Mainsource Financial (MSFG) 10-Q 8 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 08, 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	Sep. 30, 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		24,033,881
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 62,809	$ 56,104
Money market funds and federal funds sold	17,520	11,474
Cash and cash equivalents	80,329	67,578
Interest bearing time deposits	1,960	1,960
Securities available for sale	1,025,048	925,279
Loans held for sale	6,977	7,533
Loans, net of allowance for loan losses of $21,079 and $22,020	2,563,079	2,133,372
FHLB and other stock, at cost	21,537	11,300
Premises and equipment, net	76,436	62,973
Goodwill	100,889	75,953
Purchased intangible assets	7,762	4,662
Cash surrender value of life insurance	80,083	62,451
Interest receivable and other assets	49,843	32,347
Total assets	4,013,943	3,385,408
Deposits
Noninterest bearing	705,428	641,439
Interest bearing	2,418,600	2,009,336
Total deposits	3,124,028	2,650,775
Other borrowings	108,076	28,363
Federal Home Loan Bank (FHLB) advances	259,638	269,488
Subordinated debentures	41,239	41,239
Other liabilities	21,354	14,183
Total liabilities	3,554,335	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	12,430	11,201
Treasury stock ? 663,165 and 686,532 shares, at cost	(11,105)	(11,812)
Additional paid-in capital	298,649	247,629
Retained earnings	137,852	121,718
Accumulated other comprehensive income	21,782	12,624
Total shareholders' equity	459,608	381,360
Total liabilities and shareholders' equity	$ 4,013,943	$ 3,385,408

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CONSOLIDATED BALANCE SHEETS
Loans, allowance for loan losses (in dollars)	$ 21,828,000	$ 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	24,676,409	22,266,107
Common stock, Outstanding shares	24,033,381	21,579,575
Treasury stock, shares	643,028	686,532

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income
Loans, including fees	$ 26,782	$ 22,040	$ 73,810	$ 64,858
Securities
Taxable	4,009	3,010	10,488	8,780
Tax exempt	3,023	3,035	9,009	8,939
Other interest income	43	28	166	96
Total interest income	33,857	28,113	93,473	82,673
Interest expense
Deposits	1,066	915	3,094	2,708
Federal Home Loan Bank advances	1,093	773	3,282	2,501
Subordinated debentures	355	318	1,051	942
Other borrowings	353	19	486	36
Total interest expense	2,867	2,025	7,913	6,187
Net interest income	30,990	26,088	85,560	76,486
Provision for loan losses	150	800	855	800
Net interest income after provision for loan losses	30,840	25,288	84,705	75,686
Non-interest income
Service charges on deposit accounts	5,696	6,102	15,597	16,221
Interchange income	2,877	2,256	8,317	6,445
Mortgage banking	2,602	2,270	7,135	6,734
Trust and investment product fees	1,163	1,204	3,626	3,664
Increase in cash surrender value of life insurance	410	310	1,056	931
Net realized gains on securities (includes $17 and $252 accumulated other comprehensive income (AOCI) reclassifications for realized net gains on available for sale securities)	23	45	144	360
Gain/(Loss) on sale and write-down of OREO	67	(19)	253	(63)
Other income	1,076	1,176	3,113	3,312
Total non-interest income	13,914	13,344	39,241	37,604
Non-interest expense
Salaries and employee benefits	16,686	14,674	47,430	43,185
Net occupancy	2,412	2,064	6,877	6,276
Equipment	3,315	2,823	9,493	8,381
Intangibles amortization	302	431	999	1,270
Telecommunications	459	410	1,256	1,290
Stationery printing and supplies	263	302	809	894
FDIC assessment	395	435	1,250	1,245
Marketing	780	948	2,523	2,413
Collection expense	174	263	596	769
Prepayment penalty on FHLB advance				2,364
Acquisition related expenses	601	617	6,964	617
Consultant expense	156	250	428	750
Interchange expense	830	696	2,558	1,986
Other expenses	2,568	2,722	8,012	7,942
Total non-interest expense	28,941	26,635	89,195	79,382
Income before income tax	15,813	11,997	34,751	33,908
Income tax expense (includes $6 and $86 income tax expense from AOCI reclassification items)	4,117	2,886	8,172	7,474
Net income attributable to common shareholders	$ 11,696	$ 9,111	$ 26,579	$ 26,434
Net income per common share:
Basic	$ 0.49	$ 0.42	$ 1.17	$ 1.22
Diluted	0.48	0.42	1.15	1.21
Dividend per share	$ 0.15	$ 0.14	$ 0.45	$ 0.40

