FAIR VALUE DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 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:

	September 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,022	$	0	$	0	$	1,022
U.S. Government sponsored agencies		0		0		0		0
Mortgage-backed securities		0		369,311		0		369,311
Non-agency residential mortgage-backed securities		0		0		0		0
State and municipal securities		0		91,760		977		92,737
Total securities		1,022		461,071		977		463,070
Mortgage banking derivative		0		263		0		263
Interest rate swap derivative		0		297		0		297
Total assets	$	1,022	$	461,631	$	977	$	463,630
Liabilities
Mortgage banking derivative		0		109		0		109
Interest rate swap derivative		0		267		0		267
Total liabilities	$	0	$	376	$	0	$	376

	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

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 nine months ended September 30, 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		(181)		0		(11)		(4)
Principal payments		(2,160)		0		0		(45)
Sales		(3,852)		0		0		0
Balance of recurring Level 3 assets at September 30	$	0	$	0	$	977	$	637

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
	9/30/2013		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	977	Price to type, par, call	Discount to benchmark index	1-7	%
					(2.57)	%

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	December 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:

	September 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	801	$	801
Non-working capital loans		0		0		3,234		3,234
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		1,974		1,974
Owner occupied loans		0		0		3,401		3,401
Nonowner occupied loans		0		0		12,306		12,306
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		489		489
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		366		366
Open end and junior lien loans		0		0		10		10
Residential construction loans		0		0		0		0
Other consumer loans		0		0		53		53
Total impaired loans	$	0	$	0	$	22,634	$	22,634
Mortgage servicing rights		0		0		8		8
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	22,717	$	22,717

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 September 30, 2013:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired Loans:
Commercial and industrial	$	4,035	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	32	%	(4% - 91%)
Impaired loans:
Commercial real estate		17,681	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	23	%	(5% - 46%)
Impaired loans:
Agri-business and agricultural		489	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	8	%	(7% - 9%)
Impaired loans:
Consumer 1-4 family mortgage		376	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	27	%	(8% - 51%)
Impaired loans:
Other consumer		53	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	35	%	(28% - 61%)
Mortgage servicing rights		8	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	%

	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

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

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.

	September 30, 2013
	Carrying		Estimated Fair Value
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	81,340	$	81,340	$	0	$	0	$	81,340
Securities available for sale		463,070		1,022		461,071		977		463,070
Real estate mortgages held for sale		1,047		0		1,066		0		1,066
Loans, net		2,342,911		0		0		2,347,776		2,347,776
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		8,328		0		1,968		6,360		8,328
Financial Liabilities:
Certificates of deposit		(782,684)		0		(792,444)		0		(792,444)
All other deposits		(1,662,142)		(1,662,142)		0		0		(1,662,142)
Securities sold under agreements to repurchase		(103,959)		0		(103,959)		0		(103,959)
Federal funds purchased		(57,000)		0		(57,000)		0		(57,000)
Other short-term borrowings		(75,000)		0		(75,000)		0		(75,000)
Long-term borrowings		(37)		0		(44)		0		(44)
Subordinated debentures		(30,928)		0		0		(31,149)		(31,149)
Standby letters of credit		(288)		0		0		(288)		(288)
Accrued interest payable		(3,629)		(121)		(3,505)		(3)		(3,629)

	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)