Mainsource Financial (MSFG) 10-Q 9 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 09, 2016
Document and Entity Information
Entity Registrant Name	MAINSOURCE FINANCIAL GROUP
Entity Central Index Key	720,002
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		21,634,691
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 56,906	$ 56,104
Money market funds and federal funds sold	15,096	11,474
Cash and cash equivalents	72,002	67,578
Interest bearing time deposits	1,715	1,960
Securities available for sale	937,719	925,279
Loans held for sale	5,514	7,533
Loans, net of allowance for loan losses of $21,079 and $22,020	2,138,918	2,133,372
FHLB and other stock, at cost	14,583	11,300
Premises and equipment, net	64,380	62,973
Goodwill	75,953	75,953
Purchased intangible assets	4,334	4,662
Cash surrender value of life insurance	62,753	62,451
Interest receivable and other assets	36,405	32,347
Total assets	3,414,276	3,385,408
Deposits
Noninterest bearing	647,187	641,439
Interest bearing	1,997,657	2,009,336
Total deposits	2,644,844	2,650,775
Other borrowings	31,159	28,363
Federal Home Loan Bank (FHLB) advances	285,557	269,488
Subordinated debentures	41,239	41,239
Other liabilities	17,273	14,183
Total liabilities	$ 3,020,072	$ 3,004,048
Commitments and contingent liabilities (Notes 1 and 16)
Shareholders' equity
Preferred stock, no par value Authorized shares - 400,000 Issued shares - 0 Outstanding shares - 0 Aggregate liquidation preference $0
Common stock $ .50 stated value: Authorized shares - 100,000,000 Issued shares - 22,290,617 and 22,266,107 Outstanding shares - 21,627,452 and 21,579,575	$ 11,222	$ 11,201
Treasury stock — 663,165 and 686,532 shares, at cost	(11,412)	(11,812)
Additional paid-in capital	247,869	247,629
Retained earnings	127,243	121,718
Accumulated other comprehensive income	19,282	12,624
Total shareholders' equity	394,204	381,360
Total liabilities and shareholders' equity	$ 3,414,276	$ 3,385,408

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
CONSOLIDATED BALANCE SHEETS
Loans, allowance for loan losses (in dollars)	$ 21,079,000	$ 22,020,000
Preferred stock, par value	$ 0	$ 0
Preferred stock, Authorized shares	400,000	400,000
Preferred stock, Issued shares	0	0
Preferred stock, Outstanding shares	0	0
Preferred stock, Aggregate liquidation preference (in dollars)	$ 0	$ 0
Common stock, stated value (in dollars per share)	$ 0.50	$ 0.50
Common stock, Authorized shares	100,000,000	100,000,000
Common stock, Issued shares	22,290,617	22,266,107
Common stock, Outstanding shares	21,627,452	21,579,575
Treasury stock, shares	663,165	686,532

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Interest income
Loans, including fees	$ 22,471	$ 21,396
Securities
Taxable	3,246	2,940
Tax exempt	2,987	2,905
Other interest income	42	26
Total interest income	28,746	27,267
Interest expense
Deposits	918	899
Federal Home Loan Bank advances	1,100	995
Subordinated debentures	343	309
Other borrowings	13	10
Total interest expense	2,374	2,213
Net interest income	26,372	25,054
Provision for loan losses	500
Net interest income after provision for loan losses	25,872	25,054
Non-interest income
Service charges on deposit accounts	4,682	4,621
Interchange income	2,635	1,961
Mortgage banking	1,790	1,855
Trust and investment product fees	1,210	1,206
Increase in cash surrender value of life insurance	302	313
Net realized gains on securities (includes $17 and $252 accumulated other comprehensive income (AOCI) reclassifications for realized net gains on available for sale securities)	17	252
Gain (Loss) on sale and write-down of OREO	149	(11)
Other income	804	1,194
Total non-interest income	11,589	11,391
Non-interest expense
Salaries and employee benefits	14,860	13,977
Net occupancy	2,261	2,182
Equipment	3,063	2,732
Intangibles amortization	328	420
Telecommunications	369	438
Stationery printing and supplies	307	306
FDIC assessment	420	375
Marketing	654	562
Collection expense	252	256
Prepayment penalty on FHLB advance		2,364
Consultant expense	136	250
Interchange expense	813	575
Other expenses	2,694	2,590
Total non-interest expense	26,157	27,027
Income before income tax	11,304	9,418
Income tax expense (includes $6 and $86 income tax expense from AOCI reclassification items)	2,538	1,755
Net income attributable to common shareholders	$ 8,766	$ 7,663
Net income per common share:
Basic	$ 0.41	$ 0.35
Diluted	0.40	0.35
Dividend per share	$ 0.15	$ 0.13

CONSOLIDATED STATEMENTS OF INC5

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CONSOLIDATED STATEMENTS OF INCOME
Accumulated other comprehensive income (AOCI) reclassifications for realized net gains on available for sale securities	$ 17	$ 252
Income tax expense from AOCI reclassification items	$ 6	$ 86

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 8,766	$ 7,663
Other comprehensive income:
Unrealized holding gains/(losses) on securities available for sale	10,259	5,612
Reclassification adjustment for (gains) included in net income	(17)	(252)
Tax effect	(3,584)	(1,822)
Other comprehensive income	6,658	3,538
Comprehensive income	$ 15,424	$ 11,201

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Activities
Net income	$ 8,766	$ 7,663
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	500
Depreciation expense	1,709	1,551
Amortization of mortgage servicing rights	286	355
Securities amortization, net	1,170	646
Amortization of purchased intangible assets	328	420
Earnings on cash surrender value of life insurance policies	(302)	(313)
Gain on life insurance benefit		(297)
Securities gains, net	(17)	(252)
Gain on loans sold	(1,413)	(1,298)
Loans originated for sale	(42,816)	(57,395)
Proceeds from loan sales	46,248	57,625
Stock based compensation expense	197	195
Stock portion of director retainer fee expense	89	90
(Gain)/(Loss) on sale and write-down of OREO	(149)	11
Prepayment penalty on FHLB advance		2,364
Change in other assets and liabilities	(4,887)	1,031
Net cash provided by operating activities	9,709	10,032
Investing Activities
Net change in short term investments	245	245
Purchases of securities available for sale	(35,903)	(66,979)
Proceeds from calls, maturities, and payments on securities available for sale	28,317	29,783
Proceeds from sales of securities available for sale	4,235	38,842
Loan originations and payments, net	(6,583)	(23,822)
Purchases of premises and equipment	(3,116)	(1,684)
Proceeds from sale of OREO	735	632
Purchase of restricted stock	(3,283)
Proceeds from life insurance benefit		1,084
Net cash used by investing activities	(15,353)	(21,899)
Financing Activities
Net change in deposits	(5,931)	6,913
Net change in other borrowings	2,796	(5,831)
Proceeds from FHLB advances	260,000	165,000
Repayment of FHLB advances	(243,931)	(143,933)
Cash dividends on common stock	(3,241)	(2,821)
Purchase of treasury shares	(95)	(520)
Proceeds from exercise of stock options, including tax benefit	470	124
Net cash provided by financing activities	10,068	18,932
Net change in cash and cash equivalents	4,424	7,065
Cash and cash equivalents, beginning of year	67,578	62,485
Cash and cash equivalents, end of period	72,002	69,550
Supplemental cash flow information
Interest paid	2,368	2,258
Income taxes paid	851
Supplemental non cash disclosure
Loan balances transferred to foreclosed real estate	$ 537	156
Loan balances transferred to loans held for sale		$ 11,356

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2016
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 1 - BASIS OF PRESENTATION The significant accounting policies followed by MainSource Financial Group, Inc. (“Company”) for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. The consolidated interim financial statements have been prepared according to accounting principles generally accepted in the United States of America and in accordance with the instructions for Form 10-Q. The interim statements do not include all information and footnotes normally included in the annual financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods reported have been included in the accompanying unaudited consolidated financial statements and all such adjustments are of a normal recurring nature. Some items in prior period financial statements were reclassified to conform to current presentation. It is suggested that these consolidated financial statements and notes be read in conjunction with the financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Adoption of New Accounting Standards and Newly-Issued, Not Yet Effective Accounting Standards

STOCK PLANS AND STOCK-BASED COM

STOCK PLANS AND STOCK-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2016
STOCK PLANS AND STOCK BASED COMPENSATION
STOCK PLANS AND STOCK BASED COMPENSATION	NOTE 2 - STOCK PLANS AND STOCK BASED COMPENSATION On January 19, 2015, the Board of Directors adopted and approved the MainSource Financial Group, Inc. 2015 Stock Incentive Plan (the “2015 Plan”) which was effective following the approval of the 2015 Plan by the Company’s shareholders at the 2015 Annual Meeting of Shareholders held on April 29, 2015. The 2015 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, share awards of restricted stock, performance share units and other equity based awards. Incentive stock options may be granted only to employees. An aggregate of 1,000,000 shares of common stock are reserved for issuance under the 2015 Plan. Shares issuable under the 2015 Plan may be authorized and unissued shares of common stock or treasury shares. The 2015 Plan is in addition to, and not in replacement of, a similar plan adopted in 2007. The 2007 Stock Incentive Plan (the “2007 Plan”) provided for the grant of incentive stock options, nonstatutory stock options, stock bonuses and restricted stock awards. An aggregate of 650,000 shares of common stock were reserved for issuance under the 2007 Stock Incentive Plan. The 2007 Plan was in replacement of a similar plan adopted in 2003, the 2003 Stock Option Plan (the “2003 Plan”). Any stock or option awards that were previously issued under the 2007 Plan or 2003 Plan have not been terminated as a result of the adoption of the 2015 Plan, but will continue in accordance with the applicable plan terms and the agreements pursuant to which such stock or option awards were issued. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. Employee and director options are tracked separately. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. All share-based payments to employees, including grants of employee stock options, are recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. For options with graded vesting, the Company values the stock option grants and recognizes compensation expense as if each vesting portion of the award was a single award. The following table summarizes stock option activity: Three Months Ended March 31, 2016 Weighted Average Exercise Options (restated for stock dividends and splits) Shares Price Outstanding, beginning of year $ Granted — — Exercised Forfeited or expired Outstanding at end of year $ Exercisable at year end $ Fully vested and expected to vest $ The following table details stock options outstanding: March 31, December 31, 2016 2015 Stock options vested and currently exercisable: Number Weighted average exercise price $ $ Aggregate intrinsic value $ $ Weighted average remaining life (in years) The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of the reporting date. The Company recorded $ 22 and $43 in stock compensation expense during the three months ended March 31, 2016 and 2015, respectively to salaries and employee benefits. There have been no options granted in the first quarter of 2016 or 2015. Unrecognized stock option compensation expense related to unvested awards for the remainder of 2016 and beyond is estimated as follows: Year (in thousands) April 2016 - December 2016 $ 2017 During 2015 and the first quarter of 2016, the Executive Compensation Committee of the Board of Directors of the Company granted restricted stock awards to certain executive officers and other employees pursuant to the Company’s Long Term Incentive Plan (“LTIP”). Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at the issue date. The value of the awards was determined by multiplying the award amount by the closing price of a share of Company common stock on the grant date. The restricted stock awards for employees vest as follows — 100% on the third anniversary of the date of grant. A total of 24,152 shares of common stock were granted in the first quarter of 2016 at a weighted average cost of $ 21.47 per share. A total of 11, 171 shares of common stock were granted in the first quarter of 2015 at a weighted average cost of $19.57 per share. A summary of changes in the Company’s nonvested restricted shares for 2016 follows: Weighted Average Restricted Grant Date Shares Fair Value Nonvested at January 1, 2016 $ Granted Vested Forfeited — — Nonvested at March 31, 2016 $ As of March 31, 2016, there was $ 908 of total unrecognized compensation costs related to nonvested restricted stock awards granted under the 2015 Plan that will be recognized over the remaining vesting period of approximately 1. 9 years. The recognized compensation costs related to the plans were $1 49 and $1 52 for the three month periods ending March 31, 2016 and 2015 respectively. Additionally, in the first quarters of 2016 and 2015, the Committee voted to grant performance share units to certain executive officers pursuant to the Company’s LTIP. The Committee established performance measures, goals and payout calibration for the Performance Share Units. At the end of each three-year performance period, the Committee will certify the results of the performance measures and goals and will pay the earned awards out in cash or shares of Company common stock. Dividends earned during each three-year performance period will be accrued and paid at the end of the performance period, based upon the final number of shares earned. The performance measures and goals are based on financial and shareholder measures, and are evaluated relative to internal goals and the performance of the Company’s peers. Once the performance measures and goals were established, the Committee established threshold, target and superior levels of performance. The LTIP payout of shares will begin once the Company achieves the pre-established threshold (thus, no payout will occur if the performance is equal to or below the threshold). Each executive’s target payout is achieved once the performance equals the target level, and the maximum payout is achieved once the performance equals the superior level (with interpolation between discrete points). Performance Payout Threshold % Target % Superior % The grant of Performance Share Units by the Committee is evidenced by an award agreement between the executive and the Company which provides that each executive will receive shares of Company stock when the Company’s actual performance as compared to its peers and long-term goals exceeds certain thresholds, determined as of December 31, 2017 or 2018, provided the executive remains employed by the Company on such date. The executive’s eligibility for the payout of shares is determined based on the following measures: Evaluated Performance Measure Weight vs. Return on Assets % Peer Total Shareholder Return % Peer Earnings Per Share % Goal The value of the awards was determined by multiplying the award amount by the closing price of a share of Company common stock on the grant date. The performance share units are earned over the three year period of the award. A total of 16, 152 performance share units were granted in the first quarter of 2016 at a weighted average cost of $ 21.41 per share. A total of 11,171 performance share units were granted in the first quarter of 2015 at a weighted average cost of $19.57 per share. Compensation expense is recognized over the three year performance period of the awards based on the fair value of the stock at the issue date and the anticipated achievement level of the target performance. Quarterly, the performance measures will be reevaluated and adjustments made to the expense recorded in the financial statements, if needed, to reflect the new revised achievement levels. $2 6 and $0 of expense was recognized on these awards in the first quarter of 2016 and 2015. A total of $ 557 will be expensed in future periods if the Target level is achieved. In the second quarter of 2015, members of the Board of Directors received their entire annual retainer in restricted Company stock for the following Board year ended with the 2016 annual meeting of shareholders. The 2015 award vests quarterly for all directors who remained on the Board of Directors on the vesting date, with 25% of the award vesting on each of May 1, August 1, and November 1, 2015, and February 1, 2016. The value of the 2015 retainer award was determined by multiplying the award amount by the closing price of the stock on the date of the 2015 annual meeting of shareholders. Due to the addition of two new directors to the Board of Directors during the second half of 2015 and the first quarter of 2016, additional shares were granted to these individuals upon their joining the Board of Directors. The shares granted were based on each new director’s pro rata time on the Board. For all awards, other expense is recognized over the three month period of the awards based on the fair value of the stock at the issue dates. Shares awarded by quarter were as follows: Quarter Shares Price per Share 2015 2Q $ 2015 4Q 2016 1Q A total of $ 89 and $90 was recognized as other expense in the first quarter of 2016 and 2015 respectively.

