ 53,702
Core deposit intangible and other intangibles acquired	4,181	4,658
Accumulated amortization	(45,164)	$ (42,329)
Core deposit intangible and other intangibles reduction	(742)
Core Deposit and Other Intangibles	$ 16,635	$ 16,031

XML

Core Deposit and Other Intangibles - Schedule of Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Amortization Expense
2016	$ 3,055
2017	3,017
2018	1,904
2019	1,676
2020	1,618
After 2020	5,365
Core Deposit and Other Intangibles	$ 16,635	$ 16,031

XML

Deposits - Schedule of Deposits (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Banking and Thrift [Abstract]
Demand deposits	$ 2,576,283	$ 2,146,492
Savings deposits	1,518,722	1,376,707
Certificates and other time deposits of $100,000 or more	323,698	260,685
Other certificates and time deposits	556,476	523,010
Brokered deposits	314,468	333,800
Total Deposits	$ 5,289,647	$ 4,640,694

XML

Deposits - Schedule of Contractual Maturities of Time Deposits (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Certificates and Other Time Deposits
2016	$ 600,551
2017	272,652
2018	126,929
2019	74,750
2020	55,187
After 2020	64,573
Total	$ 1,194,642

XML

Transfers Accounted for as Secured Borrowings (Details) - U.S. Government-sponsored mortgage-backed securities $ in Thousands	Dec. 31, 2015 USD ($)
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	$ 155,325
Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	131,537
Up to 30 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	5,680
30-90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	8,892
Greater Than 90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	$ 9,216

XML

Borrowings - Schedule of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Debt Disclosure [Abstract]
Federal funds purchased	$ 49,721	$ 15,381
Securities sold under repurchase agreements	155,325	124,539
Federal Home Loan Bank advances	235,652	145,264
Subordinated debentures and term loans	127,846	126,810
Total Borrowings	$ 568,544	$ 411,994

XML

Borrowings - Narrative (Details)				12 Months Ended
	Aug. 10, 2015 USD ($)	Apr. 11, 2014 USD ($)	Nov. 01, 2013 USD ($) investor	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Apr. 17, 2015 USD ($)	Sep. 15, 2012	Jul. 02, 2007 USD ($)
Debt Instrument [Line Items]
Interest rate, minimum (as a percent)				0.00%
Interest rate, maximum (as a percent)				6.81%
Total available remaining borrowing capacity from FHLB				$ 388,176,000
Putable advances with the FHLB				235,652,000	$ 145,264,000
Gain from cancellation of debt				1,250,000
Private debt issuance, number of institutional investors | investor			4
US Bank, NA
Debt Instrument [Line Items]
Line of credit				0	$ 0
Line of credit maximum borrowing capacity		$ 20,000,000
Commitment fee percentage		0.25%
5.00% Senior Notes Due 2028
Debt Instrument [Line Items]
Debt face amount			$ 5,000,000
Interest rate on notes (as a percent)			5.00%
6.75% Subordinated Notes Due 2028
Debt Instrument [Line Items]
Debt face amount			$ 65,000,000
Interest rate on notes (as a percent)			6.75%
Debt term with fixed interest rate			10 years
One-Month LIBOR | US Bank, NA
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		2.00%
Ameriana
Debt Instrument [Line Items]
Federal Home Loan Bank advances assumed at acquisition				24,938,000
C Financial
Debt Instrument [Line Items]
Federal Home Loan Bank advances assumed at acquisition				11,597,000			$ 18,958,000
Federal Home Loan Bank advances matured during the period				7,361,000
Putable Advances
Debt Instrument [Line Items]
Putable advances with the FHLB				$ 25,000,000
Minimum
Debt Instrument [Line Items]
Required value of assets pledged as collateral as a percentage to outstanding advances				146.00%
Securities Sold Under Repurchase Agreements
Debt Instrument [Line Items]
Maximum amount of outstanding agreements				$ 163,128,000	155,941,000
Total of average agreements				143,491,000	130,910,000
Debt outstanding				155,325,000
Subordinated Debentures and Term Loans
Debt Instrument [Line Items]
Debt outstanding				127,846,000	$ 126,810,000
Subordinated Debenture | First Merchant Capital Trust II
Debt Instrument [Line Items]
Debt outstanding				$ 51,702,000
Debt face amount			$ 70,000,000						$ 56,702,000
Cancellation of debt, amount	$ 5,000,000
Gain from cancellation of debt	$ 1,250,000
Interest rate on notes (as a percent)				2.10%	1.80%			6.495%
Basis spread on variable rate (as a percent)					1.56%
Subordinated Debenture | First Merchant Capital Trust II | Three-Month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				1.56%
Subordinated Debenture | Ameriana Capital Trust I
Debt Instrument [Line Items]
Debt face amount				$ 10,310,000
Interest rate on notes (as a percent)				2.00%
Basis spread on variable rate (as a percent)				1.50%
Line of Credit | Bank of America, N.A. | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit maximum borrowing capacity			$ 55,000,000

XML

Borrowings - Schedule of Maturities of Long Term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Federal Funds Purchased
Maturities in Years Ending December 31:
2016	$ 49,721
Total	49,721
Securities Sold Under Repurchase Agreements
Maturities in Years Ending December 31:
2016	155,325
Total	155,325
Federal Home Loan Bank Advances
Maturities in Years Ending December 31:
2016	91,441
2017	37,222
2018	26,851
2019	13,828
2020	31,310
After 2020	35,000
Total	235,652
Subordinated Debentures and Term Loans
Maturities in Years Ending December 31:
2016	183
After 2020	132,012
ASC 805 fair value adjustments at acquisition	(4,349)
Total	$ 127,846	$ 126,810

XML

Derivative Instruments and Hedging Activities - Fair Value of Derivative Financial Instruments and Their Classification on Balance Sheet (Details) - Interest Rate Contracts - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Derivatives Designated as Hedging Instruments | Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 36	$ 137
Derivatives Designated as Hedging Instruments | Other Liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	2,921	2,650
Derivatives Not Designated as Hedging Instruments | Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	4,938	3,730
Derivatives Not Designated as Hedging Instruments | Other Liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 5,149	$ 3,887