CONSOLIDATED STATEMENTS OF INC5

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONSOLIDATED STATEMENTS OF INCOME
Accumulated other comprehensive income (AOCI) reclassifications for realized net gains on available for sale securities	$ 23	$ 45	$ 144	$ 360
Income tax expense from AOCI reclassification items	$ 8	$ 16	$ 50	$ 126

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 11,696	$ 9,111	$ 26,579	$ 26,434
Other comprehensive income:
Unrealized holding gains/(losses) on securities available for sale	(4,616)	6,723	14,232	3,044
Reclassification adjustment for (gains) included in net income	(23)	(45)	(144)	(360)
Tax effect	1,624	(2,271)	(4,930)	(912)
Other comprehensive income	(3,015)	4,407	9,158	1,772
Comprehensive income	$ 8,681	$ 13,518	$ 35,737	$ 28,206

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)
Operating Activities
Net income	$ 26,579	$ 26,434
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	855	800
Depreciation expense	5,390	4,733
Amortization of mortgage servicing rights	1,068	1,034
(Recovery)/additional impairment of valuation allowance on mortgage servicing rights	175	(175)
Securities amortization, net	3,792	2,332
Amortization of purchased intangible assets	999	1,270
Earnings on cash surrender value of life insurance policies	(1,056)	(931)
Gain on life insurance benefit		(307)
Securities gains, net	(144)	(360)
Gain on loans sold	(4,512)	(4,381)
Loans originated for sale	(185,098)	(183,802)
Proceeds from loan sales	190,166	191,644
Stock based compensation expense	713	633
Stock portion of director retainer fee expense	282	230
Gain/(Loss) on sale and write-down of OREO	253	(63)
Prepayment penalty on FHLB advance		2,364
Change in other assets and liabilities	(7,520)	2,072
Net cash provided by operating activities	31,436	43,653
Investing Activities
Net change in short term investments		(45)
Purchases of securities available for sale	(186,209)	(284,755)
Proceeds from calls, maturities, and payments on securities available for sale	100,835	104,182
Proceeds from sales of securities available for sale	85,738	139,547
Loan originations and payments, net	(73,574)	(101,145)
Purchases of premises and equipment	(12,179)	(5,543)
Proceeds from sale of OREO	3,185	1,352
Proceeds from redemption of restricted stock	3,090	2,784
Purchase of restricted stock	(4,676)
Proceeds from sale of portfolio loans		11,356
Proceeds from life insurance benefit		1,094
Cash paid for agency acquisition	(11,289)	57,083
Net cash used by investing activities	(95,079)	(74,090)
Financing Activities
Net change in deposits	28,558	40,251
Net change in other borrowings	59,713	13,090
Proceeds from FHLB advances	420,000	585,000
Repayment of FHLB advances	(442,006)	(546,361)
Proceeds from line of credit	30,000
Cash dividends on common stock	(10,445)	(8,659)
Purchase of treasury shares	(333)	(3,280)
Repayment on line of credit	(10,000)
Proceeds from exercise of stock options, including tax benefit	907	264
Net cash provided by financing activities	76,394	80,305
Net change in cash and cash equivalents	12,751	49,868
Cash and cash equivalents, beginning of year	67,578	62,485
Cash and cash equivalents, end of period	80,329	112,353
Supplemental cash flow information
Interest paid	8,330	6,233
Income taxes paid	3,005	3,285
Supplemental non cash disclosure
Loan balances transferred to foreclosed real estate	$ 1,547	1,164
Loan balances transferred to loans held for sale		11,356
Due to broker for securities purchases		86,395
Due from broker for securities sales		$ 44,202

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 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 In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 adds or clarifies guidance on the presentation and classification of eight specific types of cash receipts and cash payments in the statement of cash flows, with the intent of reducing diversity in practice. This ASU 2016-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented; however, entities may apply prospectively if retrospective application is impracticable. The Company is currently assessing the impact that the adoption of ASU 2016-15 will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument” ( “CECL”). ASU 2016-13 requires an allowance for expected credit losses on financial assets be recognized as early as day one of the instrument. This ASU departs from the incurred loss model which means the probability threshold is removed. It considers more forward-looking information and requires the entity to estimate its credit losses over the life of the asset. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company will be evaluating the impact of this ASU over the next several years.

