FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2018

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, 2018
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	984	$	0	$	0	$	984
U.S. government sponsored agency securities		0		4,990		0		4,990
Mortgage-backed securities		0		371,349		0		371,349
State and municipal securities		0		182,510		831		183,341
Total Securities		984		558,849		831		560,664
Mortgage banking derivative		0		165		0		165
Interest rate swap derivative		0		3,540		0		3,540
Total assets	$	984	$	562,554	$	831	$	564,369

Liabilities
Mortgage banking derivative		0		9		0		9
Interest rate swap derivative		0		3,580		0		3,580
Total liabilities	$	0	$	3,589	$	0	$	3,589

	December 31, 2017
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	997	$	0	$	0	$	997
U.S. government sponsored agency securities		0		5,122		0		5,122
Mortgage-backed securities		0		357,985		0		357,985
State and municipal securities		0		173,509		880		174,389
Total Securities		997		536,616		880		538,493
Mortgage banking derivative		0		136		0		136
Interest rate swap derivative		0		2,441		0		2,441
Total assets	$	997	$	539,193	$	880	$	541,070

Liabilities
Mortgage banking derivative		0		3		0		3
Interest rate swap derivative		0		2,562		0		2,562
Total liabilities	$	0	$	2,565	$	0	$	2,565

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, 2018 and 2017:

	State and Municipal Securities
(dollars in thousands)	2018		2017
Balance of recurring Level 3 assets at January 1	$	880	$	670
Changes in fair value of securities
included in other comprehensive income		(4)		(3)
Principal payments		(45)		(45)
Balance of recurring Level 3 assets at March 31	$	831	$	622

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)	3/31/2018		Valuation Technique	Unobservable Input	(Average)

State and municipal securities	$	831	Price to type, par, call	Discount to benchmark index	0-5%
					(1.24%)

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	12/31/2017		Valuation Technique	Unobservable Input	(Average)

State and municipal securities	$	880	Price to type, par, call	Discount to benchmark index	0-5%
					(2.03%)

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, 2018
	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	$	2,547	$	2,547
Non-working capital loans		0		0		2,136		2,136
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		701		701
Owner occupied loans		0		0		589		589
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		70		70
Total assets	$	0	$	0	$	6,043	$	6,043

	December 31, 2017
	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	$	934	$	934
Non-working capital loans		0		0		1,693		1,693
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		477		477
Owner occupied loans		0		0		1,133		1,133
Consumer 1-4 family mortgage loans:
Open end and junior lien loans		0		0		195		195
Total assets	$	0	$	0	$	4,432	$	4,432

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, 2018:

(dollars in thousands)

Fair Value

Valuation Methodology

Unobservable Inputs

Average

Range of Inputs

Impaired loans:

Commercial and industrial

4,683

Collateral based

Discount to reflect

23% - 100%

measurements

current market conditions

and ultimate collectability

Impaired loans:

Commercial real estate

1,290

Collateral based

Discount to reflect

15% - 57%

measurements

current market conditions

and ultimate collectability

Impaired loans:

Consumer 1-4 family mortgage

Collateral based

Discount to reflect

measurements

current market conditions

and ultimate collectability

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, 2017:

(dollars in thousands)

Fair Value

Valuation Methodology

Unobservable Inputs

Average

Range of Inputs

Impaired loans:

Commercial and industrial

2,627

Collateral based

Discount to reflect

23% - 100%

measurements

current market conditions

and ultimate collectability

Impaired loans:

Commercial real estate

1,610

Collateral based

Discount to reflect

2% - 58%

measurements

current market conditions

and ultimate collectability

Impaired loans:

Consumer 1-4 family mortgage

195

Collateral based

Discount to reflect

measurements

current market conditions

and ultimate collectability

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. Due to the adoption of ASU 2016-01 as of January 1, 2018, the fair value as presented below is measured using the exit price notion in the periods after adoption and may not be comparable with prior periods presented as a result of the change in methodology.

	March 31, 2018
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	167,551	$	164,806	$	2,726	$	0	$	167,532
Securities available for sale		560,664		984		558,849		831		560,664
Real estate mortgages held for sale		1,511		0		1,545		0		1,545
Loans, net		3,800,041		0		0		3,744,565		3,744,565
Federal Home Loan Bank stock		10,352		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		14,616		8		2,760		11,848		14,616
Financial Liabilities:
Certificates of deposit		(1,476,845)		0		(1,480,116)		0		(1,480,116)
All other deposits		(2,622,643)		(2,622,643)		0		0		(2,622,643)
Securities sold under agreements
to repurchase		(94,716)		0		(94,716)		0		(94,716)
Subordinated debentures		(30,928)		0		0		(31,203)		(31,203)
Standby letters of credit		(808)		0		0		(808)		(808)
Accrued interest payable		(7,484)		(136)		(7,343)		(5)		(7,484)

	December 31, 2017
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	176,180	$	174,045	$	2,127	$	0	$	176,172
Securities available for sale		538,493		997		536,616		880		538,493
Real estate mortgages held for sale		3,346		0		3,390		0		3,390
Loans, net		3,771,338		0		0		3,744,842		3,744,842
Federal Home Loan Bank stock		10,352		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		14,093		3		2,925		11,165		14,093
Financial Liabilities:
Certificates of deposit		(1,412,583)		0		(1,417,075)		0		(1,417,075)
All other deposits		(2,596,072)		(2,596,072)		0		0		(2,596,072)
Securities sold under agreements
to repurchase		(70,652)		0		(70,652)		0		(70,652)
Other short-term borrowings		(80,000)		0		(80,004)		0		(80,004)
Long-term borrowings		(30)		0		(31)		0		(31)
Subordinated debentures		(30,928)		0		0		(31,194)		(31,194)
Standby letters of credit		(758)		0		0		(758)		(758)
Accrued interest payable		(6,311)		(149)		(6,158)		(4)		(6,311)