SECURITIES

SECURITIES	3 Months Ended
	Mar. 31, 2016
SECURITIES
SECURITIES	NOTE 3 - SECURITIES The amortized cost and fair value of securities available for sale and related unrealized gains/losses recognized in accumulated other comprehensive income was as follows: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of March 31, 2016 Available for Sale U. S. government agency $ $ $ — $ State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) — Collateralized mortgage obligations (Government Sponsored Entity) Equity securities — — Other securities — — Total available for sale $ $ $ $ Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of December 31, 2015 Available for Sale U. S. government agency $ $ $ — $ State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) Collateralized mortgage obligations (Government Sponsored Entity) Equity securities — — Other securities — — Total available for sale $ $ $ $ The amortized cost and fair value of the investment securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity or with no maturity are shown separately. Available for Sale Amortized Cost Fair Value Within one year $ $ One through five years Six through ten years After ten years Mortgage-backed securities-residential (Government Sponsored Entity) Collateralized mortgage obligations (Government Sponsored Entity) Equity securities Total available for sale securities $ $ Proceeds from sales of securities available for sale were $ 4,235 and $ 38,842 for the three months ended March 31, 2016 and 2015, respectively. Gross gains of $1 7 and $252 and gross losses of $ 0 and $ 0 were realized on these sales during 2016 and 2015, respectively. Below is a summary of securities with unrealized losses as of March 31, 2016 and December 31, 2015 presented by length of time the securities have been in a continuous unrealized loss position. Less than 12 months 12 months or longer Total March 31, 2016 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) — — — — — — Collateralized mortgage obligations (Government Sponsored Entity) — — Other securities — — — — — — Total temporarily impaired $ $ $ $ $ $ Less than 12 months 12 months or longer Total December 31, 2015 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal $ Mortgage-backed securities-residential (Government Sponsored Entity) — — Collateralized mortgage obligations (Government Sponsored Entity) Other securities — — — — — — Total temporarily impaired $ $ $ $ $ $ Other-Than-Temporary-Impairment Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations,that had credit ratings at the time of purchase of below AA are evaluated using the model outlined in ASC 325-10 . In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. When OTTI occurs under either model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. As of March 31, 201 6, the Company’s securities portfolio consisted of 9 66 securities, 19 of which were in an unrealized loss position. Unrealized losses on state and municipal securities of $ 3 5 have not been recognized into income because management has the ability to hold for a period of time sufficient to allow for any anticipated recovery in fair value and it is unlikely that management will be required to sell the securities before their anticipated recovery. The decline in value is primarily attributable to changes in interest rates. The Company monitors the financial condition of these issuers. The fair value of these debt securities is expected to recover as the securities approach their maturity date. At March 31, 2016, almost all of the mortgage-backed securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2016. The Company’s collateralized mortgage obligation securities portfolio includes agency collateralized mortgage obligations with a market value of $ 42,245 which had unrealized losses of approximately $ 281 at March 31, 201 6. As noted above, the decline in fair value is attributable to changes in interest rates and illiquidity and not credit quality. The Company monitors to insure it has adequate credit support and as of March 31, 2016, the Company believes there is no OTTI and does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. All securities are investment grade.

LOANS AND ALLOWANCE

LOANS AND ALLOWANCE	3 Months Ended
	Mar. 31, 2016
LOANS AND ALLOWANCE FOR LOAN LOSSES
LOANS AND ALLOWANCE	NOTE 4 - LOANS AND ALLOWANCE Loans were as follows: March 31, December 31, 2016 2015 Commercial Commercial and industrial $ $ Agricultural Commercial Real Estate Farm Hotel Construction and development Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans Allowance for loan losses Net loans $ $ The Company purchased some financing receivables in the fourth quarter of 2014 and the third quarter of 2015. The investment by portfolio class at March 31, 2016 is as follows. These loans are included in the above table and all other tables below in the recorded investment amount. March 31, December 31, 2016 2015 Commercial and industrial $ $ Construction and development Other real estate 1-4 family Home equity Direct $ $ The remaining discount on the above loans was $1,973 and $2,198 at March 31, 2016 and December 31, 2015 respectively. Activity in the allowance for loan losses for the three months ended March 31, 2016 and 2015 was as follows: Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, March 31 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense — Losses charged off Recoveries Balance, March 31 $ $ $ $ $ The following table presents the balance in the allowance for loan losses and the recorded investment by portfolio segment and based on impairment method at March 31, 2016 and December 31, 2015. Commercial March 31, 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ $ $ $ — $ Ending Balance collectively evaluated for impairment Total ending allowance balance $ $ $ $ $ Loans Ending Balance individually evaluated for impairment $ $ $ $ $ Ending Balance collectively evaluated for impairment Total ending loan balance excludes $6,228 of accrued interest $ $ $ $ $ Commercial December 31, 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ $ $ $ — $ Ending Balance collectively evaluated for impairment Total ending allowance balance $ $ $ $ $ Loans Ending Balance individually evaluated for impairment $ $ $ $ $ Ending Balance collectively evaluated for impairment Total ending loan balance excludes $5,878 of accrued interest $ $ $ $ $ The allowance for loans collectively evaluated for impairment consists of reserves on groups of similar loans based on historical loss experience adjusted for other factors, as well as reserves on certain loans that are classified but determined not to be impaired based on an analysis which incorporates probability of default with a loss given default scenario. The reserves on these loans totaled $1 ,347 at March 31, 2016 and $ 1,583 at December 31, 2015. The recorded investment in loans excludes accrued interest receivable due to immateriality. The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2016 and December 31, 2015. Performing troubled debt restructurings totaling $2, 717 and $ 2,760 were excluded as allowed by ASC 310-40. Allowance Unpaid for Loan Principal Recorded Losses March 31, 2016 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ $ $ Agricultural — — — Commercial Real Estate Farm — — — Hotel — — — Construction and development — — — Other Residential 1-4 Family Home Equity Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded With no related allowance recorded Commercial Commercial and industrial $ $ $ — Agricultural — Commercial Real Estate Farm — Hotel — — — Construction and development — Other — Residential 1-4 Family — Home Equity — Consumer Direct — Indirect — Subtotal — impaired with no allowance recorded — Total impaired loans $ $ $ Allowance Unpaid for Loan Principal Recorded Losses December 31, 2015 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ $ $ Agricultural — — — Commercial Real Estate Farm — — — Hotel — — — Construction and development — — — Other Residential 1-4 Family Home Equity Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded With no related allowance recorded Commercial Commercial and industrial $ $ $ — Agricultural — Commercial Real Estate Farm — Hotel — — — Construction and development — Other — Residential 1-4 Family — Home Equity — Consumer Direct — Indirect — — — Subtotal — impaired with no allowance recorded — Total impaired loans $ $ $ The following tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending March 31, 2016 and March 31, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended March 31, 2016 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ $ $ Agricultural — — Commercial Real Estate Farm — — Hotel — — — Construction and development — — Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans $ $ $ Average Interest Cash Basis Balance Income Income Three months ended March 31, 2015 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ $ $ Agricultural — — Commercial Real Estate Farm Hotel — — Construction and development Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans $ $ $ The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2016 and December 31, 2015: Past due over 90 days and Non-accrual still accruing March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 Commercial Commercial and industrial $ $ $ — $ — Agricultural — — Commercial Real Estate Farm — — Hotel — — — — Construction and development — — Other — — Residential 1-4 Family — — Home Equity — — Consumer Direct — — Indirect — — — Total $ $ $ — $ — The following tables present the aging of the recorded investment in past due loans as of March 31, 2016 and December 31, 2015 by class of loans: Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not March 31, 2016 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ $ $ $ $ $ Agricultural — Commercial Real Estate Farm — Hotel — — — — Construction and development — Other Residential 1-4 Family Home Equity Consumer Direct — Indirect — — Total — excludes $6,228 of accrued interest $ $ $ $ $ $ Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not December 31, 2015 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ $ $ — $ $ $ Agricultural — Commercial Real Estate Farm — — Hotel — — Construction and development — Other Residential 1-4 Family Home Equity Consumer Direct Indirect — — Total — excludes $5,878 of accrued interest $ $ $ $ $ $ Troubled Debt Restructurings From time to time, the terms of certain loans are modified as troubled debt restructurings. The modification of the terms of such loans include one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. The total of troubled debt restructurings at March 31, 2016 and December 31, 2015 was $ 7,805 and $ 8,389 respectively. The Company has allocated $ 488 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2016. The Company has committed to lend additional amounts totaling $0 to customers with outstanding loans that are classified as troubled debt restructurings. At December 31, 2015, the comparable numbers were $ 863 of specific reserves and $0 of commitments. The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2016 Number of Loans Investment Investment Residential Home Equity Total $ $ There were no new TDRs that occurred during the three month period ending March 31, 2015. There were no troubled debt restructurings where there was a payment default within twelve months following the modification during the three month periods ending March 31, 2016 or 2015. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The troubled debt restructurings that subsequently defaulted described above did not increase the allowance for loan losses or result in any charge offs during the three month period ending March 31, 2016 and 2015, respectively. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The terms of certain other loans were modified during the three month periods ending March 31, 2016 and 2015 that did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment of $ 983 and $151 at March 31, 2016 and 2015 respectively . The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be significant. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of the borrower to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial and commercial real estate loans individually by classifying the loans as to credit risk. This analysis includes credit relationships with an outstanding balance greater than $1 million on an annual basis. Only credit relationships over $250 are risk graded. The Company uses the following definitions for risk ratings: Special Mention — Loans classified as special mention have above average risk that requires management’s ongoing attention. The borrower may have demonstrated the inability to generate profits or to maintain net worth, chronic delinquency and/or a demonstrated lack of willingness or capacity to meet obligations. Substandard — Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are classified by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Non-accrual — Loans classified as non-accrual are loans where the further accrual of interest is stopped because payment in full of principal and interest is not expected. In most cases, the principal and interest has been in default for a period of 90 days or more. As of March 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special March 31, 2016 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ $ $ $ Agricultural — — — Commercial Real Estate Farm Hotel — — Construction and development — Other Total $ $ $ $ At December 31, 2015, the risk category of loans by class of loans was as follows: Special December 31, 2015 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ $ $ $ Agricultural — — — Commercial Real Estate Farm Hotel — — — Construction and development — Other Total $ $ $ $ Loans not analyzed individually as part of the above described process are classified by delinquency. These loans are primarily smaller (<$ 250 ) commercial, smaller commercial real estate (<$ 250 ), residential mortgage and consumer loans. All commercial, commercial real estate, consumer loans fully or partially secured by 1-4 family residential real estate that are 60 - 89 days will be classified as Watch. If loans are greater than 90 days past due, they will be classified as Substandard. Smaller commercial and commercial real estate loans on non-accrual are included in the non-accrual tables above. Consumer loans not secured by 1 -4 family residential real estate that are 60 - 119 days past due will be classified Substandard while loans greater than 119 days will be classified as Loss. As of March 31, 2016 and December 31, 2015, the grading of loans by category of loans is as follows: March 31, 2016 Performing Watch Substandard Commercial Commercial and industrial $ $ $ Agricultural — Commercial Real Estate Construction and development — Farm — Other Total $ $ $ December 31, 2015 Performing Watch Substandard Commercial Commercial and industrial $ $ — $ Agricultural — Commercial Real Estate Construction and development Farm — — Other Total $ $ $ March 31, 2016 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ March 31, 2016 Performing Substandard Loss Consumer Direct $ $ $ Indirect — Total $ $ $ December 31, 2015 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ December 31, 2015 Performing Substandard Loss Consumer Direct $ $ $ Indirect — — Total $ $ $

OTHER REAL ESTATE OWNED

OTHER REAL ESTATE OWNED	3 Months Ended
	Mar. 31, 2016
OTHER REAL ESTATE OWNED
OTHER REAL ESTATE OWNED	NOTE 5 — OTHER REAL ESTATE OWNED Other real estate owned is recorded in other assets on the balance sheet. Activity in other real estate owned was as follows: Three months ended March 31, 2016 2015 Beginning Balance $ $ Transfer to other real estate owned Sale — Out of other real estate owned Write-down — Ending Balance $ $ The value of the sale amount above is the carrying value of the property when it was sold. Activity in the valuation account for other real estate was as follows: Three months ended March 31, 2016 2015 Beginning Balance — January 1 $ $ Impairments during year — Recovery on impairments — — Reductions — Ending Balance — March 31 $ $ Expenses related to foreclosed assets for the period ending March 31 include: Three months ended March 31, 2016 2015 Write-downs $ $ — Losses/(gains)on sales Net loss/(gain) $ $ Operating expenses $ $ Foreclosed residential real estate properties included in other real estate and repossessed assets on the Consolidated Balance Sheets totaled $ 946 and $915 at March 31, 2016 and December 31, 2015, respectively. Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $2, 114 and $2, 407 at March 31, 2016 and December 31, 2015, respectively.

