FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2015

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, 2015
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$ 1,023	$ 0	$ 0	$ 1,023
Mortgage-backed securities	0	372,203	0	372,203
State and municipal securities	0	103,161	810	103,971
Total Securities	1,023	475,364	810	477,197
Mortgage banking derivative	0	301	0	301
Interest rate swap derivative	0	2,310	0	2,310
Total assets	$ 1,023	$ 477,975	$ 810	$ 479,808

Liabilities
Mortgage banking derivative	0	47	0	47
Interest rate swap derivative	0	2,380	0	2,380
Total liabilities	$ 0	$ 2,427	$ 0	$ 2,427


	December 31, 2014
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$ 1,004	$ 0	$ 0	$ 1,004
Mortgage-backed securities	0	372,095	0	372,095
State and municipal securities	0	101,962	850	102,812
Total Securities	1,004	474,057	850	475,911
Mortgage banking derivative	0	96	0	96
Interest rate swap derivative	0	1,191	0	1,191
Total assets	$ 1,004	$ 475,344	$ 850	$ 477,198

Liabilities
Mortgage banking derivative	0	11	0	11
Interest rate swap derivative	0	1,242	0	1,242
Total liabilities	$ 0	$ 1,253	$ 0	$ 1,253

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, 2015 and 2014:

	State and Municipal Securities
(dollars in thousands)	2015	2014
Balance of recurring Level 3 assets at January 1	$ 850	$ 975
Changes in fair value of securities
included in other comprehensive income	0	1
Principal payments	(40)	(85)
Balance of recurring Level 3 assets at March 31	$ 810	$ 891

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
				Range of
	Fair Value at			Inputs
(dollars in thousands)	3/31/2015	Valuation Technique	Unobservable Input	(Average)

State and municipal securities	$ 810	Price to type, par, call	Discount to benchmark index	0-6%

				(2.56%)
Quantitative Information about Level 3 Fair Value Measurements
				Range of
	Fair Value at			Inputs
(dollars in thousands)	12/31/2014	Valuation Technique	Unobservable Input	(Average)

State and municipal securities	$ 850	Price to type, par, call	Discount to benchmark index	0-6%
				(2.49%)

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, 2015
	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	$ 348	$ 348
Non-working capital loans	0	0	2,057	2,057
Commercial real estate and multi-family
residential loans:
Construction and land development loans	0	0	346	346
Owner occupied loans	0	0	4,530	4,530
Nonowner occupied loans	0	0	3,113	3,113
Agri-business and agricultural loans:
Loans secured by farmland	0	0	190	190
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	999	999
Open end and junior lien loans	0	0	30	30
Other consumer loans	0	0	26	26
Total impaired loans	$ 0	$ 0	$ 11,639	$ 11,639
Other real estate owned	0	0	75	75
Total assets	$ 0	$ 0	$ 11,714	$ 11,714

	December 31, 2014
	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	$ 531	$ 531
Non-working capital loans	0	0	2,257	2,257
Commercial real estate and multi-family
residential loans:
Construction and land development loans	0	0	341	341
Owner occupied loans	0	0	4,084	4,084
Nonowner occupied loans	0	0	3,113	3,113
Agri-business and agricultural loans:
Loans secured by farmland	0	0	189	189
Other commercial loans	0	0	15	15
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	399	399
Residential construction loans	0	0	73	73
Other consumer loans	0	0	29	29
Total impaired loans	$ 0	$ 0	$ 11,031	$ 11,031
Other real estate owned	0	0	75	75
Total assets	$ 0	$ 0	$ 11,106	$ 11,106

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, 2015:

(dollars in thousands)	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired loans:
Commercial and industrial	$ 2,405	Collateral based	Discount to reflect	36%	(5% - 44%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	7,989	Collateral based	Discount to reflect	14%	(3% - 50%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	190	Collateral based	Discount to reflect	5%
		measurements	current market conditions
			and ultimate collectability

Impaired loans:
Consumer 1-4 family mortgage	1,029	Collateral based	Discount to reflect	13%	(2% - 82%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	26	Collateral based	Discount to reflect	42%	(22% - 54%)
		measurements	current market conditions
			and ultimate collectability

Other real estate owned	75	Appraisals	Discount to reflect	49%
			current market conditions

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, 2014:

(dollars in thousands)	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired loans:
Commercial and industrial	$ 2,788	Collateral based	Discount to reflect	40%	(11% - 68%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	7,538	Collateral based	Discount to reflect	25%	(6% - 50%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	189	Collateral based	Discount to reflect	7%
		measurements	current market conditions
			and ultimate collectability

Impaired loans:
Other commercial	15	Collateral based	Discount to reflect	50%
		measurements	current market conditions
			and ultimate collectability

Impaired loans:
Consumer 1-4 family mortgage	472	Collateral based	Discount to reflect	32%	(3% - 77%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	29	Collateral based	Discount to reflect	43%	(33% - 50%)
		measurements	current market conditions
			and ultimate collectability

Other real estate owned	75	Appraisals	Discount to reflect	49%
			current market conditions

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.

	March 31, 2015
	Carrying	Estimated Fair Value
(dollars in thousands)	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$ 113,046	$ 113,046	$ 0	$ 0	$ 113,046
Securities available for sale	477,197	1,023	475,364	810	477,197
Real estate mortgages held for sale	2,248	0	2,271	0	2,271
Loans, net	2,726,536	0	0	2,714,312	2,714,312
Federal Home Loan Bank stock	5,993	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	9,091	8	1,989	7,094	9,091
Financial Liabilities:
Certificates of deposit	(996,276)	0	(1,002,672)	0	(1,002,672)
All other deposits	(1,997,963)	(1,997,963)	0	0	(1,997,963)
Securities sold under agreements
to repurchase	(60,517)	0	(60,517)	0	(60,517)
Long-term borrowings	(34)	0	(39)	0	(39)
Subordinated debentures	(30,928)	0	0	(31,221)	(31,221)
Standby letters of credit	(387)	0	0	(387)	(387)
Accrued interest payable	(3,592)	(107)	(3,482)	(3)	(3,592)

	December 31, 2014
	Carrying	Estimated Fair Value
(dollars in thousands)	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$ 90,638	$ 90,638	$ 0	$ 0	$ 90,638
Securities available for sale	475,911	1,004	474,057	850	475,911
Real estate mortgages held for sale	1,585	0	1,612	0	1,612
Loans, net	2,716,058	0	0	2,698,767	2,698,767
Federal Home Loan Bank stock	5,993	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	8,662	3	2,312	6,347	8,662
Financial Liabilities:
Certificates of deposit	(870,590)	0	(876,953)	0	(876,953)
All other deposits	(2,002,530)	(2,002,530)	0	0	(2,002,530)
Securities sold under agreements
to repurchase	(54,907)	0	(54,907)	0	(54,907)
Federal funds purchased	(500)	0	(500)	0	(500)
Other short-term borrowings	(105,000)	0	(105,001)	0	(105,001)
Long-term borrowings	(35)	0	(40)	0	(40)
Subordinated debentures	(30,928)	0	0	(31,212)	(31,212)
Standby letters of credit	(379)	0	0	(379)	(379)
Accrued interest payable	(2,946)	(109)	(2,834)	(3)	(2,946)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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