FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on a recurring basis

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

	March 31, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,032	$	0	$	0	$	1,032
U.S. Government sponsored agencies		0		5,289		0		5,289
Mortgage-backed securities		0		375,468		0		375,468
Non-agency residential mortgage-backed securities		0		0		5,885		5,885
State and municipal securities		0		94,044		986		95,030
Total Securities		1,032		474,801		6,871		482,704
Mortgage banking derivative		0		371		0		371
Interest rate swap derivative		0		878		0		878
Total assets	$	1,032	$	476,050	$	6,871	$	483,953
Liabilities
Mortgage banking derivative		0		25		0		25
Interest rate swap derivative		0		881		0		881
Total liabilities	$	0	$	906	$	0	$	906

	December 31, 2012
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,037	$	0	$	0	$	1,037
U.S. Government sponsored agencies		0		5,304		0		5,304
Mortgage-backed securities		0		365,644		0		365,644
Non-agency residential mortgage-backed securities		0		3,594		2,859		6,453
State and municipal securities		0		87,595		988		88,583
Total Securities		1,037		462,137		3,847		467,021
Mortgage banking derivative		0		739		0		739
Total assets	$	1,037	$	462,876	$	3,847	$	467,760
Liabilities
Mortgage banking derivative	$	0	$	12	$	0	$	12

There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2013 and there were no transfers between Level 1 and Level 2 during 2012.

Schedule of reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2013 and 2012:

	Non-Agency Residential
	Mortgage-Backed Securities					State and Municipal Securities
	2013			2012		2013			2012
Balance of recurring Level 3 assets at January 1	$	2,859		$	0	$	988		$	686
Transfers into Level 3		3,334			0		0			0
Changes in fair value of securities		(17	)		0		(2	)		(3	)
Principal payments		(291	)		0		0			(45	)
Balance of recurring Level 3 assets at March 31	$	5,885		$	0	$	986		$	638

Fair Value Measurements, Recurring, Valuation Techniques

The state and municipal securities measured at fair value included below are non-rated Indiana municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	3/31/2013		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	5,885	Discounted cash flow	Constant prepayment rate	5.00-30.00 (8.69)
				Average life (years)	0.09-2.78 (1.70)
				Swap/EDSF spread	283-340 (308)
State and municipal securities	$	986	Price to type, par, call	Discount to benchmark index	1-10% (3.41%)

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	12/31/2012		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	2,859	Discounted cash flow	Constant prepayment rate	5.00-9.00 (6.00)
				Average life (years)	0.20-2.86 (2.70)
				Swap/EDSF spread	297-339 (328)
State and municipal securities	$	988	Price to type, par, call	Discount to benchmark index	1-11% (4%)

Schedule of assets measured at fair value on a nonrecurring basis

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

	March 31, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	897	$	897
Non-working capital loans		0		0		2,917		2,917
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		4,343		4,343
Owner occupied loans		0		0		1,134		1,134
Nonowner occupied loans		0		0		12,189		12,189
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		283		283
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		448		448
Open end and junior lien loans		0		0		8		8
Residential construction loans		0		0		0		0
Other consumer loans		0		0		40		40
Total impaired loans	$	0	$	0	$	22,259	$	22,259
Mortgage servicing rights		0		0		9		9
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	22,343	$	22,343

Fair Value Measured On Nonrecurring Basis Valuation Techniques

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2013:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired Loans:
Commercial and industrial:	$	3,814	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		33	%	(13% - 88%)
Impaired loans:
Commercial real estate:		17,666	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		24	%	(3% - 43%)
Impaired loans:
Agri-business and agricultural:		283	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		13	%
Impaired loans:
Consumer 1-4 family mortgage		456	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		23	%	(8% - 100%)
Impaired loans:
Other consumer		40	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		38	%	(21% - 91%)
Mortgage servicing rights		9	Discounted cash flows	Discount rate		9.50	%
Other real estate owned		75	Appraisal	Discount to reflect current market conditions		49	%

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2012:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired Loans:
Commercial and industrial:	$	3,980	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		35	%	(10% - 99%)
Impaired loans:
Commercial real estate:		24,560	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		23	%	(4% - 57%)
Impaired loans:
Agri-business and agricultural:		268	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		19	%
Impaired loans:
Consumer 1-4 family mortgage		510	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		39	%	(8% - 100%)
Impaired loans:
Other consumer		46	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		40	%	(29% - 100%)
Mortgage servicing rights		1,906	Discounted cash flows	Discount rate		9.20	%	(9.10% - 9.50%)
Other real estate owned		75	Appraisals	Discount to reflect current market conditions		49	%

Schedule of fair values and the related carrying values of financial instruments

	December 31, 2012
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	990	$	990
Non-working capital loans		0		0		2,990		2,990
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,026		2,026
Owner occupied loans		0		0		3,892		3,892
Nonowner occupied loans		0		0		18,642		18,642
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		268		268
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		352		352
Open end and junior lien loans		0		0		158		158
Residential construction loans		0		0		0		0
Other consumer loans		0		0		46		46
Total impaired loans	$	0	$	0	$	29,364	$	29,364
Mortgage servicing rights		0		0		1,906		1,906
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	31,345	$	31,345

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2013
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	75,667		$	75,667		$	0		$	0		$	75,667
Securities available for sale		482,704			1,033			474,800			6,871			482,704
Real estate mortgages held for sale		6,629			0			6,726			0			6,726
Loans, net		2,211,642			0			0			2,235,744			2,235,744
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		9,227			12			2,064			7,151			9,227
Financial Liabilities:
Certificates of deposit		(850,629	)		0			(863,641	)		0			(863,641	)
All other deposits		(1,600,559	)		(1,600,559	)		0			0			(1,600,559	)
Securities sold under agreements to repurchase		(113,515	)		0			(113,515	)		0			(113,515	)
Long-term borrowings		(37	)		0			(45	)		0			(45	)
Subordinated debentures		(30,928	)		0			0			(31,211	)		(31,211	)
Standby letters of credit		(286	)		0			0			(286	)		(286	)
Accrued interest payable		(4,560	)		(230	)		(4,327	)		(3	)		(4,560	)

	December 31, 2012
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	232,237		$	232,237		$	0		$	0		$	232,237
Securities available for sale		467,021			1,037			462,137			3,847			467,021
Real estate mortgages held for sale		9,452			0			9,663			0			9,663
Loans, net		2,206,075			0			0			2,230,993			2,230,993
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		8,485			6			2,215			6,264			8,485
Financial Liabilities:
Certificates of deposit		(907,505	)		0			(922,397	)		0			(922,397	)
All other deposits		(1,674,251	)		(1,674,251	)		0			0			(1,674,251	)
Securities sold under agreements to repurchase		(121,883	)		0			(121,883	)		0			(121,883	)
Long-term borrowings		(15,038	)		0			(15,607	)		0			(15,607	)
Subordinated debentures		(30,928	)		0			0			(31,223	)		(31,223	)
Standby letters of credit		(262	)		0			0			(262	)		(262	)
Accrued interest payable		(4,757	)		(298	)		(4,456	)		(3	)		(4,757	)