XML

Derivative Instruments and Hedging Activities - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) interest_rate_swap interest_rate_cap	Dec. 31, 2014 USD ($) interest_rate_swap interest_rate_cap
Derivative [Line Items]
Termination value of derivatives in a net liability position	$ 8,367
Derivative collateral posted	11,690
Not Designated as Hedging Instruments
Derivative [Line Items]
Notional amount of interest rate derivatives	192,759
Cash Flow Hedging
Derivative [Line Items]
Estimated amount to be transferred from OCI to earnings	$ 1,157
Interest Rate Swap
Derivative [Line Items]
Number of interest rate derivatives held | interest_rate_swap	5	5,000
Notional amount of interest rate derivatives	$ 56,000	$ 56,000
Interest Rate Swap | Cash Flow Hedging | Trust Preferred Debt
Derivative [Line Items]
Notional amount of interest rate derivatives	26,000
Interest Rate Swap | Cash Flow Hedging | Federal Home Loan Bank Advances
Derivative [Line Items]
Notional amount of interest rate derivatives	$ 30,000
Interest Rate Cap
Derivative [Line Items]
Number of interest rate derivatives held | interest_rate_cap	1	1,000
Notional amount of interest rate derivatives	$ 13,000	$ 13,000
Interest Rate Cap | Cash Flow Hedging | Trust Preferred Debt
Derivative [Line Items]
Notional amount of interest rate derivatives	$ 13,000

XML

Derivative Instruments and Hedging Activities - Effect of Derivative Financial Instruments on Income Statement (Details) - Interest Rate Contracts - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flow Hedging
Derivative [Line Items]
Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)	$ (1,681)	$ (3,996)
Cash Flow Hedging | Interest expense
Derivative [Line Items]
Amount of Loss Reclassified from Other Comprehensive Income Into Income (Effective Portion)	(1,427)	(1,411)	$ (935)
Not Designated as Hedging Instruments | Other income
Derivative [Line Items]
Amount of Gain (Loss) Recognized Income on Derivative	$ (53)	$ (73)	$ 247

XML

Fair Values of Financial Instruments - Fair Value Measurements of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	$ 658,400	$ 549,543
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	652,468	542,897
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	5,932	6,646
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liability derivatives	8,070	6,537
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	104	109
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	300,014	221,982
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	346,266	319,104
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	2,176
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	3,908	1,702
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Asset derivatives	4,938	3,730
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate cap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Asset derivatives	36	137
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	5,897	6,611
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	31	31
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	4	4
Fair Value, Measurements, Recurring | Fair Value | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liability derivatives	8,070	6,537
Fair Value, Measurements, Recurring | Fair Value | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	104	109
Fair Value, Measurements, Recurring | Fair Value | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	305,911	228,593
Fair Value, Measurements, Recurring | Fair Value | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	346,266	319,104
Fair Value, Measurements, Recurring | Fair Value | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	2,176
Fair Value, Measurements, Recurring | Fair Value | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	31	31
Fair Value, Measurements, Recurring | Fair Value | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	3,912	1,706
Fair Value, Measurements, Recurring | Fair Value | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Asset derivatives	4,938	3,730
Fair Value, Measurements, Recurring | Fair Value | Interest rate cap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Asset derivatives	$ 36	$ 137

XML

Fair Values of Financial Instruments - Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements using Significant Unobservable Level 3 Inputs (Details) - Fair Value, Measurements, Recurring - Available for Sale Securities - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Available for Sale Securities
Beginning Balance	$ 6,646	$ 9,977
Included in other comprehensive income	199	3,656
Principal payments	(913)	(6,987)
Ending balance	$ 5,932	$ 6,646

XML

Fair Values of Financial Instruments - Transfer Between Levels 1, 2 and 3 and Reasons for Transfers (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Transfer between Levels 1, 2 and 3	$ 0	$ 0

XML

Fair Values of Financial Instruments - Valuation Methodologies Used for Instruments Measured at Fair Value on Non-Recurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Significant Unobservable Inputs (Level 3) | Impaired Loans (collateral dependent)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	$ 7,066	$ 17,134
Significant Unobservable Inputs (Level 3) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	5,529	5,155
Fair Value | Impaired Loans (collateral dependent)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	7,066	17,134
Fair Value | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	$ 5,529	$ 5,155

XML

Fair Values of Financial Instruments - Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements Other Than Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Discounted cash flow | State and municipal securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 5,897	$ 6,611
Discounted cash flow | State and municipal securities | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Maturity Call Date	1 month	1 month
US Muni BQ curve	A-	A-
Discount rate	0.80%	0.90%
Discounted cash flow | State and municipal securities | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Maturity Call Date	15 years	15 years
US Muni BQ curve	BBB-	BBB-
Discount rate	5.00%	5.00%
Discounted cash flow | Corporate obligations and Equity securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 35	$ 35
Discounted cash flow | Corporate obligations and Equity securities | Three-Month LIBOR
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Premium for illiquidity	2.00%	2.00%
Collateral based measurements | Impaired loans (collateral dependent)
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 7,066	$ 17,134
Collateral based measurements | Impaired loans (collateral dependent) | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	0.00%	0.00%
Collateral based measurements | Impaired loans (collateral dependent) | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	50.00%	50.00%
Collateral based measurements | Impaired loans (collateral dependent) | Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	2.00%	3.00%
Appraisals | Other real estate owned
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 5,529	$ 5,155
Appraisals | Other real estate owned | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions	0.00%	0.00%
Appraisals | Other real estate owned | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions	20.00%	20.00%
Appraisals | Other real estate owned | Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount to reflect current market conditions	2.00%	7.00%

XML

Fair Values of Financial Instruments - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets:
Investment securities available for sale	$ 658,400	$ 549,543
Investment securities held to maturity	632,380	647,723
Loans held for sale	9,894	7,235
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	102,170	118,616
Interest-bearing time deposits	32,315	47,520
Liabilities:
Deposits	4,095,004	3,532,199
Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	652,468	542,897
Investment securities held to maturity	598,082	614,457
Loans held for sale	9,894	7,235
Federal Reserve and Federal Home Loan Bank stock	37,633	41,353
Interest rate swap asset	4,974	3,867
Interest receivable	24,415	19,984
Liabilities:
Deposits	1,177,142	1,099,610
Borrowings:
Federal funds purchased	49,721	15,381
Securities sold under repurchase agreements	155,325	124,539
Federal Home Loan Bank advances	236,375	146,669
Subordinated debentures and term loans	103,643	92,802
Interest rate swap liability	8,070	6,537
Interest payable	3,092	3,201
Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	5,932	6,646
Investment securities held to maturity	34,298	33,266
Loans	4,539,940	3,810,912
Carrying Amount
Assets:
Cash and cash equivalents	102,170	118,616
Interest-bearing time deposits	32,315	47,520
Investment securities available for sale	658,400	549,543
Investment securities held to maturity	618,599	631,088
Loans held for sale	9,894	7,235
Loans	4,631,369	3,860,901
Federal Reserve and Federal Home Loan Bank stock	37,633	41,353
Interest rate swap asset	4,974	3,867
Interest receivable	24,415	19,984
Liabilities:
Deposits	5,289,647	4,640,694
Borrowings:
Federal funds purchased	49,721	15,381
Securities sold under repurchase agreements	155,325	124,539
Federal Home Loan Bank advances	235,652	145,264
Subordinated debentures and term loans	127,846	126,810
Interest rate swap liability	8,070	6,537
Interest payable	$ 3,092	$ 3,201