DEPOSITS & REPURCHASE AGREEMENT

DEPOSITS & REPURCHASE AGREEMENTS	3 Months Ended
	Mar. 31, 2016
DEPOSITS & REPURCHASE AGREEMENTS
DEPOSITS & REPURCHASE AGREEMENTS	NOTE 6 — DEPOSITS & REPURCHASE AGREEMENTS March 31, December 31, 2016 2015 Non-interest-bearing demand $ $ Interest-bearing demand Savings Certificates of deposit of $250 or more Other certificates and time deposits Total deposits $ $ The Company has entered into repurchase agreements with some of its customers. The agreements are one day in length. At March 31, 2016, these agreements totaled $ 19,556 and were secured by a pledged amount of $46, 600 of mortgage backed securities. Management monitors the fair value of the securities on a regular basis. If the fair value of the securities declined to an amount approximating these agreements, more securities would be pledged.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	3 Months Ended
	Mar. 31, 2016
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 7 - EARNINGS PER SHARE Earnings per common share (EPS) were computed as follows: March 31, 2016 March 31, 2015 Net Average Share Net Average Share Three Months Ended March 31, 2016 Income Shares Amount Income Shares Amount Basic Earnings Per Common Share Net income $ $ $ $ Effect of dilutive warrants Effect of dilutive stock options Diluted Earnings Per Common Share Net income attributable to common shareholders and assumed conversions $ $ $ $ Stock options for 0 common shares in 2016 and stock options for 26,994 common shares in 2015 were not considered in computing diluted earnings per share because they were antidilutive.

FAIR VALUE

FAIR VALUE	3 Months Ended
	Mar. 31, 2016
FAIR VALUE.
FAIR VALUE	NOTE 8 — FAIR VALUE ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or using market data utilizing pricing models, primarily Interactive Data Corporation (IDC), that vary based upon asset class and include available trade, bid, and other market information. Matrix pricing is used for most municipals, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. The grouping of securities is done according to insurer, credit support, state of issuance, and rating to incorporate additional spreads and municipal curves. For the general market municipals, the Thomson Municipal Market Data curve is used to determine the initial curve for determining the price, movement, and yield relationships with the municipal market (Level 2 inputs). Level 3 securities are largely comprised of small, local municipality issuances. Fair values are derived through consideration of funding type, maturity and other features of the issuance, and include reviewing financial statements, earnings forecasts, industry trends and the valuation of comparative issuers. In most cases, the book value of the security is used as the fair value as meaningful pricing data is not readily available. Twice a year, a sample of prices supplied by the pricing agent is validated by comparison to prices obtained from other third party sources. The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals or industry accepted valuation methods. In a limited number of situations, the Company’s appraisal department is determining the value of appraisal. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the loan officers to adjust for differences between the comparable sales and income data available as well as costs to sell. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated quarterly for additional impairment and take into account changing market conditions, specific information in the market the property is located, and the overall economic climate as well as overall changes in the credit. The Company’s Appraisal Manager has the overall responsibility for all appraisals. The Company’s loan officer responsible for the loan, the special assets officer, as well as the senior officers of the Company review the adjustments made to the appraisal for market and disposal costs on the loan. The fair value of servicing rights is based on a valuation model from a third party that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. The Company is able to compare the valuation model inputs and results to widely available published industry data for reasonableness (Level 3 inputs). The fair value of other real estate owned is measured based on the value of the collateral securing those assets and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers (third party). The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Appraisal Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Fair values are reviewed on at least an annual basis. The Company normally applies an internal discount to the value of appraisals used in the fair value evaluation of OREO. The deductions take into account changing business factors and market conditions as well as disposal costs. As noted in the impaired loans discussion above, the Company’s Appraisal Manager has the overall responsibility for all appraisals. The Appraisal Manager reports to the Vice President of Credit Administration who reports to the Chief Credit Officer of the Company. The fair value of mortgage banking derivatives are based on derivative valuation models using market data inputs as of the valuation date (Level 2). The mortgage banking derivative is classified as Interest receivable and other assets on the balance sheet. The fair value of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2). The fair value of derivatives are classified as Interest receivable and other assets and Other liabilities on the balance sheet. Assets and Liabilities Measured on a Recurring Basis Assets and liabilities measured at fair value under ASC 820 on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below: Fair Value Measurements at March 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ $ — $ $ — States and municipal — Mortgage-backed securities — residential — Government Sponsored Entity — — Collateralized mortgage obligations — Government Sponsored Entity — — Equity securities — — Other securities — — Total investment securities available-for-sale $ $ $ $ Mortgage banking derivatives $ — $ — Interest rate swap asset $ — $ — Interest rate swap liability $ — $ — Fair Value Measurements at December 31, 2015 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ $ — $ $ — States and municipal — Mortgage-backed securities — residential — Government Sponsored Entity — — Collateralized mortgage obligations — Government Sponsored Entity — — Equity securities — — Other securities — — Total investment securities available-for-sale $ $ $ $ Mortgage banking derivative $ — $ — Interest rate swap asset $ — $ — Interest rate swap liability $ — $ — There were no transfers between Level 1 and Level 2 during the first quarter of 2016 or 2015. The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month periods ended March 31, 2016 and 2015: Three months ended March 31: States and municipal 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income — Settlements Ending balance, March 31 $ $ Other securities 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Ending balance, March 31 $ $ The Company’s state and municipal security valuations were supported by analysis prepared by an independent third party. Fair values are derived through consideration of funding type, maturity and other features of the issuance, and include reviewing financial statements, earnings forecasts, industry trends and the valuation of comparative issuers. In most cases, the book value of the security is used as the fair value as meaningful pricing data is not readily available. The Company’s other security valuation was supported by analysis prepared by an independent third party. Fair values are derived through consideration of funding type, maturity and other features of the issuance, and include reviewing financial statements, earnings forecasts, industry trends and the valuation of comparative issuers. In most cases, the book value of the security is used as the fair value as meaningful pricing data is not readily available. Assets and Liabilities Measured on a Non-Recurring Basis Assets and liabilities measured at fair value on a non-recurring basis are summarized below: Fair Value Measurements at March 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable March 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Other real estate Total impaired loans $ $ Impaired servicing rights $ $ Fair Value Measurements at December 31, 2015 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable December 31, Identical Assets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Other real estate Total impaired loans $ $ Impaired servicing rights $ $ Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $ 945 , with a valuation allowance of $ 439 at March 31, 2016. The Company recorded a charge of $ 125 to provision expense associated with these loans for the three months ended March 31, 2016. The Company recorded a charge of $ 129 to provision expense associated with these loans for the three months ended March 31, 2015. At December 31, 2015, impaired loans had a gross carrying amount of $2 ,393 with a valuation allowance of $ 1,253 . A breakdown of these loans by portfolio class at March 31, 2016 is as follows: Gross Valuation Balance Allowance Net Commercial and industrial $ $ $ Other real estate Ending Balance $ $ $ Impaired tranches of servicing rights were carried at a fair value of $ 474 , which is made up of the gross outstanding balance of $ 674 net of a valuation allowance of $2 00 . No change occurred in the valuation allowance in the first quarters of 2016 or 2015. At December 31, 2015, impaired servicing rights were carried at a fair value of $ 531 which was made up of the gross outstanding balance of $ 731 , net of a valuation allowance of $200 . The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2016 and December 31, 2015. Impaired commercial loans, commercial real estate loans, and other real estate owned that are deemed collateral dependent are valued based on the fair value of the underlying collateral. These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the collateral. The fair value of the mortgage servicing rights is valued based on present value of future cash flows to be received taking into account the coupon rate on the mortgage as well as estimated prepayment speeds. Fair Value Valuation Unobservable Range/ March 31, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales % % Avg Other real estate Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property % - 20 % $ % Avg Mortgage servicing rights $ Cash flow analysis Discount rate % Fair Value Valuation Unobservable Range/ December 31, 2015 (in thousands) Technique(s) Input(s) Average Impaired Loans: Farm real estate $ Sales comparison approach Adjustment for differences between comparable sales % % Avg Other Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property % - 20 % $ % Avg Mortgage servicing rights $ Cash flow analysis Discount rate % The carrying amounts and estimated fair values of financial instruments, not previously presented, is as follows: Carrying March 31, 2016 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ $ $ $ $ Interest bearing time deposits Loans including loans held for sale, net FHLB and other stock N/A Interest receivable Liabilities Deposits Other borrowings FHLB advances Interest payable Subordinated debentures Carrying December 31, 2015 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ $ $ $ $ Interest bearing time deposits Loans including loans held for sale, net FHLB and other stock N/A Interest receivable Liabilities Deposits Other borrowings FHLB advances Interest payable Subordinated debentures The difference between the loan balance included above and the amounts shown in Note 4 are the impaired loans discussed above. The methods and assumptions, not previously presented, used to estimate fair values are described as follows: (a) Cash and Cash Equivalents The carrying amounts of cash, short-term instruments, and interest bearing time deposits approximate fair values and are classified as either Level 1 or Level 2. Noninterest bearing deposits are Level 1 whereas interest bearing, due from bank accounts, and fed funds sold are Level 2. (b) FHLB and other stock It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. (c) Loans, Net Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. (d) Deposits The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate interest bearing deposits approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate interest bearing deposits are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. (e) Borrowings The fair values of the Company’s FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification. The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification. (f) Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.

REGULATORY CAPITAL

REGULATORY CAPITAL	3 Months Ended
	Mar. 31, 2016
REGULATORY CAPITAL
REGULATORY CAPITAL	NOTE 9 — REGULATORY CAPITAL Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by four ratios that are calculated according to the regulations. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures. The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity’s activities that are not part of the calculated ratios. On July 2, 2013, the Federal Reserve approved a final rule that establishes an integrated regulatory capital framework. The rule implements the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. In general, under the new rules, minimum requirements have increased for both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the new rules include a new minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. The rule also raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking organizations. The new rules also change the methodology for calculating risk-weighted assets to enhance risk sensitivity and became effective on January 1, 2015. Actual and required capital amounts and ratios are presented below: Required for To Be Actual Adequate Capital Well Capitalized March 31, 2016 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) % % % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets) Required for To Be Actual Adequate Capital Well Capitalized December 31, 2015 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ % % % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets) Management believes as of March 31, 2016, the Company and the Bank met all capital adequacy requirements to which they are subject to be considered well-capitalized. The Company is a source of additional financial strength to the Bank with its $19,800 in cash and its ability to downstream additional capital to the Bank.

INCOME TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2016
INCOME TAXES
INCOME TAXES	NOTE 10 — INCOME TAXES In accordance with ASC 740-270-50-1, Accounting for Interim Reporting, the provision for income taxes was recorded at March 31, 2016 and 2015 based on the current estimate of the effective annual rate. The effective tax rate for the first quarter of 2016 was 22.5% versus 18.6% for the same period 2015. The increase was due to the increase in pre-tax income in the first quarter of 2016 while tax exempt income remained relatively flat.