STOCK PLANS AND STOCK-BASED COM

STOCK PLANS AND STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 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 was a 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. 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: Nine Months Ended September 30, 2016 Weighted Average Exercise Options Shares Price Outstanding, beginning of year $ Granted — — Exercised Forfeited or expired Outstanding at end of period $ Exercisable at end of period $ Fully vested and expected to vest $ The following table details stock options outstanding: September 30, 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 $21 and $64 in stock compensation expense during the three and nine months ended September 30, 2016 and $48 and $133 in stock compensation expense during the three and nine months ended September 30 2015 to salaries and employee benefits. There were no options granted in the first nine months 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) October 2016 - December 2016 $ 2017 During 2015 and the first and second quarters 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 and 16,000 shares of common stock were granted in the first and second quarters of 2016 at a weighted average cost of $21.47 and $22.57 per share, respectively. A total of 28,955 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 September 30, 2016 $ As of September 30, 2016, there was $1,089 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 2.1 years. The recognized compensation costs related to the plans were $160 and $512 for the three month and nine periods ending September 30, 2016 and $143 and $447 for the three and nine months periods ending September 30, 2015. Additionally, in the first quarter of 2016 and the second quarter of 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 16,205 performance share units were granted in the second 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. $55 and $137 of expense was recognized on these awards for the three and nine month periods ending September 30, 2016 and $27 and $53 of expense was recognized in the three and nine months periods ending September 30, 2015. A total of $447 will be expensed in future periods if the Target level is achieved. In the second quarter of 2016, members of the Board of Directors received their entire annual retainer in restricted Company stock for the following Board year ended with the 2017 annual meeting of shareholders. The 2016 award vests quarterly for all directors who remain on the Board of Directors on the vesting dates, with 25% of the award vesting on each of May 1, August 1, and November 1, 2016, and February 1, 2017. The value of the 2016 retainer award was determined by multiplying the award amount by the closing price of the stock on the date of the 2016 annual meeting of shareholders. Additional shares were granted in June 2016 to a new director who joined the Board following the Company’s acquisition of Cheviot Financial Corp. The shares granted were pro-rated based on the new director’s 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 2016 1Q 2016 2Q A total of $103 and $70 was recognized as other expense in the third quarter of 2016 and 2015 respectively for these grants and $282 and $230 was recognized in the first nine months of 2016 and 2015 respectively.