XML

Commitments and Contingent Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Loan commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 1,547,048	$ 1,617,552
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 46,734	$ 52,655

XML

Stockholders' Equity (Details)								12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares shares	Nov. 07, 2014 USD ($) $ / shares shares	Nov. 22, 2013 USD ($) shares	Nov. 12, 2013 USD ($) shares	Jul. 02, 2013 USD ($) shares	Jan. 03, 2013 USD ($) shares	Sep. 22, 2011 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)
Class of Stock [Line Items]
Stockholders' equity	$ 850,509,000							$ 850,509,000	$ 726,827,000	$ 634,923,000	$ 552,236,000
Dividend reinvestment and stock purchase plan, stockholder's maximum amount of cash payments per quarter in purchase of common stock								$ 2,500
Preferred stock, liquidation value (in dollars per share) | $ / shares	$ 1,000							$ 1,000	$ 1,000
Price of preferred stock redeemed								$ 1,640,000	$ 1,067,000	491,000
Preferred stock, shares outstanding | shares	125							125	125
Value of stock issued as a part of acquisition								$ 70,402,000	$ 34,981,000	$ 135,642,000
Cash paid in acquisition								$ 14,500,000	$ 14,208,000
Merger with CFS Bancorp, Inc.
Class of Stock [Line Items]
Percentage of interest acquired				100.00%
Value of stock issued as a part of acquisition				$ 135,600,000
Percentage of common stock received per shares owned through acquisition				0.65%
Stock issued as a part of acquisition (in shares) | shares				7,100,000
Total purchase price				$ 135,642,000
Merger with Community Bancshares, Inc.
Class of Stock [Line Items]
Percentage of interest acquired		100.00%
Value of stock issued as a part of acquisition		$ 35,000,000
Stock issued as a part of acquisition (in shares) | shares		1,600,000
Number of shares of common stock		4.0926
Share price (in dollars per share) | $ / shares		$ 85.94
Cash paid in acquisition		$ 14,200,000
Total purchase price		$ 49,189,000
Merger with Ameriana Bancorp
Class of Stock [Line Items]
Percentage of interest acquired	100.00%							100.00%
Value of stock issued as a part of acquisition	$ 70,400,000
Stock issued as a part of acquisition (in shares) | shares	2,800,000
Total purchase price	$ 70,402,000							$ 70,402,000
Series B Preferred Stock
Class of Stock [Line Items]
Number of new stock issued during the period (shares) | shares							90,782.94
Preferred stock, liquidation value (in dollars per share) | $ / shares							$ 1,000
Number of new stock issued during the period value							$ 90,782,940
Preferred stock redeemed (in shares) | shares			34,043		34,044	22,695.94
Price of preferred stock redeemed			$ 34,043,000		$ 34,044,000	$ 22,695,940
Preferred stock, shares outstanding | shares	0				34,043	68,087		0
Series B Preferred Stock remaining liquidation amount					$ 34,000,000	$ 68,000,000
Common Stock | Merger with Ameriana Bancorp
Class of Stock [Line Items]
Number of shares of common stock	0.9037							0.9037
Subsidiaries
Class of Stock [Line Items]
Amount available for dividends	$ 29,812,000							$ 29,812,000
Stockholders' equity	930,360,000							930,360,000
Stockholders' equity restricted from dividend distribution	$ 900,548,000							$ 900,548,000
CFS Bancorp | Merger with CFS Bancorp, Inc.
Class of Stock [Line Items]
Percentage of common stock received per shares owned through acquisition				0.65%

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Accumulated Other Comprehensive Income (Loss) - Summary of Changes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income [Roll Forward]
AOCI - beginning balance	$ (1,630)	$ (6,410)
Other comprehensive income before reclassifications	1,274	6,528
Amounts reclassified from accumulated other comprehensive income	(1,006)	(1,748)
Period change	268	4,780	$ (911)
AOCI - ending balance	(1,362)	(1,630)	(6,410)
Unrealized Gains (Losses) on Securities Available for Sale
Accumulated Other Comprehensive Income [Roll Forward]
AOCI - beginning balance	14,098	1,566
Other comprehensive income before reclassifications	(37)	14,860
Amounts reclassified from accumulated other comprehensive income	(1,736)	(2,328)
Period change	(1,773)	12,532
AOCI - ending balance	12,325	14,098	1,566
Unrealized Gains (Losses) on Securities Available for Sale for which a Portion of Other-Than-Temporary Impairment has been Recognized in Income
Accumulated Other Comprehensive Income [Roll Forward]
AOCI - beginning balance	$ 0	(1,847)
Other comprehensive income before reclassifications		$ 1,847
Amounts reclassified from accumulated other comprehensive income
Period change	$ 0	$ 1,847
AOCI - ending balance	0	0	(1,847)
Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income [Roll Forward]
AOCI - beginning balance	(2,182)	(501)
Other comprehensive income before reclassifications	(1,093)	(2,599)
Amounts reclassified from accumulated other comprehensive income	928	918
Period change	(165)	(1,681)
AOCI - ending balance	(2,347)	(2,182)	(501)
Unrealized Gains (Losses) on Defined Benefit Plans
Accumulated Other Comprehensive Income [Roll Forward]
AOCI - beginning balance	(13,546)	(5,628)
Other comprehensive income before reclassifications	2,404	(7,580)
Amounts reclassified from accumulated other comprehensive income	(198)	(338)
Period change	2,206	(7,918)
AOCI - ending balance	$ (11,340)	$ (13,546)	$ (5,628)