DERIVATIVES

DERIVATIVES	3 Months Ended
	Mar. 31, 2016
DERIVATIVES
DERIVATIVES	NOTE 11 — DERIVATIVES The Bank executes interest rate swaps with commercial banking customers to facilitate their risk management strategies. These derivative positions relate to transactions in which the Bank enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. The Bank agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Bank agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the customer to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Bank’s results of operations. The notional amounts of these interest rate swaps and the offsetting counterparty derivative instruments were $ 57.2 million at March 31, 2016 and $ 53.7 million at December 31, 2015. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Bank’s exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. There are provisions in the agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, the Bank minimizes credit risk through credit approvals, limits, and monitoring procedures. The fair value hedges are summarized below: March 31, 2016 December 31, 2015 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps $ $ $ $ Included in Other Liabilities: Interest Rate Swaps $ $ $ $ The effect of derivative instruments on the Consolidated Statement of Income is presented below: Three Months Ended March 31, 2016 2015 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ $

ACQUISITION

ACQUISITION	3 Months Ended
	Mar. 31, 2016
ACQUISITION
ACQUISITION	NOTE 12 – ACQUISITION On November 23, 2015, the Company entered into an Agreement and Plan of Merger with Cheviot Financial Corp., a Maryland corporation (“Cheviot”), pursuant to which Cheviot will merge with and into the Company, whereupon the separate corporate existence of Cheviot will cease and MainSource will survive. It is anticipated that immediately after the Merger, Cheviot Savings Bank, an Ohio-chartered savings and loan association and a wholly-owned subsidiary of Cheviot, will merge with and into MainSource Bank, an Indiana chartered commercial bank and wholly-owned subsidiary of the Company, with MainSource Bank as the surviving bank. Subject to the approval of Cheviot’s stockholders of the merger and other customary closing conditions, the parties anticipate completing the merger on May 20, 2016. At the effective time of the merger, stockholders of Cheviot will have the right to elect to receive either 0.6916 shares of the Company’s common stock or $15.00 in cash for each share of Cheviot common stock owned, subject to proration provisions specified in the Merger Agreement that provide for a targeted aggregate split of total consideration of 50% common stock and 50% cash. Based upon the November 20, 2015 closing price of $23.56 per share of the Company’s common stock, the transaction is valued at approximately $107.4 million. Cheviot Financial Corp is the holding company of Cheviot Savings Bank. Cheviot Savings Bank was founded in 1911 as an Ohio-chartered savings and loan association and reorganized into a two -tier mutual holding company in 2004. Cheviot now operates 12 full service offices spanning across Hamilton County. As of December 31, 2015, Cheviot had $57 2,000 of total assets, $3 76,171 of loans, $45 4,885 of deposits and total equity of $96, 469 . Two putative class action lawsuits were filed in the Court of Common Pleas, Hamilton, Ohio, Civil Division, challenging the proposed merger and naming as defendants Cheviot, its directors, and MainSource (collectively, the “defendants”). These actions are captioned: (1) Raymond J. Neiheisel v. Cheviot Financial Corp., et al. , Case No. A1600359 (filed January 15, 2016); and (2) Stephen Bushansky v. Steven Hausfeld, et al. , Case No. A1600936 (filed February 16, 2016) (together, the “Actions”). On February 29, 2016, each plaintiff filed an amended complaint. On March 24, 2016, the court consolidated the actions under Raymond J. Neiheisel v. Cheviot Financial Corp., et al. , Case No. A1600359 (collectively, the “Actions”). The amended consolidated complaint alleges, among other things, that the directors of Cheviot breached their fiduciary duties of due care, independence, good faith and fair dealing to the stockholders of Cheviot, that the consideration to be received by the stockholders is inadequate and undervalues Cheviot, that the Merger Agreement includes improper deal-protection devices that purportedly lock up the Merger and may operate to prevent other bidders from making successful competing offers for Cheviot, that the deal protection devices unreasonably inhibit the ability of the directors of Cheviot to act with respect to investigating and pursuing superior proposals and alternatives and that the Merger Agreement involves conflicts of interest. The complaint further alleges that Cheviot and MainSource aided and abetted the alleged breaches of fiduciary duty by the directors of Cheviot. The amended consolidated complaint also alleges that the registration statement on Form S-4, initially filed with the Securities and Exchange Commission (the “SEC”) on February 11, 2016 in connection with the Merger, provides materially misleading and incomplete information rendering the stockholders of Cheviot unable to make an informed decision with respect to the Merger. On April 21, 2016, defendants and lead plaintiffs entered into a memorandum of understanding (“MOU”), which provides for the settlement of the Actions. The settlement contemplated by the MOU is subject to confirmatory discovery and customary conditions, including court approval following notice to Cheviot’s stockholders. If the settlement is finally approved by the court, it will resolve and release all claims by stockholders of Cheviot challenging any aspect of the merger, the merger agreement, and any disclosure made in connection therewith, pursuant to terms that will be disclosed to stockholders prior to final approval of the settlement. The Company does not anticipate a material financial impact as a result of the actions or MOU.

BRANCH CLOSURES

BRANCH CLOSURES	3 Months Ended
	Mar. 31, 2016
BRANCH CLOSURES
BRANCH CLOSURES	NOTE 13 – BRANCH CLOSURES In the fourth quarter of 2015, the Company announced that it would be closing the following branches in the second quarter of 2016: one of two branches in the following cities in Indiana – Rushville, New Castle , and Crawfordsville , Indiana and its branch in Bourbonnais , Illinois . The Company does not anticipate losing many deposit accounts as a resul t of these closings as it will still have a branch presence in these cities. Included in the operating results of 2015 are $175 of impairment costs for the affected properties and $75 of severance costs. These branches were closed on April 1, 2016.

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2016
STOCK PLANS AND STOCK BASED COMPENSATION
Summary of stock option activity	Three Months Ended March 31, 2016 Weighted Average Exercise Options (restated for stock dividends and splits) Shares Price Outstanding, beginning of year $ Granted — — Exercised Forfeited or expired Outstanding at end of year $ Exercisable at year end $ Fully vested and expected to vest $
Schedule of details of stock options outstanding	March 31, December 31, 2016 2015 Stock options vested and currently exercisable: Number Weighted average exercise price $ $ Aggregate intrinsic value $ $ Weighted average remaining life (in years)
Schedule of unrecognized stock option compensation expense related to unvested awards	Year (in thousands) April 2016 - December 2016 $ 2017
Summary of changes in the nonvested shares	Weighted Average Restricted Grant Date Shares Fair Value Nonvested at January 1, 2016 $ Granted Vested Forfeited — — Nonvested at March 31, 2016 $
Summary of executive's payout percentage from the LTIP upon achievement of certain performance levels	Performance Payout Threshold % Target % Superior %
Schedule of executive's eligibility for payout of shares determined by certain measures	Evaluated Performance Measure Weight vs. Return on Assets % Peer Total Shareholder Return % Peer Earnings Per Share % Goal
Schedule of shares awarded by quarter	Quarter Shares Price per Share 2015 2Q $ 2015 4Q 2016 1Q

SECURITIES (Tables)

SECURITIES (Tables)	3 Months Ended
	Mar. 31, 2016
SECURITIES
Schedule of amortized cost and fair value of securities available for sale and related unrealized gains/losses recognized in accumulated other comprehensive income	Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of March 31, 2016 Available for Sale U. S. government agency $ $ $ — $ State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) — Collateralized mortgage obligations (Government Sponsored Entity) Equity securities — — Other securities — — Total available for sale $ $ $ $ Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of December 31, 2015 Available for Sale U. S. government agency $ $ $ — $ State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) Collateralized mortgage obligations (Government Sponsored Entity) Equity securities — — Other securities — — Total available for sale $ $ $ $
Schedule of contractual maturities of securities	Available for Sale Amortized Cost Fair Value Within one year $ $ One through five years Six through ten years After ten years Mortgage-backed securities-residential (Government Sponsored Entity) Collateralized mortgage obligations (Government Sponsored Entity) Equity securities Total available for sale securities $ $
Schedule of securities in a continuous unrealized loss position with unrealized losses presented by length of time	Less than 12 months 12 months or longer Total March 31, 2016 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal Mortgage-backed securities-residential (Government Sponsored Entity) — — — — — — Collateralized mortgage obligations (Government Sponsored Entity) — — Other securities — — — — — — Total temporarily impaired $ $ $ $ $ $ Less than 12 months 12 months or longer Total December 31, 2015 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal $ Mortgage-backed securities-residential (Government Sponsored Entity) — — Collateralized mortgage obligations (Government Sponsored Entity) Other securities — — — — — — Total temporarily impaired $ $ $ $ $ $

LOANS AND ALLOWANCE (Tables)

LOANS AND ALLOWANCE (Tables)	3 Months Ended
	Mar. 31, 2016
LOANS AND ALLOWANCE FOR LOAN LOSSES
Schedule of loans	March 31, December 31, 2016 2015 Commercial Commercial and industrial $ $ Agricultural Commercial Real Estate Farm Hotel Construction and development Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans Allowance for loan losses Net loans $ $
Schedule of loans acquired through purchase	March 31, December 31, 2016 2015 Commercial and industrial $ $ Construction and development Other real estate 1-4 family Home equity Direct $ $
Schedule of activity in the allowance for loan losses	Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, March 31 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense — Losses charged off Recoveries Balance, March 31 $ $ $ $ $
Schedule of balance in the allowance for loan losses and the recorded investment by portfolio segment and impairment method	Commercial March 31, 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ $ $ $ — $ Ending Balance collectively evaluated for impairment Total ending allowance balance $ $ $ $ $ Loans Ending Balance individually evaluated for impairment $ $ $ $ $ Ending Balance collectively evaluated for impairment Total ending loan balance excludes $6,228 of accrued interest $ $ $ $ $ Commercial December 31, 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ $ $ $ — $ Ending Balance collectively evaluated for impairment Total ending allowance balance $ $ $ $ $ Loans Ending Balance individually evaluated for impairment $ $ $ $ $ Ending Balance collectively evaluated for impairment Total ending loan balance excludes $5,878 of accrued interest $ $ $ $ $
Schedule of loans individually evaluated for impairment by class of loans	Allowance Unpaid for Loan Principal Recorded Losses March 31, 2016 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ $ $ Agricultural — — — Commercial Real Estate Farm — — — Hotel — — — Construction and development — — — Other Residential 1-4 Family Home Equity Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded With no related allowance recorded Commercial Commercial and industrial $ $ $ — Agricultural — Commercial Real Estate Farm — Hotel — — — Construction and development — Other — Residential 1-4 Family — Home Equity — Consumer Direct — Indirect — Subtotal — impaired with no allowance recorded — Total impaired loans $ $ $ Allowance Unpaid for Loan Principal Recorded Losses December 31, 2015 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ $ $ Agricultural — — — Commercial Real Estate Farm — — — Hotel — — — Construction and development — — — Other Residential 1-4 Family Home Equity Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded With no related allowance recorded Commercial Commercial and industrial $ $ $ — Agricultural — Commercial Real Estate Farm — Hotel — — — Construction and development — Other — Residential 1-4 Family — Home Equity — Consumer Direct — Indirect — — — Subtotal — impaired with no allowance recorded — Total impaired loans $ $ $
Schedule of average balance of impaired loans and interest income and cash basis interest recognized	The following tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending March 31, 2016 and March 31, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended March 31, 2016 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ $ $ Agricultural — — Commercial Real Estate Farm — — Hotel — — — Construction and development — — Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans $ $ $ Average Interest Cash Basis Balance Income Income Three months ended March 31, 2015 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ $ $ Agricultural — — Commercial Real Estate Farm Hotel — — Construction and development Other Residential 1-4 family Home equity Consumer Direct Indirect Total loans $ $ $
Schedule of recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans	Past due over 90 days and Non-accrual still accruing March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 Commercial Commercial and industrial $ $ $ — $ — Agricultural — — Commercial Real Estate Farm — — Hotel — — — — Construction and development — — Other — — Residential 1-4 Family — — Home Equity — — Consumer Direct — — Indirect — — — Total $ $ $ — $ —
Schedule of aging of the recorded investment in past due loans	Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not March 31, 2016 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ $ $ $ $ $ Agricultural — Commercial Real Estate Farm — Hotel — — — — Construction and development — Other Residential 1-4 Family Home Equity Consumer Direct — Indirect — — Total — excludes $6,228 of accrued interest $ $ $ $ $ $ Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not December 31, 2015 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ $ $ — $ $ $ Agricultural — Commercial Real Estate Farm — — Hotel — — Construction and development — Other Residential 1-4 Family Home Equity Consumer Direct Indirect — — Total — excludes $5,878 of accrued interest $ $ $ $ $ $
Schedule of loans by class modified as troubled debt restructurings	Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2016 Number of Loans Investment Investment Residential Home Equity Total $ $
Schedule of loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification	There were no new TDRs that occurred during the three month period ending March 31, 2015. There were no troubled debt restructurings where there was a payment default within twelve months following the modification during the three month periods ending March 31, 2016 or 2015.
Schedule of risk category of loans by class of loans	As of March 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special March 31, 2016 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ $ $ $ Agricultural — — — Commercial Real Estate Farm Hotel — — Construction and development — Other Total $ $ $ $ At December 31, 2015, the risk category of loans by class of loans was as follows: Special December 31, 2015 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ $ $ $ Agricultural — — — Commercial Real Estate Farm Hotel — — — Construction and development — Other Total $ $ $ $
Schedule of performing/non performing loans by category of loans	March 31, 2016 Performing Watch Substandard Commercial Commercial and industrial $ $ $ Agricultural — Commercial Real Estate Construction and development — Farm — Other Total $ $ $ December 31, 2015 Performing Watch Substandard Commercial Commercial and industrial $ $ — $ Agricultural — Commercial Real Estate Construction and development Farm — — Other Total $ $ $ March 31, 2016 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ March 31, 2016 Performing Substandard Loss Consumer Direct $ $ $ Indirect — Total $ $ $ December 31, 2015 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ December 31, 2015 Performing Substandard Loss Consumer Direct $ $ $ Indirect — — Total $ $ $

