FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 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 and liabilities measured at fair value on a recurring basis:

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,017	$	0	$	0	$	1,017
Mortgage-backed securities		0		371,977		0		371,977
State and municipal securities		0		94,998		975		95,973
Total Securities		1,017		466,975		975		468,967
Mortgage banking derivative		0		142		0		142
Interest rate swap derivative		0		627		0		627
Total assets	$	1,017	$	467,744	$	975	$	469,736
Liabilities
Mortgage banking derivative		0		2		0		2
Interest rate swap derivative		0		592		0		592
Total liabilities	$	0	$	594	$	0	$	594

	December 31, 2012
	Fair Value Measurements Using						Assets
(dollars in thousands)	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 years ended December 31, 2013 and 2012:

	Non-Agency Residential Mortgage-Backed Securities					State and Municipal Securities
(dollars in thousands)	2013			2012		2013			2012
Balance of recurring Level 3 assets at January 1	$	2,859		$	0	$	988		$	686
Transfers into Level 3		3,334			2,859		0			351
Changes in fair value of securities		(158	)		0		(13	)		(4	)
Principal payments		(2,183	)		0		0			(45	)
Sales		(3,852	)		0		0			0
Balance of recurring Level 3 assets at December 31	$	0		$	2,859	$	975		$	988

Fair Value Measurements, Recurring, Valuation Techniques

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

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	12/31/2013		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	975	Price to type, par, call	Discount to benchmark index		0-6%
						(2.21	)%

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	12/31/2012		Valuation Technique	Unobservable Input	(Average)
Non-agency residential	$	2,859	Discounted cash flow	Constant prepayment rate		5.00-9.00
mortgage-backed securities						(6.00	)
				Average life		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:

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	920	$	920
Non-working capital loans		0		0		3,097		3,097
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,210		2,210
Owner occupied loans		0		0		3,958		3,958
Nonowner occupied loans		0		0		8,938		8,938
Agri-business and agricultural loans:
Loans secured by farmland		0		0		472		472
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		409		409
Open end and junior lien loans		0		0		174		174
Other consumer loans		0		0		50		50
Total impaired loans	$	0	$	0	$	20,228	$	20,228
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	20,303	$	20,303

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

	December 31, 2012
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
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
Agri-business and agricultural loans:
Loans secured by farmland		0		0		268		268
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
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

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 December 31, 2013:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired loans:
Commercial and industrial	$	4,017	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		29	%	(3% - 93%)
Impaired loans:
Commercial real estate		15,106	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		22	%	(3% - 45%)
Impaired loans:
Agri-business and agricultural		472	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		8	%	(4% - 12%)
Impaired loans:
Consumer 1-4 family mortgage		583	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		33	%	(6% - 77%)
Impaired loans:
Other consumer		50	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability		53	%	(28% - 98%)
Other real estate owned		75	Appraisals	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:

(dollars in thousands)	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

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments at December 31, 2013. Items which are not financial instruments are not included.

	December 31, 2013
	Carrying			Estimated Fair Value
(dollars in thousands)	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	63,105		$	63,105		$	0		$	0		$	63,105
Securities available for sale		468,967			1,017			466,975			975			468,967
Real estate mortgages held for sale		1,778			0			1,800			0			1,800
Loans, net		2,486,301			0			0			2,490,593			2,490,593
Federal Home Loan Bank stock		7,312			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		8,577			0			2,297			6,280			8,577
Financial Liabilities:
Certificates of deposit		(727,809	)		0			(736,088	)		0			(736,088	)
All other deposits		(1,818,259	)		(1,818,259	)		0			0			(1,818,259	)
Securities sold under agreements
to repurchase		(104,876	)		0			(104,876	)		0			(104,876	)
Federal funds purchased		(11,000	)		0			(11,000	)		0			(11,000	)
Other short-term borrowings		(146,000	)		0			(146,002	)		0			(146,002	)
Long-term borrowings		(37	)		0			(43	)		0			(43	)
Subordinated debentures		(30,928	)		0			0			(31,217	)		(31,217	)
Standby letters of credit		(312	)		0			0			(312	)		(312	)
Accrued interest payable		(2,918	)		(125	)		(2,790	)		(3	)		(2,918	)

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments at December 31, 2012. Items which are not financial instruments are not included.

	December 31, 2012
	Carrying			Estimated Fair Value
(dollars in thousands)	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		7,312			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	)