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Accumulated Other Comprehensive Income (Loss) - Reclassifications (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Interest expense - subordinated debentures and term loans									$ (6,661)	$ (6,616)	$ (3,531)
Other expenses - salaries and employee benefits									(101,908)	(96,499)	(85,413)
Income tax expense	$ (4,418)	$ (6,557)	$ (8,856)	$ (5,834)	$ (5,638)	$ (5,980)	$ (5,888)	$ (4,617)	(25,665)	(22,123)	(15,884)
NET INCOME	$ 14,177	$ 17,067	$ 17,968	$ 16,172	$ 15,260	$ 16,122	$ 15,160	$ 13,620	65,384	60,162	44,530
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
NET INCOME									1,006	1,748	(1,438)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on available for sale securities
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Other income - net realized gains on sales of available for sale securities									2,670	3,581	487
Income tax expense									(934)	(1,253)	(170)
NET INCOME									1,736	2,328	317
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on cash flow hedges
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Interest expense - subordinated debentures and term loans									(1,427)	(1,411)	(935)
Income tax expense									499	493	327
NET INCOME									(928)	(918)	(608)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on defined benefit plans
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Other expenses - salaries and employee benefits									305	520	(1,765)
Income tax expense									(107)	(182)	618
NET INCOME									$ 198	$ 338	$ (1,147)

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Regulatory Capital (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Total Risk-based Capital to Risk-weighted Assets, Amount
Actual	$ 783,776	$ 685,507
Prompt Corrective Action Thresholds, Adequate Capital	419,809	357,581
Tier 1 Capital to Risk-weighted Assets, Amount
Actual	656,323	564,535
Prompt Corrective Action Thresholds, Adequate Capital	314,857	178,791
Common Equity Tier One Capital to Risk-weighted Assets, Amount
Actual	603,063
Prompt Corrective Action Thresholds, Adequate Capital	236,143
Tier I Capital to Average Assets, Amount
Actual	656,323	564,535
Prompt Corrective Action Thresholds, Adequate Capital	$ 242,001	$ 222,533
Risk Based Ratios
Total Capital to Risk-weighted Assets, Actual Ratio	14.94%	15.34%
Total Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	8.00%	8.00%
Tier I Capital to Risk-weighted Assets, Actual Ratio	12.51%	12.63%
Tier I Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	6.00%	4.00%
Common Equity Tier 1 Capital to Risk-weighted Assets, Actual Ratio	11.49%
Common Equity Tier 1 Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequately Capitalized Ratio	4.50%
Leverage Ratios
Tier I Capital to Average Assets, Actual Ratio	10.85%	10.15%
Tier I Capital to Average Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	4.00%	4.00%
First Merchants Bank
Total Risk-based Capital to Risk-weighted Assets, Amount
Actual	$ 739,793	$ 653,169
Prompt Corrective Action Thresholds, Adequate Capital	423,242	356,884
Prompt Corrective Action Thresholds, Well Capitalized	529,052	446,105
Tier 1 Capital to Risk-weighted Assets, Amount
Actual	677,340	597,305
Prompt Corrective Action Thresholds, Adequate Capital	317,431	178,442
Prompt Corrective Action Thresholds, Well Capitalized	423,242	267,663
Common Equity Tier One Capital to Risk-weighted Assets, Amount
Actual	677,340
Prompt Corrective Action Thresholds, Adequate Capital	238,074
Prompt Corrective Action Thresholds, Well Capitalized	343,884
Tier I Capital to Average Assets, Amount
Actual	677,340	597,305
Prompt Corrective Action Thresholds, Adequate Capital	241,423	226,339
Prompt Corrective Action Thresholds, Well Capitalized	$ 301,779	$ 282,953
Risk Based Ratios
Total Capital to Risk-weighted Assets, Actual Ratio	13.98%	14.64%
Total Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	8.00%	8.00%
Total Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Well Capitalized Ratio	10.00%	10.00%
Tier I Capital to Risk-weighted Assets, Actual Ratio	12.80%	13.39%
Tier I Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	6.00%	4.00%
Tier I Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Well Capitalized Ratio	8.00%	6.00%
Common Equity Tier 1 Capital to Risk-weighted Assets, Actual Ratio	12.80%
Common Equity Tier 1 Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Adequately Capitalized Ratio	4.50%
Common Equity Tier 1 Capital to Risk-weighted Assets, Prompt Corrective Action Thresholds, Well Capitalized Ratio	6.50%
Leverage Ratios
Tier I Capital to Average Assets, Actual Ratio	11.22%	10.56%
Tier I Capital to Average Assets, Prompt Corrective Action Thresholds, Adequate Capital Ratio	4.00%	4.00%
Tier I Capital to Average Assets, Prompt Corrective Action Thresholds, Well Capitalized Ratio	5.00%	5.00%

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Loan Servicing (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Banking and Thrift [Abstract]
Unpaid balance of loans serviced for others	$ 312,204	$ 254,223	$ 271,871

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Share-Based Compensation - Narrative (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of average closing price to be paid by employees		85.00%
Share-based compensation		$ 2,270,000	$ 2,177,000	$ 1,773,000
Options granted (in shares)		0
Estimated pre-vesting forfeiture rate (as a percent)		5.50%
Weighted-average grant date fair value for stock options (in dollars per share)			$ 8.13	$ 5.73
Aggregate intrinsic value of stock options exercised		$ 921,000	$ 392,000
Stock options exercised		1,461,000	$ 504,000	$ 115,000
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock purchases through advance payroll deductions in a calendar year		$ 25,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option term		10 years
Stock options vesting percentage		100.00%
Estimated pre-vesting forfeiture rate (as a percent)			5.46%	4.73%
Unrecognized compensation expense	$ 0	$ 0
Stock Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		6 months
Stock Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		2 years
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		3 years
Unrecognized compensation expense	3,269,000	$ 3,269,000
Unrecognized compensation expense expected recognition period		1 year 3 months 10 days
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	0	$ 0
Grant date fair value of ESPP options	$ 23,000

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Share-Based Compensation - Assumptions Used (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeiture rate	5.50%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		2.41%	1.25%
Expected price volatility		45.05%	45.68%
Dividend yield		2.73%	2.96%
Forfeiture rate		5.46%	4.73%
Weighted-average expected life, until exercise		7 years 8 months 26 days	7 years 3 months 7 days