OTHER REAL ESTATE OWNED (Tables

OTHER REAL ESTATE OWNED (Tables)	3 Months Ended
	Mar. 31, 2016
OTHER REAL ESTATE OWNED
Schedule of activity in other real estate owned	Three months ended March 31, 2016 2015 Beginning Balance $ $ Transfer to other real estate owned Sale — Out of other real estate owned Write-down — Ending Balance $ $
Schedule of activity in the valuation account for other real estate	Three months ended March 31, 2016 2015 Beginning Balance — January 1 $ $ Impairments during year — Recovery on impairments — — Reductions — Ending Balance — March 31 $ $
Schedule of net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets	Three months ended March 31, 2016 2015 Write-downs $ $ — Losses/(gains)on sales Net loss/(gain) $ $ Operating expenses $ $

DEPOSITS & REPURCHASE AGREEME25

DEPOSITS & REPURCHASE AGREEMENTS (Tables)	3 Months Ended
	Mar. 31, 2016
DEPOSITS & REPURCHASE AGREEMENTS
Schedule of deposits	March 31, December 31, 2016 2015 Non-interest-bearing demand $ $ Interest-bearing demand Savings Certificates of deposit of $250 or more Other certificates and time deposits Total deposits $ $

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2016
EARNINGS PER SHARE
Schedule of earnings per common share (EPS) computation	March 31, 2016 March 31, 2015 Net Average Share Net Average Share Three Months Ended March 31, 2016 Income Shares Amount Income Shares Amount Basic Earnings Per Common Share Net income $ $ $ $ Effect of dilutive warrants Effect of dilutive stock options Diluted Earnings Per Common Share Net income attributable to common shareholders and assumed conversions $ $ $ $

FAIR VALUE (Tables)

FAIR VALUE (Tables)	3 Months Ended
	Mar. 31, 2016
FAIR VALUE.
Schedule of assets and liabilities measured at fair value on a recurring basis	Fair Value Measurements at March 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ $ — $ $ — States and municipal — Mortgage-backed securities — residential — Government Sponsored Entity — — Collateralized mortgage obligations — Government Sponsored Entity — — Equity securities — — Other securities — — Total investment securities available-for-sale $ $ $ $ Mortgage banking derivatives $ — $ — Interest rate swap asset $ — $ — Interest rate swap liability $ — $ — Fair Value Measurements at December 31, 2015 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ $ — $ $ — States and municipal — Mortgage-backed securities — residential — Government Sponsored Entity — — Collateralized mortgage obligations — Government Sponsored Entity — — Equity securities — — Other securities — — Total investment securities available-for-sale $ $ $ $ Mortgage banking derivative $ — $ — Interest rate swap asset $ — $ — Interest rate swap liability $ — $ —
Schedule of reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)	Three months ended March 31: States and municipal 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income — Settlements Ending balance, March 31 $ $ Other securities 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Ending balance, March 31 $ $
Schedule of assets and liabilities measured at fair value on a non-recurring basis	Fair Value Measurements at March 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable March 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Other real estate Total impaired loans $ $ Impaired servicing rights $ $ Fair Value Measurements at December 31, 2015 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable December 31, Identical Assets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Other real estate Total impaired loans $ $ Impaired servicing rights $ $
Schedule of breakdown of impaired loans by portfolio class	Gross Valuation Balance Allowance Net Commercial and industrial $ $ $ Other real estate Ending Balance $ $ $
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis	Fair Value Valuation Unobservable Range/ March 31, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales % % Avg Other real estate Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property % - 20 % $ % Avg Mortgage servicing rights $ Cash flow analysis Discount rate % Fair Value Valuation Unobservable Range/ December 31, 2015 (in thousands) Technique(s) Input(s) Average Impaired Loans: Farm real estate $ Sales comparison approach Adjustment for differences between comparable sales % % Avg Other Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property % - 20 % $ % Avg Mortgage servicing rights $ Cash flow analysis Discount rate %
Schedule of carrying amounts and estimated fair values of financial instruments	Carrying March 31, 2016 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ $ $ $ $ Interest bearing time deposits Loans including loans held for sale, net FHLB and other stock N/A Interest receivable Liabilities Deposits Other borrowings FHLB advances Interest payable Subordinated debentures Carrying December 31, 2015 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ $ $ $ $ Interest bearing time deposits Loans including loans held for sale, net FHLB and other stock N/A Interest receivable Liabilities Deposits Other borrowings FHLB advances Interest payable Subordinated debentures

REGULATORY CAPITAL (Tables)

REGULATORY CAPITAL (Tables)	3 Months Ended
	Mar. 31, 2016
REGULATORY CAPITAL
Schedule of actual and required capital amounts and ratios	Required for To Be Actual Adequate Capital Well Capitalized March 31, 2016 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) % % % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets) Required for To Be Actual Adequate Capital Well Capitalized December 31, 2015 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ % % % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets)

DERIVATIVES (Tables)

DERIVATIVES (Tables)	3 Months Ended
	Mar. 31, 2016
DERIVATIVES
Schedule of fair value hedges	March 31, 2016 December 31, 2015 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps $ $ $ $ Included in Other Liabilities: Interest Rate Swaps $ $ $ $
Summary of the effect of derivative instruments on the Consolidated Statement of Income	Three Months Ended March 31, 2016 2015 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ $

STOCK PLANS AND STOCK BASED COM

STOCK PLANS AND STOCK BASED COMPENSATION - Stock Incentive Plans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Jan. 19, 2015	Apr. 26, 2007
Stock options
Unrecognized stock option compensation expense related to unvested awards
April 2016 - December 2016	$ 64
2,017	$ 35
2015 Plan
Stock-based compensation
Number of shares reserved for issuance under the plan		1,000,000
2007 Plan
Stock-based compensation
Number of shares reserved for issuance under the plan			650,000

STOCK PLANS AND STOCK BASED C31

STOCK PLANS AND STOCK BASED COMPENSATION - Activity in Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Shares
Outstanding, beginning of year (in shares)	310,665
Exercised (in shares)	(28,075)
Forfeited or expired (in shares)	(2,625)
Outstanding at end of year	279,965		310,665
Exercisable at year end (in shares)	238,715
Fully vested and expected to vest(in shares)	277,754
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share)	$ 12.83
Exercised (in dollars per share)	15.20
Forfeited or expired (in dollars per share)	18.04
Outstanding, period end (in dollars per share)	12.54		$ 12.83
Exercisable at year end (in dollars per share)	12.10
Fully vested and expected to vest (in dollars per share)	$ 12.52
Stock options vested and currently exercisable
Number (in shares)	238,715
Weighted average exercise price (in dollars per share)	$ 12.10
Stock options
Shares
Granted (in shares)	0	0
Exercisable at year end (in shares)	238,715		269,415
Weighted Average Exercise Price
Exercisable at year end (in dollars per share)	$ 12.10		$ 12.48
Stock options vested and currently exercisable
Number (in shares)	238,715		269,415
Weighted average exercise price (in dollars per share)	$ 12.10		$ 12.48
Aggregate intrinsic value	$ 2,145		$ 2,801
Weighted average remaining liffe	3 years 8 months 12 days		3 years 7 months 6 days

STOCK PLANS AND STOCK BASED C32

STOCK PLANS AND STOCK BASED COMPENSATION - Intrinsic Value of Stock Options and Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Additional disclosures
Compensation expense	$ 89	$ 90
Stock options
Additional disclosures
Compensation expense	22	43
Performance units | Executive officers
Additional disclosures
Compensation expense	$ 26	$ 0

STOCK PLANS AND STOCK BASED C33

STOCK PLANS AND STOCK BASED COMPENSATION - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015
Stock-based compensation
Closing price of common stock (in dollars per share)	$ 19.89	$ 19.89	$ 19.89
Shares of common stock granted	358,000	1,341,000	14,084,000
Shares
Granted (in shares)	358,000	1,341,000	14,084,000
Additional disclosures
Compensation expense	$ 89			$ 90
Restricted stock
Stock-based compensation
Shares of common stock granted	24,152
Shares
Nonvested at the beginning of the period (in shares)	101,631
Granted (in shares)	24,152
Vested (in shares)	1,000
Nonvested at the end of the period (in shares)	124,783	101,631
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period (in dollars per share)	$ 16.57
Granted (in dollars per share)	21.47
Vested (in dollars per share)	13.67
Nonvested at the end of the period (in dollars per share)	$ 17.54	$ 16.57
Restricted stock | 2007 Plan
Additional disclosures
Unrecognized compensation costs	$ 908
Compensation expense	$ 149			$ 152
Weighted-average period of expected recognition of the cost	1 year 10 months 24 days
Restricted stock | Executive officers and other employees [Member]
Stock-based compensation
Vesting percentage of stock awards on third anniversary of grant date	100.00%
Shares of common stock granted	24,152			11,171
Shares
Granted (in shares)	24,152			11,171
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 21.47			$ 19.57
Performance units | Executive officers
Stock-based compensation
Shares of common stock granted	16,152			11,171
Shares
Granted (in shares)	16,152			11,171
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 21.41			$ 19.57
Additional disclosures
Unrecognized compensation costs	$ 557
Compensation expense	$ 26			$ 0

STOCK PLANS AND STOCK BASED C34

STOCK PLANS AND STOCK BASED COMPENSATION - Performance Measures and Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015
Additional disclosures
Shares of common stock granted	358,000	1,341,000	14,084,000
Compensation expense	$ 89			$ 90
Performance units | Executive officers
Performance Measures
Return on assets criteria (as a percent)	50.00%
Total shareholder return criteria (as a percent)	25.00%
Earnings per share criteria (as a percent)	25.00%
Additional disclosures
Vesting period	3 years
Shares of common stock granted	16,152			11,171
Compensation expense	$ 26			$ 0
Threshold | Performance units | Executive officers
Performance Measures
Performance levels (as a percent)	0.00%
Target | Performance units | Executive officers
Performance Measures
Performance levels (as a percent)	100.00%
Superior | Performance units | Executive officers
Performance Measures
Performance levels (as a percent)	150.00%

STOCK PLANS AND STOCK BASED C35

STOCK PLANS AND STOCK BASED COMPENSATION - Other Expense and Stock Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015
Additional disclosures
Shares of common stock granted	358,000	1,341,000	14,084,000
Price Per Share	$ 19.89	$ 19.89	$ 19.89
Compensation expense	$ 89			$ 90
Restricted stock
Additional disclosures
Shares of common stock granted	24,152
Restricted stock | Directors
Additional disclosures
Quarterly vesting percentage of stock awards	25.00%

SECURITIES - Fair Value and Rel

SECURITIES - Fair Value and Related Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Available for sale securities
Amortized Cost	$ 908,055	$ 905,857
Gross Unrealized Gains	29,980	21,972
Gross Unrealized Losses	(316)	(2,550)
Fair Value	937,719	925,279
U. S. government agency
Available for sale securities
Amortized Cost	473	499
Gross Unrealized Gains	13	5
Fair Value	486	504
State and municipal
Available for sale securities
Amortized Cost	329,661	332,999
Gross Unrealized Gains	19,779	17,802
Gross Unrealized Losses	(35)	(68)
Fair Value	349,405	350,733
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for sale securities
Amortized Cost	348,661	332,525
Gross Unrealized Gains	6,337	2,199
Gross Unrealized Losses		(644)
Fair Value	354,998	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Available for sale securities
Amortized Cost	218,048	228,621
Gross Unrealized Gains	3,851	1,966
Gross Unrealized Losses	(281)	(1,838)
Fair Value	221,618	228,749
Equity securities
Available for sale securities
Amortized Cost	4,689	4,689
Fair Value	4,689	4,689
Other securities
Available for sale securities
Amortized Cost	6,523	6,524
Fair Value	$ 6,523	$ 6,524

SECURITIES - Contractual Maturi

SECURITIES - Contractual Maturities of Securities Available for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Available for Sale, Amortized Cost
Within one year	$ 13,327
One through five years	50,056
Six through ten years	129,180
After ten years	144,094
Amortized Cost, Equity securities	4,689
Amortized Cost	908,055	$ 905,857
Available for Sale, Fair Value
Within one year	13,451
One through five years	52,486
Six through ten years	137,543
After ten years	152,934
Equity securities	4,689
Fair Value	937,719	925,279
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	348,661
Amortized Cost	348,661	332,525
Available for Sale, Fair Value
Debt securities without single maturity date	354,998
Fair Value	354,998	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	218,048
Amortized Cost	218,048	228,621
Available for Sale, Fair Value
Debt securities without single maturity date	221,618
Fair Value	$ 221,618	$ 228,749

SECURITIES - Additional Informa

SECURITIES - Additional Information - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Available for sale securities
Gross proceeds from sales of securities	$ 4,235	$ 38,842
Gross gains realized on sales	17	252
Gross losses realized on sales	$ 0	$ 0

