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