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Share-Based Compensation - Components of Awards (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	$ 2,270	$ 2,177	$ 1,773
Income tax expense (benefit)	(745)	(726)	(547)
Total share-based compensation expense, net of income taxes	1,525	1,451	1,226
Stock and ESPP Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	101	237	253
Income tax expense (benefit)	4	(47)	(16)
Total share-based compensation expense, net of income taxes	105	190	237
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	2,169	1,940	1,520
Income tax expense (benefit)	(749)	(679)	(531)
Total share-based compensation expense, net of income taxes	$ 1,420	$ 1,261	$ 989

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Share-Based Compensation - Stock Option Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Beginning balance (in shares)	737,931
Exercised (in shares)	(96,066)
Canceled (in shares)	(199,853)
Ending balance (in shares)	442,012	737,931
Vested and Expected to Vest, Number of Shares	442,012
Exercisable, Number of Shares	442,012
Weighted-Average Exercise Price
Beginning balance (in dollars per share)	$ 20.99	$ 21.32
Exercised (in dollars per share)	15.21
Canceled (in dollars per share)	25.99
Ending balance (in dollars per share)	19.99	$ 20.99
Vested and Expected to Vest, Weighted-Average Exercise Price (in dollars per share)	19.99
Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 19.99
Weighted Average Remaining Contractual Term
Outstanding	3 years 1 month 10 days
Vested and Expected to Vest	3 years 1 month 10 days
Exercisable	3 years 1 month 10 days
Aggregate Intrinsic Value
Outstanding	$ 2,599,319
Vested and Expected to Vest	2,599,319
Exercisable	$ 2,599,319

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Share-Based Compensation - Unvested RSAs Outstanding (Details) - RSAs	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Number of Shares
Unvested RSAs, Beginning Balance (in shares) | shares	385,450
Granted (in shares) | shares	125,050
Forfeited (in shares) | shares	(6,419)
Vested (in shares) | shares	(149,577)
Unvested RSAs, Ending Balance (in shares) | shares	354,504
Weighted-Average Grant Date Fair Value
Unvested RSAs, Beginning Balance (in dollars per share) | $ / shares	$ 15.65
Granted (in dollars per share) | $ / shares	23.48
Forfeited (in dollars per share) | $ / shares	17.99
Vested (in dollars per share) | $ / shares	11.88
Unvested RSAs, Ending Balance (in dollars per share) | $ / shares	$ 19.65

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Pension and Other Post Retirement Benefit Plans - Narrative (Details) - USD ($) $ in Thousands			12 Months Ended
	Nov. 20, 2015	Mar. 01, 2005	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Percentage of employees covered by plan			20.00%
Minimum participant attained age		55 years
Requisite service period (at least)		10 years
Percentage of the premiums paid by plan participants			100.00%
Discount rate (as a percent)			4.50%	4.00%	4.80%
Defined benefit plan liability				$ 7,645
Accumulated benefit obligation			$ 71,747	80,650
Amount of discretionary contributions made by employer to defined contribution plan, percent			50.00%
Maximum annual contribution percentage per employee			6.00%
Requisite service period			1000 hours
Employer percentage contribution			2.00%
Vesting period			5 years
Expense recognized in the period			$ 3,526	3,396	$ 3,138
Obligations payable			1,403	1,811
Post retirement plan expense			(127)	97	519
Fair value of plan assets			71,396	77,139	$ 69,871
Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets			52,433	57,413
Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets			$ 18,963	$ 19,726
Ameriana | Pentegra Plan
Defined Benefit Plan Disclosure [Line Items]
Written notice of withdrawal, period	60 days
Defined benefit plan liability	$ 5,435
Minimum
Defined Benefit Plan Disclosure [Line Items]
Age of plan participants			55 years
Minimum | Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Maturities of debt securities			15 days	15 days
Maximum
Defined Benefit Plan Disclosure [Line Items]
Age of plan participants			65 years
Maximum | Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Maturities of debt securities			9 years 15 days	9 years 7 months 3 days
Weighted Average | Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Maturities of debt securities			4 years 5 months 20 days	5 years 7 days

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Pension and Other Post Retirement Benefit Plans - Schedule of Changes in Benefit Obligation, and Plan Assets, Funded Status of the Plan, Assets and Liabilities Recognized in the Balance Sheets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Change in Benefit Obligation:
Benefit obligation at beginning of year	$ 80,650	$ 62,270
Service cost	55	73	$ 131
Interest cost	3,087	3,235	2,670
Actuarial loss (gain)	(5,617)	12,968
Benefits paid	$ (6,428)	(5,541)
Net transfers in from CFS acquisition		7,645
Benefit obligation at end of year	$ 71,747	80,650	62,270
Change in Plan Assets:
Fair value of plan assets at beginning of year	77,139	69,871
Actual return on plan assets	153	5,232
Employer contributions	532	504
Benefits paid	$ (6,428)	(5,541)
CFS acquisition		7,073
End of year	$ 71,396	77,139	$ 69,871
Funded status at end of year	(351)	(3,511)
Assets and Liabilities Recognized in the Balance Sheets:
Deferred tax asset	7,461	8,541
Assets	4,006	1,329
Liabilities	4,357	4,840
Amounts Recognized in Accumulated Other Comprehensive Income Not Yet Recognized as Components of Net Periodic (Benefit) Cost Consist of:
Accumulated loss	(13,857)	(15,863)
Prior service credit	(305)	(346)
Total	$ (14,162)	$ (16,209)

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Pension and Other Post Retirement Benefit Plans - Schedule of Accumulated Benefit Obligation in Excess of Plan Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Projected benefit obligation	$ 4,357	$ 4,840
Accumulated benefit obligation	$ 4,357	$ 4,840
Fair value of plan assets

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Pension and Other Post Retirement Benefit Plans - Schedule of Net Periodic Benefit Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 55	$ 73	$ 131
Interest cost	3,087	3,235	2,670
Expected return on plan assets	(4,471)	(4,467)	(4,265)
Amortization of prior service costs	64	81	25
Amortization of net loss	1,722	478	2,131
Net periodic pension (benefit) cost	$ 457	$ (600)	$ 692

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Pension and Other Post Retirement Benefit Plans - Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Net periodic pension (benefit) cost	$ 457	$ (600)	$ 692
Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Net periodic pension (benefit) cost	457	(600)	692
Net gain (loss)	1,299	(12,203)	11,942
Amortization of loss	1,722	478	2,131
Amortization of prior service cost	64	81	25
Total recognized in other comprehensive income (loss)	3,085	(11,644)	14,098
Total recognized in net periodic pension cost and other comprehensive income (loss)	$ 2,628	$ (11,044)	$ 13,406