SECURITIES - Securities in an U

SECURITIES - Securities in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value	$ 4,428	$ 227,076
Less than 12 months, Unrealized Losses	(24)	(1,268)
12 months or longer, Fair Value	42,867	53,428
12 months or longer, Unrealized Losses	(292)	(1,282)
Total Fair Value	47,295	280,504
Total Unrealized Losses	(316)	(2,550)
State and municipal
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value	4,428
Less than 12 months, Unrealized Losses	(24)
12 months or longer, Fair Value	622
12 months or longer, Unrealized Losses	(11)
Total Fair Value	5,050
Total Unrealized Losses	(35)
Mortgage-backed securities-residential (Government Sponsored Entity)
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value		4,802
Less than 12 months, Unrealized Losses		(33)
12 months or longer, Fair Value		1,367
12 months or longer, Unrealized Losses		(35)
Total Fair Value		6,169
Total Unrealized Losses		(68)
Collateralized mortgage obligations (Government Sponsored Entity)
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value		168,950
Less than 12 months, Unrealized Losses		(644)
12 months or longer, Fair Value	42,245
12 months or longer, Unrealized Losses	(281)
Total Fair Value	42,245	168,950
Total Unrealized Losses	$ (281)	(644)
Other securities
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value		53,324
Less than 12 months, Unrealized Losses		(591)
12 months or longer, Fair Value		52,061
12 months or longer, Unrealized Losses		(1,247)
Total Fair Value		105,385
Total Unrealized Losses		$ (1,838)

SECURITIES - Other-Than-Tempora

SECURITIES - Other-Than-Temporary Impairment and Other Disclosures (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)item	Dec. 31, 2015USD ($)
Other-Than-Temporary-Impairment
Number of general segments segregated in investment securities portfolio | item	2
Number of security in the portfolio | item	966
Number of portfolio security in unrealized loss position | item	19
Market value of unrealized loss	$ 47,295	$ 280,504
Unrealized losses of collateralized mortgage obligation securities	316	2,550
State and municipal
Other-Than-Temporary-Impairment
Market value of unrealized loss	5,050
Unrealized losses of collateralized mortgage obligation securities	35
Collateralized mortgage obligations (Government Sponsored Entity)
Other-Than-Temporary-Impairment
Market value of unrealized loss	42,245	168,950
Unrealized losses of collateralized mortgage obligation securities	281	$ 644
Other than temporary impairment on available for sale securities	$ 0

LOANS AND ALLOWANCE FOR LOAN LO

LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans and Allowance For Loan Losses - (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Loans and allowance
Total loans	$ 2,159,997	$ 2,155,392
Allowance for loan losses	(21,079)	(22,020)	$ (22,638)	$ (23,250)
Net loans	2,138,918	2,133,372
Financing receivables	149,894	163,764
Remaining discount on financing receivables	1,973	2,198
Commercial and industrial
Loans and allowance
Financing receivables	7,957	9,406
Construction and development
Loans and allowance
Financing receivables	3,356	3,666
Other real estate
Loans and allowance
Financing receivables	74,155	81,831
1-4 family
Loans and allowance
Financing receivables	44,526	46,967
Home equity
Loans and allowance
Financing receivables	17,353	19,076
Direct
Loans and allowance
Financing receivables	2,547	2,818
Commercial
Loans and allowance
Total loans	440,437	445,664
Allowance for loan losses	(5,989)	(6,511)	(3,675)	(2,977)
Commercial | Commercial and industrial
Loans and allowance
Total loans	375,427	380,960
Commercial | Agricultural
Loans and allowance
Total loans	65,010	64,704
Commercial Real Estate
Loans and allowance
Total loans	934,917	925,884
Allowance for loan losses	(9,668)	(10,702)	(14,718)	(15,605)
Commercial Real Estate | Farm
Loans and allowance
Total loans	106,825	97,916
Commercial Real Estate | Hotel
Loans and allowance
Total loans	76,898	72,193
Commercial Real Estate | Construction and development
Loans and allowance
Total loans	58,076	77,394
Commercial Real Estate | Other
Loans and allowance
Total loans	693,118	678,381
Residential
Loans and allowance
Total loans	726,426	727,073
Allowance for loan losses	(4,553)	(3,859)	(3,328)	(3,501)
Residential | 1-4 family
Loans and allowance
Total loans	441,446	438,808
Residential | Home equity
Loans and allowance
Total loans	284,980	288,265
Consumer
Loans and allowance
Total loans	58,217	56,771
Allowance for loan losses	(869)	(948)	$ (917)	$ (1,167)
Consumer | Direct
Loans and allowance
Total loans	57,779	56,312
Consumer | Indirect
Loans and allowance
Total loans	$ 438	$ 459

LOANS AND ALLOWANCE FOR LOAN 42

LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for Loan Losses and Recorded Investment By Portfolio Segment - (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Mar. 31, 2016	Dec. 31, 2015
Allowance for loan losses
Balance at the beginning of the period	$ 22,020	$ 23,250	$ 23,250
Provision charged to expense	500
Losses charged off	(2,442)	(1,356)
Recoveries	1,001	744
Balance at the end of the period	21,079	22,638	22,020
Allowance for loan losses
Ending Balance individually evaluated for impairment				$ 745	$ 1,429
Ending Balance collectively evaluated for impairment				20,334	20,591
Total ending allowance balance	22,020	23,250	23,250	21,079	22,020
Loans
Ending Balance individually evaluated for impairment				17,334	18,989
Ending Balance collectively evaluated for impairment				2,142,663	2,136,403
Total ending loan balance excluding accrued interest				2,159,997	2,155,392
Accrued interest				6,228	5,878
Allowance that includes a probability of default for subject loans	1,347		1,583
Commercial
Allowance for loan losses
Balance at the beginning of the period	6,511	2,977	2,977
Provision charged to expense	(110)	773
Losses charged off	(562)	(107)
Recoveries	150	32
Balance at the end of the period	5,989	3,675	6,511
Allowance for loan losses
Ending Balance individually evaluated for impairment				117	92
Ending Balance collectively evaluated for impairment				5,872	6,419
Total ending allowance balance	6,511	2,977	2,977	5,989	6,511
Loans
Ending Balance individually evaluated for impairment				764	812
Ending Balance collectively evaluated for impairment				439,673	444,852
Total ending loan balance excluding accrued interest				440,437	445,664
Commercial Real Estate
Allowance for loan losses
Balance at the beginning of the period	10,702	15,605	15,605
Provision charged to expense	(587)	(1,005)
Losses charged off	(503)	(58)
Recoveries	56	176
Balance at the end of the period	9,668	14,718	10,702
Allowance for loan losses
Ending Balance individually evaluated for impairment				460	1,166
Ending Balance collectively evaluated for impairment				9,208	9,536
Total ending allowance balance	10,702	15,605	15,605	9,668	10,702
Loans
Ending Balance individually evaluated for impairment				7,553	8,909
Ending Balance collectively evaluated for impairment				927,364	916,975
Total ending loan balance excluding accrued interest				934,917	925,884
Residential
Allowance for loan losses
Balance at the beginning of the period	3,859	3,501	3,501
Provision charged to expense	1,084	173
Losses charged off	(503)	(494)
Recoveries	113	148
Balance at the end of the period	4,553	3,328	3,859
Allowance for loan losses
Ending Balance individually evaluated for impairment				168	171
Ending Balance collectively evaluated for impairment				4,385	3,688
Total ending allowance balance	3,859	3,501	3,501	4,553	3,859
Loans
Ending Balance individually evaluated for impairment				8,897	9,155
Ending Balance collectively evaluated for impairment				717,529	717,918
Total ending loan balance excluding accrued interest				726,426	727,073
Consumer
Allowance for loan losses
Balance at the beginning of the period	948	1,167	1,167
Provision charged to expense	113	59
Losses charged off	(874)	(697)
Recoveries	682	388
Balance at the end of the period	869	917	948
Allowance for loan losses
Ending Balance collectively evaluated for impairment				869	948
Total ending allowance balance	$ 948	$ 1,167	$ 1,167	869	948
Loans
Ending Balance individually evaluated for impairment				120	113
Ending Balance collectively evaluated for impairment				58,097	56,658
Total ending loan balance excluding accrued interest				$ 58,217	$ 56,771

LOANS AND ALLOWANCE FOR LOAN 43

LOANS AND ALLOWANCE FOR LOAN LOSSES - Nonperforming Loans - (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
LOANS AND ALLOWANCE FOR LOAN LOSSES
Troubled debt restructurings	$ 7,805	$ 8,389
Non-accrual loans	11,330	12,843
Total ending loan balance excluding accrued interest	$ 2,159,997	$ 2,155,392

LOANS AND ALLOWANCE FOR LOAN 44

LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan Impairment - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Loans individually evaluated for impairment and average balance of impaired loans
Performing troubled debt restructurings excluded as allowed	$ 2,717		$ 2,760
Unpaid Principal Balance
With an allowance recorded	2,883		4,146
With no related allowance recorded	14,602		15,230
Total impaired loans	17,485		19,376
Recorded Investment
With an allowance recorded	2,671		3,981
With no related allowance recorded	11,946		12,248
Total impaired loans	14,617		16,229
Allowance for Loan Losses Allocated
With an allowance recorded	745		1,429
Total impaired loans	745		1,429
Average recorded investment
Average Balance	15,423	$ 23,283
Interest Income Recognized
Total impaired loans - interest income recognized	59	110
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	59	110
Commercial and industrial
Average recorded investment
Average Balance	781	834
Interest Income Recognized
Total impaired loans - interest income recognized	13	2
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	13	2
Agricultural
Average recorded investment
Average Balance	7	75
Farm
Average recorded investment
Average Balance	302	444
Interest Income Recognized
Total impaired loans - interest income recognized		4
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized		4
Hotel
Average recorded investment
Average Balance		7,126
Construction and development
Average recorded investment
Average Balance	185	38
Interest Income Recognized
Total impaired loans - interest income recognized		47
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized		47
Other
Average recorded investment
Average Balance	5,006	5,210
Interest Income Recognized
Total impaired loans - interest income recognized	26	25
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	26	25
1-4 family
Average recorded investment
Average Balance	6,568	7,712
Interest Income Recognized
Total impaired loans - interest income recognized	10	21
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	10	21
Home equity
Average recorded investment
Average Balance	2,458	1,734
Interest Income Recognized
Total impaired loans - interest income recognized	5	4
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	5	4
Direct
Average recorded investment
Average Balance	115	106
Interest Income Recognized
Total impaired loans - interest income recognized	4	4
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	4	4
Indirect
Average recorded investment
Average Balance	1	4
Interest Income Recognized
Total impaired loans - interest income recognized	1	3
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	1	$ 3
Commercial
Allowance for Loan Losses Allocated
With an allowance recorded	117		92
Commercial | Commercial and industrial
Unpaid Principal Balance
With an allowance recorded	185		150
With no related allowance recorded	652		676
Recorded Investment
With an allowance recorded	185		150
With no related allowance recorded	571		655
Allowance for Loan Losses Allocated
With an allowance recorded	117		92
Commercial | Agricultural
Unpaid Principal Balance
With no related allowance recorded	7		7
Recorded Investment
With no related allowance recorded	7		7
Commercial | Farm
Unpaid Principal Balance
With no related allowance recorded	529
Recorded Investment
With no related allowance recorded	295
Commercial | Construction and development
Unpaid Principal Balance
With no related allowance recorded	243
Recorded Investment
With no related allowance recorded	185
Commercial | Other
Unpaid Principal Balance
With an allowance recorded	1,259
With no related allowance recorded	4,434
Recorded Investment
With an allowance recorded	1,132
With no related allowance recorded	3,225
Allowance for Loan Losses Allocated
With an allowance recorded	460
Commercial Real Estate
Allowance for Loan Losses Allocated
With an allowance recorded	460		1,166
Commercial Real Estate | Farm
Unpaid Principal Balance
With no related allowance recorded			496
Recorded Investment
With no related allowance recorded			309
Commercial Real Estate | Construction and development
Unpaid Principal Balance
With no related allowance recorded			189
Recorded Investment
With no related allowance recorded			186
Commercial Real Estate | Other
Unpaid Principal Balance
With an allowance recorded			2,480
With no related allowance recorded			4,429
Recorded Investment
With an allowance recorded			2,363
With no related allowance recorded			3,291
Allowance for Loan Losses Allocated
With an allowance recorded			1,166
Residential
Allowance for Loan Losses Allocated
With an allowance recorded	168		171
Residential | 1-4 family
Unpaid Principal Balance
With an allowance recorded	1,282		1,357
With no related allowance recorded	6,021		6,718
Recorded Investment
With an allowance recorded	1,230		1,309
With no related allowance recorded	5,206		5,391
Allowance for Loan Losses Allocated
With an allowance recorded	165		167
Residential | Home equity
Unpaid Principal Balance
With an allowance recorded	157		159
With no related allowance recorded	2,590		2,589
Recorded Investment
With an allowance recorded	124		159
With no related allowance recorded	2,337		2,296
Allowance for Loan Losses Allocated
With an allowance recorded	3		4
Residential | Direct
Unpaid Principal Balance
With no related allowance recorded	124
Recorded Investment
With no related allowance recorded	118
Residential | Indirect
Unpaid Principal Balance
With no related allowance recorded	2
Recorded Investment
With no related allowance recorded	$ 2
Consumer | Direct
Unpaid Principal Balance
With no related allowance recorded			126
Recorded Investment
With no related allowance recorded			$ 113