SECURITIES

SECURITIES	9 Months Ended
	Sep. 30, 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 September 30, 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 $85,738 and $139,547 for the nine months ended September 30, 2016 and 2015, respectively. Gross gains of $144 and $1,515 and gross losses of $0 and $1,155 were realized on these sales during 2016 and 2015, respectively. Income taxes on these net gains were $50 and $126 in 2016 and 2015. Proceeds from sales of securities available for sale were $7,615 and $57,208 for the three months ended September 30, 2016 and 2015, respectively. Gross gains of $23 and $203 and gross losses of $0 and $158 were realized on these sales during 2016 and 2015, respectively. Income taxes on these net gains were $8 and $16 in 2016 and 2015. Below is a summary of securities with unrealized losses as of September 30, 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 September 30, 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 September 30, 2016, the Company’s securities portfolio consisted of 938 securities, 28 of which were in an unrealized loss position. Unrealized losses on state and municipal securities of $93 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 September 30, 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 of approximately $3 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 September 30, 2016. The Company’s collateralized mortgage obligation securities portfolio includes agency collateralized mortgage obligations with a market value of $26,636 which had unrealized losses of approximately $145 at September 30, 2016. 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 September 30, 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	9 Months Ended
	Sep. 30, 2016
LOANS AND ALLOWANCE FOR LOAN LOSSES
LOANS AND ALLOWANCE	NOTE 4 - LOANS AND ALLOWANCE Loans were as follows: September 30, 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 last several years. The investment by portfolio class at September 30, 2016 is as follows. These loans are included in the above table and all other tables below at the recorded investment amount. September 30, December 31, 2016 2015 Commercial and industrial $ $ Agricultural — Construction and development Farm real estate — Hotel — Other real estate 1-4 family Home equity Direct $ $ The remaining discount on the above loans was $7,308 and $2,198 at September 30, 2016 and December 31, 2015 respectively. Activity in the allowance for loan losses for the three months ended September 30, 2016 and 2015 was as follows: Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, July 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, July 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $ Activity in the allowance for loan losses for the nine months ended September 30, 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, September 30 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $ 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 September 30, 2016 and December 31, 2015. Commercial September 30, 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 $6,911 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 $2,410 at September 30, 2016 and $1,583 at December 31, 2015. In connection with the acquisition of Cheviot Financial Corp. (see Note 12), the Company acquired $16,175 of purchased credit impaired loans with $4,615 of non accretable yield and no accretable yield. The Company provided no allowance for loan losses on these loans at September 30, 2016. 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 September 30, 2016 and December 31, 2015. Performing troubled debt restructurings totaling $1,954 and $2,760 were excluded as allowed by ASC 310-40. Allowance Unpaid for Loan Principal Recorded Losses September 30, 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 nine months ending September 30, 2016 and September 30, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Nine months ended September 30, 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 Nine months ended September 30, 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 tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending September 30, 2016 and September 30, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended September 30, 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 September 30, 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 September 30, 2016 and December 31, 2015: Past due over 90 days and Non-accrual still accruing September 30, 2016 December 31, 2015 September 30, 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 $ $ $ — $ — Included in the above non-accrual loans at September 30, 2016 are $3,544 of loans from the Cheviot acquisition. The following tables present the aging of the recorded investment in past due loans as of September 30, 2016 and December 31, 2015 by class of loans: Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not September 30, 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 $6,911 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 includes 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 September 30, 2016 and December 31, 2015 was $6,669 and $8,389 respectively. The Company has allocated $501 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 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 nine month period ending September 30, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the nine months ended September 30, 2016 Number of Loans Investment Investment Commercial Agricultural $ $ Commercial Real Estate Other Residential 1-4 Family Home Equity Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the nine month period ending September 30, 2015: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the nine months ended September 30, 2015 Number of Loans Investment Investment Commercial Commercial and industrial $ $ Commercial real estate Other Residential 1-4 Family Home Equity Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending September 30, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended September 30, 2016 Number of Loans Investment Investment Commercial real estate Other $ $ Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending September 30, 2015: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended September 30, 2015 Number of Loans Investment Investment Commercial real estate Other $ $ Residential 1-4 Family Home Equity Total $ $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the nine month period ending September 30, 2016: For the nine months ended September 30, 2016 Number of Loans Recorded Investment Commercial real estate Other $ Residential 1-4 Family Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the nine month period ending September 30, 2015: For the nine months ended September 30, 2015 Number of Loans Recorded Investment Commercial real estate Other $ Residential 1-4 Family Home Equity Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three month period ending September 30, 2016: For the three months ended September 30, 2016 Number of Loans Recorded Investment Residential 1-4 Family $ Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three month period ending September 30, 2015: For the three months ended September 30, 2015 Number of Loans Recorded Investment Commercial real estate: Other $ Residential 1-4 Family Home Equity Total $ 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 or nine month periods ending September 30, 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 and nine month periods ending September 30, 2016 and 2015 that did not meet the definition of a troubled debt restructuring. These modified loans had a total recorded investment of $7,895 and $5,511 for the three month period ending September 30, 2016 and 2015 respectively. These modified loans had a total recorded investment of $10,784 and $6,586 for the nine month period ending September 30, 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 September 30, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special September 30, 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 and are subsequently charged off. As of September 30, 2016 and December 31, 2015, the grading of loans by category of loans is as follows: September 30, 2016 Performing Watch Substandard Commercial Commercial and industrial $ $ $ Agricultural Commercial Real Estate Construction and development Farm — — Hotel — — Other Total $ $ $ December 31, 2015 Performing Watch Substandard Commercial Commercial and industrial $ $ — $ Agricultural — Commercial Real Estate Construction and development Farm — — Other Total $ $ $ September 30, 2016 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ September 30, 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	9 Months Ended
	Sep. 30, 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 September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning Balance $ $ $ $ Transfer to other real estate owned Sale — Out of other real estate owned Acquisition — — — 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 September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning Balance — $ $ $ $ Impairments during year — Recovery on impairments — — Reductions — — Ending Balance — September 30 $ $ $ $ Expenses related to foreclosed assets for the period ending September 30 include: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Write-downs $ $ — $ $ Losses/(gains)on sales Net loss/(gain) $ $ $ $ Operating expenses $ $ $ $ Foreclosed residential real estate properties included in other assets on the Consolidated Balance Sheets totaled $1,669 and $915 at September 30, 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 $3,161 and $2,407 at September 30, 2016 and December 31, 2015, respectively.