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Pension and Other Post Retirement Benefit Plans - Amount To Be Amortized From Accumulated Other Comprehensive Income, Next Fiscal Year (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract]
Amortization of net loss	$ (1,505)	$ (1,770)	$ (533)
Amortization of prior service cost	(61)	(64)	(25)
Total	$ (1,566)	$ (1,834)	$ (558)

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Pension and Other Post Retirement Benefit Plans - Schedule of Weighted Average Assumptions Used to Determine Benefit Obligation and Benefit Cost (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Weighted-average Assumptions Used to Determine Benefit Obligation:
Discount rate	4.50%	4.00%	4.80%
Rate of compensation increase for accruing active participants	3.00%	3.00%	3.00%
Weighted-average Assumptions Used to Determine Cost:
Discount rate	4.00%	4.80%	4.00%
Expected return on plan assets	6.00%	6.00%	7.00%
Rate of compensation increase for accruing active participants	3.00%	3.00%	3.00%

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Pension and Other Post Retirement Benefit Plans - Schedule of Expected Future Benefit Payments (Details)	12 Months Ended
	Dec. 31, 2015 USD ($)
Compensation and Retirement Disclosure [Abstract]
Minimum required contribution in 2016	$ 0
2016	4,814,000
2017	4,729,000
2018	4,657,000
2019	4,838,000
2020	4,772,000
After 2020	24,440,000
Total	$ 48,250,000

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Pension and Other Post Retirement Benefit Plans - Schedule of Plan Assets by Category (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Actual (as a percent)	100.00%	100.00%
Target (as a percent)	100.00%	100.00%
Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Actual (as a percent)	2.20%	2.60%
Target (as a percent)	2.00%	2.00%
Equity securities
Defined Benefit Plan Disclosure [Line Items]
Actual (as a percent)	58.10%	58.70%
Target (as a percent)	60.00%	60.00%
Debt securities
Defined Benefit Plan Disclosure [Line Items]
Actual (as a percent)	37.40%	36.50%
Target (as a percent)	36.00%	36.00%
Alternative investments
Defined Benefit Plan Disclosure [Line Items]
Actual (as a percent)	2.30%	2.20%
Target (as a percent)	2.00%	2.00%

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Pension and Other Post Retirement Benefit Plans - Schedule of Plan Assets by Level (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 71,396	$ 77,139	$ 69,871
Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	52,433	57,413
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,608	2,032
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Bonds and Notes
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	9,113	9,384
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common Stock
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,538	1,376
Quoted Prices in Active Markets for Identical Assets (Level 1) | Taxable Bond
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	4,536	4,987
Quoted Prices in Active Markets for Identical Assets (Level 1) | Large Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	18,528	21,185
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mid Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	8,537	9,434
Quoted Prices in Active Markets for Identical Assets (Level 1) | Small Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	3,578	3,872
Quoted Prices in Active Markets for Identical Assets (Level 1) | International Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	3,353	3,474
Quoted Prices in Active Markets for Identical Assets (Level 1) | Specialty Alternative Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,642	1,669
Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	18,963	19,726
Significant Other Observable Inputs (Level 2) | Government Agency and Municipal Bonds and Notes
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	6,993	8,252
Significant Other Observable Inputs (Level 2) | Certificates of Deposit
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,511	1,001
Significant Other Observable Inputs (Level 2) | Common Bond Fund
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	4,647	4,615
Significant Other Observable Inputs (Level 2) | Common Equity Fund
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 5,812	$ 5,858
Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets
Fair Value
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 71,396	$ 77,139
Fair Value | Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,608	2,032
Fair Value | Corporate Bonds and Notes
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	9,113	9,384
Fair Value | Government Agency and Municipal Bonds and Notes
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	6,993	8,252
Fair Value | Certificates of Deposit
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,511	1,001
Fair Value | Common Stock
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,538	1,376
Fair Value | Common Bond Fund
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	4,647	4,615
Fair Value | Common Equity Fund
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	5,812	5,858
Fair Value | Taxable Bond
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	4,536	4,987
Fair Value | Large Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	18,528	21,185
Fair Value | Mid Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	8,537	9,434
Fair Value | Small Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	3,578	3,872
Fair Value | International Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	3,353	3,474
Fair Value | Specialty Alternative Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 1,642	$ 1,669

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Income Tax - Reconciliation of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Currently Payable:
Federal									$ 21,221	$ 7,075	$ 13,737
Deferred:
Federal									3,952	14,538	$ 2,147
State									492	510
Total Income Tax Expense	$ 4,418	$ 6,557	$ 8,856	$ 5,834	$ 5,638	$ 5,980	$ 5,888	$ 4,617	25,665	22,123	$ 15,884
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 35%									31,867	28,800	21,145
Tax-exempt Interest Income									(7,083)	$ (5,148)	$ (3,923)
Basis Difference on Sale of Insurance Subsidiary									2,252
Stock Compensation									34	$ 36	$ 50
Earnings on Life Insurance									(1,012)	(1,271)	(905)
Tax Credits									(583)	(911)	(857)
Other									190	617	374
Total Income Tax Expense	$ 4,418	$ 6,557	$ 8,856	$ 5,834	$ 5,638	$ 5,980	$ 5,888	$ 4,617	$ 25,665	$ 22,123	$ 15,884
Federal statutory income tax rate									35.00%	35.00%	35.00%

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Income Tax - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Valuation Allowance [Line Items]
Tax expense applicable to security gains and losses, including unrealized losses relating to other-than-temporary charges	$ 435	$ 760	$ 157
Increase (decrease) in deferred tax assets	4,163
Valuation allowance	15,736	17,568	$ 17,171
Additional paid-in capital	504,530	$ 431,220
Unrecorded deferred tax liability	8,847
Merger with Ameriana Bancorp
Valuation Allowance [Line Items]
Increase (decrease) in deferred tax assets	9,262
Additional paid-in capital	11,883
Merger with CFS Bancorp, Inc.
Valuation Allowance [Line Items]
Additional paid-in capital	13,393
State and Local Jurisdiction
Valuation Allowance [Line Items]
Valuation allowance	15,736
State tax loss carryforward	121,626
Valuation allowance on state loss carryforward	120,369
Available for Sale Securities
Valuation Allowance [Line Items]
Decrease in deferred tax liability	955
Deferred Compensation
Valuation Allowance [Line Items]
Increase (decrease) in deferred tax assets	(857)
Loans
Valuation Allowance [Line Items]
Increase (decrease) in deferred tax assets	(1,873)
Operating Loss Carryforwards | Federal
Valuation Allowance [Line Items]
Increase (decrease) in deferred tax assets	(1,662)
Allowance for Loan Losses
Valuation Allowance [Line Items]
Increase (decrease) in deferred tax assets	$ (789)