LOANS AND ALLOWANCE FOR LOAN 45

LOANS AND ALLOWANCE FOR LOAN LOSSES - Aging of the Recorded Investment in Past Due Loans - (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	$ 11,330	$ 12,843
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	2,159,997	2,155,392
30-59 Days Past Due	5,974	5,164
60-89 Days Past Due	981	2,597
Greater than 90 Days Past Due	5,973	7,092
Total Past Due	12,928	14,853
Loans Not Past Due	2,147,069	2,140,539
Accrued interest	6,228	5,878
Commercial
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	440,437	445,664
Commercial | Commercial and industrial
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	625	654
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	375,427	380,960
30-59 Days Past Due	1,283	93
60-89 Days Past Due	48
Greater than 90 Days Past Due	196	249
Total Past Due	1,527	342
Loans Not Past Due	373,900	380,618
Commercial | Agricultural
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	7	7
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	65,010	64,704
30-59 Days Past Due	63	20
Greater than 90 Days Past Due	8	7
Total Past Due	71	27
Loans Not Past Due	64,939	64,677
Commercial Real Estate
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	934,917	925,884
Commercial Real Estate | Farm
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	295	308
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	106,825	97,916
60-89 Days Past Due	6
Greater than 90 Days Past Due	184	119
Total Past Due	190	119
Loans Not Past Due	106,635	97,797
Commercial Real Estate | Hotel
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	76,898	72,193
60-89 Days Past Due		13
Total Past Due		13
Loans Not Past Due	76,898	72,180
Commercial Real Estate | Construction and development
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	143	144
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	58,076	77,394
30-59 Days Past Due	32
60-89 Days Past Due		67
Greater than 90 Days Past Due	126	144
Total Past Due	158	211
Loans Not Past Due	57,918	77,183
Commercial Real Estate | Other
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	3,469	4,791
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	693,118	678,381
30-59 Days Past Due	629	873
60-89 Days Past Due	370	102
Greater than 90 Days Past Due	1,756	2,601
Total Past Due	2,755	3,576
Loans Not Past Due	690,363	674,805
Residential
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	726,426	727,073
Residential | 1-4 family
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	5,056	5,211
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	441,446	438,808
30-59 Days Past Due	3,425	3,726
60-89 Days Past Due	385	1,904
Greater than 90 Days Past Due	2,564	2,771
Total Past Due	6,374	8,401
Loans Not Past Due	435,072	430,407
Residential | Home equity
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	1,638	1,639
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	284,980	288,265
30-59 Days Past Due	392	410
60-89 Days Past Due	172	446
Greater than 90 Days Past Due	1,094	1,133
Total Past Due	1,658	1,989
Loans Not Past Due	283,322	286,276
Consumer
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	95	89
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	58,217	56,771
Consumer | Direct
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	57,779	56,312
30-59 Days Past Due	150	40
60-89 Days Past Due		65
Greater than 90 Days Past Due	43	68
Total Past Due	193	173
Loans Not Past Due	57,586	56,139
Consumer | Indirect
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	2
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	438	459
30-59 Days Past Due		2
Greater than 90 Days Past Due	2
Total Past Due	2	2
Loans Not Past Due	$ 436	$ 457

LOANS AND ALLOWANCE FOR LOAN 46

LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructurings - (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)item	Dec. 31, 2015USD ($)
Troubled debt restructurings
Total of troubled debt restructurings	$ 7,805	$ 8,389
Allocated specific reserves	488	863
Amounts Company has committed to lend to customers with outstanding loans classified as troubled debt restructurings	$ 0	0
Loans by class modified as troubled debt restructurings
Number of Loans | item	4
Pre-Modification Outstanding Recorded Investment	$ 76
Post-Modification Outstanding Recorded Investment	$ 76
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Period of contractually past due loans under the modified terms, to be considered in payment default	90 days
Additional disclosures
Recorded investment in loans modified other than troubled debt restructurings	$ 983	$ 151
Residential | Home equity
Loans by class modified as troubled debt restructurings
Number of Loans | item	4
Pre-Modification Outstanding Recorded Investment	$ 76
Post-Modification Outstanding Recorded Investment	$ 76

LOANS AND ALLOWANCE FOR LOAN 47

LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk Categories of Loans by Class of Loans - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Risk category of loans
Loans	$ 2,159,997	$ 2,155,392
Pass
Risk category of loans
Loans	1,185,478	1,181,671
Special Mention
Risk category of loans
Loans	11,796	19,019
Substandard
Risk category of loans
Loans	15,116	7,157
Substandard Commercial
Risk category of loans
Loans		1,117
Non-accrual
Risk category of loans
Loans	3,482	4,787
Performing
Risk category of loans
Loans		157,628
Watch
Risk category of loans
Loans		169
Minimum
Risk category of loans
Credit relationships with an outstanding balance	$ 1,000
Minimum | Substandard
Risk category of loans
Period of loans past due	90 days
Minimum | Watch
Risk category of loans
Period of loans past due	60 days
Minimum | Loss
Risk category of loans
Period of loans past due	119 days
Maximum | Watch
Risk category of loans
Period of loans past due	89 days
Consumer loans not secured by 1-4 family residential real estate | Minimum | Substandard
Risk category of loans
Period of loans past due	60 days
Consumer loans not secured by 1-4 family residential real estate | Maximum | Substandard
Risk category of loans
Period of loans past due	119 days
Commercial
Risk category of loans
Loans	$ 440,437	445,664
Commercial | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial | Commercial and industrial
Risk category of loans
Loans	375,427	380,960
Commercial | Commercial and industrial | Pass
Risk category of loans
Loans	331,350	338,436
Commercial | Commercial and industrial | Special Mention
Risk category of loans
Loans	3,617	8,324
Commercial | Commercial and industrial | Substandard
Risk category of loans
Loans	6,550	636
Commercial | Commercial and industrial | Substandard Commercial
Risk category of loans
Loans	46	99
Commercial | Commercial and industrial | Non-accrual
Risk category of loans
Loans	579	555
Commercial | Commercial and industrial | Performing
Risk category of loans
Loans	33,272	32,910
Commercial | Commercial and industrial | Watch
Risk category of loans
Loans	13
Commercial | Agricultural
Risk category of loans
Loans	65,010	64,704
Commercial | Agricultural | Pass
Risk category of loans
Loans	58,598	58,253
Commercial | Agricultural | Substandard
Risk category of loans
Loans		7
Commercial | Agricultural | Substandard Commercial
Risk category of loans
Loans	7
Commercial | Agricultural | Performing
Risk category of loans
Loans	6,405	6,444
Commercial Real Estate
Risk category of loans
Loans	934,917	925,884
Commercial Real Estate | Substandard Commercial
Risk category of loans
Loans	1,054
Commercial Real Estate | Performing
Risk category of loans
Loans	158,284
Commercial Real Estate | Watch
Risk category of loans
Loans	144
Commercial Real Estate | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial Real Estate | Farm
Risk category of loans
Loans	106,825	97,916
Commercial Real Estate | Farm | Pass
Risk category of loans
Loans	86,009	75,924
Commercial Real Estate | Farm | Special Mention
Risk category of loans
Loans	241	328
Commercial Real Estate | Farm | Substandard
Risk category of loans
Loans	700	713
Commercial Real Estate | Farm | Non-accrual
Risk category of loans
Loans	295	308
Commercial Real Estate | Farm | Performing
Risk category of loans
Loans	19,574	20,643
Commercial Real Estate | Farm | Watch
Risk category of loans
Loans	6
Commercial Real Estate | Hotel
Risk category of loans
Loans	76,898	72,193
Commercial Real Estate | Hotel | Pass
Risk category of loans
Loans	76,607	72,193
Commercial Real Estate | Hotel | Substandard
Risk category of loans
Loans	291
Commercial Real Estate | Construction and development
Risk category of loans
Loans	58,076	77,394
Commercial Real Estate | Construction and development | Pass
Risk category of loans
Loans	40,003	60,246
Commercial Real Estate | Construction and development | Substandard
Risk category of loans
Loans	2,182	2,499
Commercial Real Estate | Construction and development | Substandard Commercial
Risk category of loans
Loans	30	31
Commercial Real Estate | Construction and development | Non-accrual
Risk category of loans
Loans	113	113
Commercial Real Estate | Construction and development | Performing
Risk category of loans
Loans	15,748	14,438
Commercial Real Estate | Construction and development | Watch
Risk category of loans
Loans		67
Commercial Real Estate | Other
Risk category of loans
Loans	693,118	678,381
Commercial Real Estate | Other | Pass
Risk category of loans
Loans	592,911	576,619
Commercial Real Estate | Other | Special Mention
Risk category of loans
Loans	7,938	10,367
Commercial Real Estate | Other | Substandard
Risk category of loans
Loans	5,393	3,309
Commercial Real Estate | Other | Substandard Commercial
Risk category of loans
Loans	971	980
Commercial Real Estate | Other | Non-accrual
Risk category of loans
Loans	2,495	3,811
Commercial Real Estate | Other | Performing
Risk category of loans
Loans	83,285	83,193
Commercial Real Estate | Other | Watch
Risk category of loans
Loans	125	102
Residential
Risk category of loans
Loans	726,426	727,073
Residential | Substandard
Risk category of loans
Loans	3,658	2,350
Residential | Performing
Risk category of loans
Loans	722,211	720,819
Residential | Watch
Risk category of loans
Loans	557
Residential | Loss
Risk category of loans
Loans		3,904
Residential | 1-4 family
Risk category of loans
Loans	441,446	438,808
Residential | 1-4 family | Substandard
Risk category of loans
Loans	2,564	1,904
Residential | 1-4 family | Performing
Risk category of loans
Loans	438,497	434,133
Residential | 1-4 family | Watch
Risk category of loans
Loans	385
Residential | 1-4 family | Loss
Risk category of loans
Loans		2,771
Residential | Home equity
Risk category of loans
Loans	284,980	288,265
Residential | Home equity | Substandard
Risk category of loans
Loans	1,094	446
Residential | Home equity | Performing
Risk category of loans
Loans	283,714	286,686
Residential | Home equity | Watch
Risk category of loans
Loans	172
Residential | Home equity | Loss
Risk category of loans
Loans		1,133
Consumer
Risk category of loans
Loans	58,217	56,771
Consumer | Substandard
Risk category of loans
Loans	30	101
Consumer | Performing
Risk category of loans
Loans	58,173	56,638
Consumer | Loss
Risk category of loans
Loans	14	32
Consumer | Direct
Risk category of loans
Loans	57,779	56,312
Consumer | Direct | Substandard
Risk category of loans
Loans	30	101
Consumer | Direct | Performing
Risk category of loans
Loans	57,737	56,179
Consumer | Direct | Loss
Risk category of loans
Loans	12	32
Consumer | Indirect
Risk category of loans
Loans	438	459
Consumer | Indirect | Performing
Risk category of loans
Loans	436	$ 459
Consumer | Indirect | Loss
Risk category of loans
Loans	$ 2

OTHER REAL ESTATE OWNED - Infor

OTHER REAL ESTATE OWNED - Information Regarding Other Real Estate Owned (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Activity in other real estate owned
Beginning Balance	$ 1,959	$ 2,688	$ 2,688
Transfer to other real estate owned	537	156
Sale - Out of other real estate owned	(586)	(643)
Write-down	(19)		(19)
Ending Balance	1,891	2,201	1,959
Valuation allowance on other real estate owned
Beginning Balance	(217)	(448)	(448)
Impairments during year	(19)
Reductions		163
Ending Balance	(236)	(285)	(217)
Net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets
Write-down	19		19
Losses/(gains) on sales	(168)	11
Net loss	(149)	11
Operating expenses	5	$ 36
Foreclosed residential real estate properties
Foreclosed residential real estate properties	946		915
Retail mortgage loans, foreclosure proceedings in process	$ 2,114		$ 2,407

DEPOSITS & REPURCHASE AGREEME49

DEPOSITS & REPURCHASE AGREEMENTS - Deposit Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
DEPOSITS & REPURCHASE AGREEMENTS
Non-interest-bearing demand	$ 647,187	$ 641,439
Interest-bearing demand	1,069,237	1,084,786
Savings	617,670	599,729
Certificates of deposit of $250 or more	68,163	73,493
Other certificates and time deposits	242,587	251,328
Total deposits	$ 2,644,844	$ 2,650,775
Repurchase agreement, term	1 day
Securities under repurchase agreements	$ 19,556
Pledged amount of mortgage backed securities	$ 46,600

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net Income
Net income attributable to common shareholders	$ 8,766	$ 7,663
Net income attributable to common shareholders and assumed conversions	$ 8,766	$ 7,663
Weighted Average Shares
Net income attributable to common shareholders (in shares)	21,607,289	21,690,495,000
Effect of dilutive warrants (in shares)	161,675	130,274,000
Effect of dilutive stock options (in shares)	104,074	94,665,000
Net income attributable to common shareholders and assumed conversions (in shares)	21,873,038	21,915,434,000
Earnings per Common Share
Net income attributable to common shareholders (in dollars per share)	$ 0.41	$ 0.35
Net income attributable to common shareholders and assumed conversions (in dollars per share)	$ 0.40	$ 0.35
Stock options
Earnings per Common Share
Common shares not considered in computing diluted earnings per share	0	26,994