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Income Tax - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Assets:
Differences in Accounting for Loan Losses	$ 25,867	$ 26,665
Differences in Accounting for Loan Fees	762	747
Differences in Accounting for Loans and Securities	9,359	9,910
Deferred Compensation	5,100	5,234
Difference in Accounting for Pensions and Other Employee Benefits	2,247	1,084
Federal & State Income Tax Loss Carryforward and Credits	23,737	23,977
Other	9,310	8,535
Total Assets	76,382	76,152
Liabilities:
Differences in Depreciation Methods	7,742	8,220
State Income Tax	591	591
Net Unrealized Gain on Securities Available for Sale	6,636	7,591
Gain on FDIC Modified Whole Bank Transaction	1,405	1,694
Other	717	1,096
Total Liabilities	17,091	19,192
Net Deferred Tax Asset Before Valuation Allowance	59,291	56,960
Valuation allowance:
Beginning Balance	(17,568)	(17,171)
Decrease/(Increase) During the Year	1,832	(397)
Ending Balance	(15,736)	(17,568)
Net Deferred Tax Asset	$ 43,555	$ 39,392

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Net Income Per Share - Reconciliation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Net income	$ 14,177	$ 17,067	$ 17,968	$ 16,172	$ 15,260	$ 16,122	$ 15,160	$ 13,620	$ 65,384	$ 60,162	$ 44,530
Preferred stock dividends											(2,380)
Net income available to common stockholders									$ 65,384	$ 60,162	42,150
Net income available to common stockholders									$ 65,384	$ 60,162	$ 42,150
Weighted-Average Shares
Net income available to common stockholders (in shares)	37,908,873	37,850,827	37,793,448	37,709,883	37,018,014	36,054,867	36,026,763	35,956,436	37,816,399	36,266,356	29,731,420
Effect of dilutive stock options and warrants (in shares)									271,834	288,253	276,960
Net income available to common stockholders (in shares)	38,190,694	38,118,199	38,043,359	38,000,074	37,323,276	36,328,981	36,294,149	36,260,624	38,088,233	36,554,609	30,008,380
Basic net income per share:
Net income available to common stockholders (in dollars per share)	$ 0.37	$ 0.46	$ 0.47	$ 0.43	$ 0.41	$ 0.45	$ 0.42	$ 0.38	$ 1.73	$ 1.66	$ 1.42
Diluted net income per share:
Net income available to common stockholders (in dollars per share)	$ 0.37	$ 0.45	$ 0.47	$ 0.43	$ 0.41	$ 0.45	$ 0.41	$ 0.38	$ 1.72	$ 1.65	$ 1.41

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Net Income Per Share - Narrative (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Stock options not included in the earnings per share calculation (in shares)	286,119	543,514	800,674
Weighted average exercise price (in dollars per share)	$ 19.99	$ 20.99	$ 21.32

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Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 56,514	$ 56,538	$ 55,202	$ 52,944	$ 53,053	$ 53,290	$ 51,527	$ 51,009	$ 221,198	$ 208,879	$ 170,834
Interest expense	6,440	6,215	6,171	5,968	5,893	5,424	5,408	5,117	24,794	21,842	16,569
NET INTEREST INCOME	$ 50,074	$ 50,323	49,031	$ 46,976	47,160	47,866	$ 46,119	$ 45,892	196,404	187,037	154,265
Provision for loan losses			417		960	1,600			417	2,560	6,648
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	$ 50,074	$ 50,323	48,614	$ 46,976	46,200	46,266	$ 46,119	$ 45,892	195,987	184,477	147,617
Non-interest income	14,767	16,899	24,633	16,232	16,375	18,412	16,179	15,434	72,531	66,400	56,016
Non-interest expense	46,246	43,598	46,423	41,202	41,677	42,576	41,250	43,089	177,469	168,592	143,219
INCOME BEFORE INCOME TAX	18,595	23,624	26,824	22,006	20,898	22,102	21,048	18,237	91,049	82,285	60,414
Income tax expense	4,418	6,557	8,856	5,834	5,638	5,980	5,888	4,617	25,665	22,123	15,884
NET INCOME	$ 14,177	$ 17,067	$ 17,968	$ 16,172	$ 15,260	$ 16,122	$ 15,160	$ 13,620	$ 65,384	$ 60,162	$ 44,530
Basic EPS (in dollars per share)	$ 0.37	$ 0.46	$ 0.47	$ 0.43	$ 0.41	$ 0.45	$ 0.42	$ 0.38	$ 1.73	$ 1.66	$ 1.42
Diluted EPS (in dollars per share)	$ 0.37	$ 0.45	$ 0.47	$ 0.43	$ 0.41	$ 0.45	$ 0.41	$ 0.38	$ 1.72	$ 1.65	$ 1.41
Average Shares Outstanding:
Basic (in shares)	37,908,873	37,850,827	37,793,448	37,709,883	37,018,014	36,054,867	36,026,763	35,956,436	37,816,399	36,266,356	29,731,420
Diluted (in shares)	38,190,694	38,118,199	38,043,359	38,000,074	37,323,276	36,328,981	36,294,149	36,260,624	38,088,233	36,554,609	30,008,380

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Condensed Financial Information (parent company only) - Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Assets
Goodwill	$ 243,129	$ 202,724	$ 188,948
Other assets	24,023	20,764
TOTAL ASSETS	6,761,003	5,824,127
Liabilities
Borrowings	568,544	411,994
Other liabilities	49,211	41,411
Total Liabilities	5,910,494	5,097,300
Stockholders' equity	850,509	726,827	$ 634,923	$ 552,236
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	6,761,003	5,824,127
Parent
Assets
Cash	43,622	36,044
Investment in subsidiaries	932,372	820,123
Goodwill	448	448
Other assets	9,668	6,281
TOTAL ASSETS	986,110	862,896
Liabilities
Borrowings	127,663	126,702
Other liabilities	7,938	9,367
Total Liabilities	135,601	136,069
Stockholders' equity	850,509	726,827
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 986,110	$ 862,896

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Condensed Financial Information (parent company only) - Statement of Income and Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income
Gain on the sale of insurance subsidiary									$ 8,265
Gain on cancellation of subordinated debentures									1,250
Other income									4,441	$ 6,438	$ 5,404
Expenses
Interest expense	$ 6,440	$ 6,215	$ 6,171	$ 5,968	$ 5,893	$ 5,424	$ 5,408	$ 5,117	24,794	21,842	16,569
Salaries and employee benefits									101,908	96,499	85,413
Other expenses									15,669	14,239	11,142
INCOME BEFORE INCOME TAX	18,595	23,624	26,824	22,006	20,898	22,102	21,048	18,237	91,049	82,285	60,414
Income tax benefit (expense)	(4,418)	(6,557)	(8,856)	(5,834)	(5,638)	(5,980)	(5,888)	(4,617)	(25,665)	(22,123)	(15,884)
NET INCOME	14,177	17,067	17,968	16,172	15,260	16,122	15,160	13,620	$ 65,384	$ 60,162	44,530
Preferred stock dividends and discount accretion											(2,380)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS									$ 65,384	$ 60,162	42,150
Net income	$ 14,177	$ 17,067	$ 17,968	$ 16,172	$ 15,260	$ 16,122	$ 15,160	$ 13,620	65,384	60,162	44,530
Other comprehensive income (loss)									268	4,780	(911)
Comprehensive income									65,652	64,942	43,619
Parent
Income
Dividends from subsidiaries									39,032	$ 53,231	$ 63,732
Gain on the sale of insurance subsidiary									8,265
Gain on cancellation of subordinated debentures									1,250
Other income									197	$ 538	$ 45
Total income									48,744	53,769	63,777
Expenses
Interest expense									6,661	6,616	3,531
Salaries and employee benefits									3,023	3,128	3,284
Net occupancy and equipment expenses									464	442	258
Other outside services									1,455	458	1,141
Professional services									636	409	648
Other expenses									1,234	1,132	870
Total expenses									13,473	12,185	9,732
INCOME BEFORE INCOME TAX									35,271	41,584	54,045
Income tax benefit (expense)									(974)	3,999	3,153
Income before equity in undistributed income of subsidiaries									34,297	45,583	57,198
Equity in undistributed (distributions in excess of) income of subsidiaries									31,087	14,579	(12,668)
NET INCOME									$ 65,384	$ 60,162	44,530
Preferred stock dividends and discount accretion											(2,380)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS									$ 65,384	$ 60,162	42,150
Net income									65,384	60,162	44,530
Other comprehensive income (loss)									268	4,780	(911)
Comprehensive income									$ 65,652	$ 64,942	$ 43,619

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Condensed Financial Information (parent company only) - Statement of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flow From Operating Activities:
Net income	$ 14,177	$ 17,067	$ 17,968	$ 16,172	$ 15,260	$ 16,122	$ 15,160	$ 13,620	$ 65,384	$ 60,162	$ 44,530
Adjustments to Reconcile Net Income to Net Cash:
Share-based compensation									2,270	$ 2,177	$ 1,773
Gain on sale of insurance subsidiary									(8,265)
Gain on cancellation of subordinated debentures									(1,250)
Net Change in:
Net cash provided by operating activities									56,660	$ 75,840	$ 183,131
Cash Flows from Investing Activities:
Net cash paid in acquisition									(7,936)	(10,084)	10,992
Other									9	5,889	(2,768)
Net cash used in investing activities									(340,391)	(125,991)	(138,162)
Cash Flows from Financing Activities:
Repayment of borrowings									$ (370,813)	$ (789,563)	(163,838)
Preferred stock redemption under small business lending fund											(90,783)
Stock issued under employee benefit plans									$ 460	$ 478	479
Stock issued under dividend reinvestment and stock purchase plan									661	523	325
Stock options exercised									1,461	504	115
Stock redeemed									(1,640)	(1,067)	(491)
Net cash provided by (used in) financing activities									267,285	59,333	(36,995)
Cash and Cash Equivalents, beginning of the year				118,616				109,434	118,616	109,434	101,460
Cash and Cash Equivalents, end of year	102,170				118,616				102,170	118,616	109,434
Parent
Cash Flow From Operating Activities:
Net income									65,384	60,162	44,530
Adjustments to Reconcile Net Income to Net Cash:
Share-based compensation									843	887	778
Distributions in excess of (equity in undistributed) income of subsidiaries									(31,087)	$ (14,579)	$ 12,668
Gain on sale of insurance subsidiary									(8,265)
Gain on cancellation of subordinated debentures									(1,250)
Net Change in:
Other assets									(441)	$ 2,425	$ (1,354)
Other liabilities									(1,486)	1,466	(8,438)
Investment in subsidiaries - operating activities									197	(4,517)	12,991
Net cash provided by operating activities									23,895	45,844	$ 61,175
Cash Flows from Investing Activities:
Net cash paid in acquisition									(14,500)	$ (12,832)
Proceeds from business divestitures									16,000
Other									575		$ 240
Net cash used in investing activities									2,075	$ (12,832)	240
Cash Flows from Financing Activities:
Cash dividends									(15,654)	$ (10,694)	(7,992)
Repayment of borrowings									$ (3,750)		(55,000)
Proceeds from issuance of long-term debt											70,000
Preferred stock redemption under small business lending fund											(90,783)
Stock issued under employee benefit plans									$ 460	$ 478	479
Stock issued under dividend reinvestment and stock purchase plan									661	523	325
Stock options exercised									1,531	564	115
Stock redeemed									(1,640)	(1,067)	(491)
Net cash provided by (used in) financing activities									(18,392)	(10,196)	(83,347)
Cash and Cash Equivalents, beginning of the year				$ 36,044				$ 13,228	36,044	13,228	35,160
Cash and Cash Equivalents, end of year	$ 43,622				$ 36,044				$ 43,622	$ 36,044	$ 13,228

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Subsequent Events (Details) - Subsequent Event	Feb. 09, 2016 USD ($)
Subsequent Event [Line Items]
Stock repurchase program, approved amount	$ 15,000,000
Stock repurchase program, percentage of total shares outstanding	1.70%