FAIR VALUE - Valuation Inputs -

FAIR VALUE - Valuation Inputs - (Details)	3 Months Ended
	Mar. 31, 2016item
FAIR VALUE.
Number of times a sample of prices supplied by the pricing agent is validated by comparison to prices obtained from other third party sources	2

FAIR VALUE - Assets and Liabili

FAIR VALUE - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 937,719	$ 925,279
Transfers between Level 1 and Level 2
Transfers of assets from Level 1 to Level 2	0		$ 0
Transfers of assets from Level 2 to Level 1	0		$ 0
U. S. government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	486	504
State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	349,405	350,733
Mortgage-backed securities-residential (Government Sponsored Entity)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	354,998	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	221,618	228,749
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,689	4,689
Other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,523	6,524
Recurring basis | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	937,719	925,279
Mortgage banking derivatives	725	700
Fair value, assets	3,610	1,508
Derivative liability	(3,610)	(1,508)
Recurring basis | Level 1 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,689	4,689
Recurring basis | Level 2 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	916,078	903,208
Mortgage banking derivatives	725	700
Fair value, assets	3,610	1,508
Derivative liability	(3,610)	(1,508)
Recurring basis | Level 3 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	16,952	17,382
Recurring basis | U. S. government agency | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	486	504
Recurring basis | U. S. government agency | Level 2 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	486	504
Recurring basis | State and municipal | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	349,405	350,733
Recurring basis | State and municipal | Level 2 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	338,976	339,875
Recurring basis | State and municipal | Level 3 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	10,429	10,858
Recurring basis | Mortgage-backed securities-residential (Government Sponsored Entity) | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	354,998	334,080
Recurring basis | Mortgage-backed securities-residential (Government Sponsored Entity) | Level 2 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	354,998	334,080
Recurring basis | Collateralized mortgage obligations (Government Sponsored Entity) | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	221,618	228,749
Recurring basis | Collateralized mortgage obligations (Government Sponsored Entity) | Level 2 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	221,618	228,749
Recurring basis | Equity securities | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,689	4,689
Recurring basis | Equity securities | Level 1 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,689	4,689
Recurring basis | Other securities | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,523	6,524
Recurring basis | Other securities | Level 3 | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 6,523	$ 6,524

FAIR VALUE - Reconciliation Of

FAIR VALUE - Reconciliation Of Gains and Losses on Level 3 Assets - (Details) - Level 3 - Recurring basis - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
State and municipal
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	$ 10,858	$ 12,810
Included in other comprehensive income	1
Settlements	(430)	(439)
Balance at the end of the period	10,429	12,371
Other securities
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	6,524	2,503
Included in other comprehensive income	(1)	35
Balance at the end of the period	$ 6,523	$ 2,538

FAIR VALUE - Fair Value of Asse

FAIR VALUE - Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis - (Details) - Non-recurring basis - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Assets:
Total impaired loans	$ 506		$ 1,140
Impaired servicing rights	474		531
Recorded investment of impaired loans	945		2,393
Valuation allowance of impaired loans	439		1,253
Provision expenses of impaired loans	125	$ 129
Gross outstanding balance of servicing rights	674		731
Valuation allowance of servicing rights	200		200
Commercial and industrial
Assets:
Total impaired loans	68		58
Other
Assets:
Total impaired loans	438		1,082
Recorded investment of impaired loans	795
Valuation allowance of impaired loans	357
Construction and development
Assets:
Total impaired loans	68
Recorded investment of impaired loans	150
Valuation allowance of impaired loans	82
Level 3
Assets:
Total impaired loans	506		1,140
Impaired servicing rights	474		531
Level 3 | Commercial and industrial
Assets:
Total impaired loans	68		58
Level 3 | Other
Assets:
Total impaired loans	$ 438		$ 1,082

FAIR VALUE - Quantitative Infor

FAIR VALUE - Quantitative Information about Level 3 Value Measurements - (Details) - Non-recurring basis - Level 3 - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Impaired Loans
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 506
Unobservable Inputs
Discount rate (as a percent)	10.00%
Impaired Loans | Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value		$ 1,140
Unobservable Inputs
Discount rate (as a percent)		10.00%
Impaired Loans | Farm | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 68	$ 58
Unobservable Inputs
Discount rate (as a percent)	10.00%	10.00%
Impaired Loans | Farm | Sales comparison approach | Average
Unobservable Inputs
Discount rate (as a percent)	10.00%	10.00%
Impaired Loans | Other commercial real estate | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 438
Impaired Loans | Other commercial real estate | Sales comparison approach | Minimum
Unobservable Inputs
Discount rate (as a percent)	0.00%
Impaired Loans | Other commercial real estate | Sales comparison approach | Maximum
Unobservable Inputs
Discount rate (as a percent)	20.00%
Impaired Loans | Other | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value		$ 1,082
Impaired Loans | Other | Sales comparison approach | Minimum
Unobservable Inputs
Discount rate (as a percent)		0.00%
Impaired Loans | Other | Sales comparison approach | Maximum
Unobservable Inputs
Discount rate (as a percent)		20.00%
Mortgage servicing rights | Cash flow analysis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 474	$ 531
Unobservable Inputs
Discount rate (as a percent)	10.00%	10.00%

FAIR VALUE - Carrying Amounts a

FAIR VALUE - Carrying Amounts and Estimated Fair Values of Financial Instruments - (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financial assets
Interest bearing time deposits	$ 1,715	$ 1,960
FHLB and other stock, at cost	14,583	11,300
Interest receivable	6,228	5,878
Carrying Value
Financial assets
Cash and cash equivalents	72,002	67,578
Interest bearing time deposits	1,715	1,960
Loans including loans held for sale, net	2,143,926	2,139,765
FHLB and other stock, at cost	14,583	11,300
Interest receivable	11,076	10,779
Financial liabilities
Deposits	(2,644,844)	(2,650,775)
Other borrowings	(31,159)	(28,363)
FHLB advances	(285,557)	(269,488)
Interest payable	(566)	(560)
Subordinated debentures	(41,239)	(41,239)
Fair Value
Financial assets
Cash and cash equivalents	72,002	67,578
Interest bearing time deposits	1,715	1,960
Loans including loans held for sale, net	2,208,287	2,195,092
Interest receivable	11,076	10,779
Financial liabilities
Deposits	(2,643,854)	(2,648,844)
Other borrowings	(31,159)	(28,363)
FHLB advances	(290,171)	(270,977)
Interest payable	(566)	(560)
Subordinated debentures	(24,212)	(24,212)
Level 1
Financial assets
Cash and cash equivalents	56,906	56,104
Financial liabilities
Deposits	(647,187)	(641,439)
Level 2
Financial assets
Cash and cash equivalents	15,096	11,474
Interest bearing time deposits	1,715	1,960
Loans including loans held for sale, net	5,712	7,726
Interest receivable	4,848	4,901
Financial liabilities
Deposits	(1,996,667)	(2,007,405)
Other borrowings	(31,159)	(28,363)
FHLB advances	(290,171)	(270,977)
Interest payable	(566)	(560)
Subordinated debentures	(24,212)	(24,212)
Level 3
Financial assets
Loans including loans held for sale, net	2,202,575	2,187,366
Interest receivable	$ 6,228	$ 5,878

REGULATORY CAPITAL (Details)

REGULATORY CAPITAL (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)item	Dec. 31, 2015USD ($)	Mar. 31, 2015USD ($)	Dec. 31, 2014USD ($)
Actual and required capital amounts and ratios
Number of ratios calculated according to the regulations for determining assigned capital category | item	4
Total capital (to risk-weighted assets)
Actual, Amount	$ 360,610	$ 356,210
Required for Adequate Capital, Amount	$ 185,486	$ 184,170
Actual, Ratio	15.60%	15.50%
Required for Adequate Capital, Ratio	8.00%	8.00%
Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 339,531	$ 334,190
Required for Adequate Capital, Amount	$ 139,115	$ 138,127
Actual, Ratio	14.60%	14.50%
Required for Adequate Capital, Ratio	6.00%	6.00%
Common equity Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 298,657	$ 293,316
Required for Adequate Capital, Amount	$ 104,336	$ 103,595
Actual, Ratio	12.90%	12.70%
Required for Adequate Capital, Ratio	4.50%	4.50%
Tier 1 capital (to average assets)
Actual, Amount	$ 339,531	$ 334,190
Required for Adequate Capital, Amount	$ 132,833	$ 130,845
Actual, Ratio (as a percent)	10.20%	10.20%
Required for Adequate Capital, Ratio	4.00%	4.00%
Cash and cash equivalents	$ 72,002	$ 67,578	$ 69,550	$ 62,485
Minimum | Prior To Federal Reserve Corrective Action Rules
Tier 1 capital (to risk-weighted assets)
Required for Adequate Capital, Ratio	4.00%
Minimum | Federal Reserve Corrective Action Rules
Basel III and Dodd Frank Rules
Required minimum Tier 1 capital to risk weighted assets (as a percent )	4.50%
Required minimum conservation buffer percentage	2.50%
Tier 1 capital (to risk-weighted assets)
Required for Adequate Capital, Ratio	6.00%
Tier 1 capital (to average assets)
Required for Adequate Capital, Ratio	4.00%
Parent Company
Tier 1 capital (to average assets)
Cash and cash equivalents	$ 19,800
MainSource Bank
Basel III and Dodd Frank Rules
Tier 1 leverage capital required to be well capitalized to average assets (as a percent)	5.00%	5.00%
Total capital (to risk-weighted assets)
Actual, Amount	$ 332,608	$ 334,266
Required for Adequate Capital, Amount	185,485	184,168
To Be Well Capitalized, Amount	$ 231,856	$ 230,211
Actual, Ratio	14.30%	14.50%
Required for Adequate Capital, Ratio	8.00%	8.00%
To Be Well Capitalized, Ratio	10.00%	10.00%
Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 311,529	$ 312,246
Required for Adequate Capital, Amount	139,114	138,126
To Be Well Capitalized, Amount	$ 185,485	$ 184,168
Actual, Ratio	13.40%	13.60%
Required for Adequate Capital, Ratio	6.00%	6.00%
To Be Well Capitalized, Ratio	8.00%	8.00%
Common equity Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 311,529	$ 312,246
Required for Adequate Capital, Amount	104,335	103,595
To Be Well Capitalized, Amount	$ 150,707	$ 149,637
Actual, Ratio	13.40%	13.60%
Required for Adequate Capital, Ratio	4.50%	4.50%
To Be Well Capitalized, Ratio	6.50%	6.50%
Tier 1 capital (to average assets)
Actual, Amount	$ 311,529	$ 312,246
Required for Adequate Capital, Amount	132,542	130,555
To Be Well Capitalized, Amount	$ 165,678	$ 163,194
Actual, Ratio (as a percent)	9.40%	9.60%
Required for Adequate Capital, Ratio	4.00%	4.00%
To Be Well Capitalized, Ratio	5.00%	5.00%

INCOME TAXES (Details)

INCOME TAXES (Details)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Differences between effective tax rates and the federal statutory rate applied to income before income taxes
Effective Income Tax Rate Reconciliation, Percent	22.50%	18.60%

DERIVATIVES (Details)

DERIVATIVES (Details) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Other Income
Derivatives, Fair Value [Line Items]
Fee income (expense)	$ 81	$ 75
Other Assets
Derivatives, Fair Value [Line Items]
Notional amount, assets	57,164		$ 53,741
Fair value, assets	3,610		1,508
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional amount, liabilities	57,164		53,741
Fair value, liabilities	$ 3,610		$ 1,508

ACQUISITIONS - Acquisition of C

ACQUISITIONS - Acquisition of Cheviot Financial Corp. (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2016USD ($)$ / shares	Mar. 31, 2016USD ($)$ / shares	Dec. 31, 2015item$ / shares	Jun. 30, 2015$ / shares
ACQUISITIONS
Closing price of common stock (in dollars per share) | $ / shares		$ 19.89	$ 19.89	$ 19.89
Cheviot Financial Corp.
ACQUISITIONS
Number of tiers in mutual holding company | item			2
Number of full service offices | item			12
Assets of acquiree		$ 572,000
Loans		376,171
Deposits		454,885
Equity		$ 96,469
Cheviot Financial Corp. | Forecast
ACQUISITIONS
Ratio of shares to be received by acquiree shareholders	0.6916
Cash received in exchange for each common stock owned (in dollars per share) | $ / shares	$ 15
Total consideration in common stock (as a percent)	50.00%
Total consideration in cash (as a percent)	50.00%
Closing price of common stock (in dollars per share) | $ / shares	$ 23.56
Approximate value of transaction	$ 107,400

BRANCH CLOSURES (Details)

BRANCH CLOSURES (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016item	Dec. 31, 2015USD ($)
BRANCH CLOSURES
Severance costs | $		$ 75
Impairment costs for the affected properties | $		$ 175
Rushville, Indiana
BRANCH CLOSURES
Number of branch offices to be closed	1
Number of branches at specified location	2
New Castle, Indiana
BRANCH CLOSURES
Number of branch offices to be closed	1
Number of branches at specified location	2
Crawfordsville, Indiana
BRANCH CLOSURES
Number of branch offices to be closed	1
Number of branches at specified location	2
Bourbonnais, Illinois
BRANCH CLOSURES
Number of branch offices to be closed	1
Number of branches at specified location	1