DEPOSITS & REPURCHASE AGREEMENT

DEPOSITS & REPURCHASE AGREEMENTS	9 Months Ended
	Sep. 30, 2016
DEPOSITS & REPURCHASE AGREEMENTS
DEPOSITS & REPURCHASE AGREEMENTS	NOTE 6 — DEPOSITS & REPURCHASE AGREEMENTS September 30, 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 September 30, 2016, these agreements totaled $34,076 and were secured by a pledged amount of $50,844 of mortgage backed securities. At December 31, 2015, these agreements totaled $28,363 and were secured by a pledged amount of $48,662. 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	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 7 - EARNINGS PER SHARE Earnings per common share (EPS) were computed as follows: 2016 2015 Net Average Share Net Average Share Three Months Ended September 30, 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 $ $ $ $ There were no antidilutive options in the three month periods ending September 30, 2016 or 2015. 2016 2015 Net Average Share Net Average Share Nine Months Ended September 30, 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 10,210 common shares in 2015 were not considered in computing diluted earnings per share because they were antidilutive. There were no antidilutive options in 2016.

FAIR VALUE

FAIR VALUE	9 Months Ended
	Sep. 30, 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 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 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 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 September 30, 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 third 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 and nine month periods ended September 30, 2016 and 2015: Three months ended September 30: States and municipal 2016 2015 Beginning balance, July 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Settlements Ending balance, September 30 $ $ Other securities 2016 2015 Beginning balance, July 1 $ $ Total gains or losses (realized / unrealized) Purchases — — Included in other comprehensive income Ending balance, September 30 $ $ Nine months ended September 30: States and municipal 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Settlements Ending balance, September 30 $ $ Other securities 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Purchases — Included in other comprehensive income Ending balance, September 30 $ $ 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 September 30, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable September 30, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Agricultural Farm real estate 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 $3,700, with a valuation allowance of $949 at September 30, 2016. The Company recorded a charge of $228 to provision expense associated with these loans for the three months ended September 30, 2016 and a charge of $634 to provision expense with these loans for the nine month period ending September 30, 2016. The Company recorded a charge of $426 to provision expense associated with these loans for the three months ended September 30, 2015 and a charge of $1,281 provision expense associated with these loans for the nine month period ending September 30, 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 September 30, 2016 is as follows: Gross Valuation Balance Allowance Net Commercial and industrial $ $ $ Agricultural Farm real estate Other real estate Ending Balance $ $ $ Impaired tranches of servicing rights were carried at a fair value of $3,161, which is made up of the gross outstanding balance of $3,536 net of a valuation allowance of $375. A $125 charge was made to the valuation allowance in the third quarter of 2016 and a charge of $175 was made to the valuation account in the first nine months of 2016. A $25 credit to earnings was made to the valuation allowance in the third quarter of 2015 and a credit of $175 was made to the valuation allowance in the first nine months of 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 September 30, 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/ September 30, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales 15% - 25% 21% Avg Agricultural Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Farm real estate Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Other real estate Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 15% - 25% 20% Avg $ Mortgage servicing rights $ Cash flow analysis Discount rate 10% 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 10% 10% Avg Other Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 0% - 20% $ 10% Avg Mortgage servicing rights $ Cash flow analysis Discount rate 10% The carrying amounts and estimated fair values of financial instruments, not previously presented, is as follows: Carrying September 30, 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	9 Months Ended
	Sep. 30, 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. Additionally, in order to avoid limitations on capital distributions, the Company will be required to maintain a capital conservation buffer above the adequately capitalized regulatory capital ratios. The capital conservation buffer is being phased in from 0.00% in 2015 to 2.50% in 2019. At September 30, 2016, the capital conservation buffer is 0.625%. At September 30, 2016, the capital levels for the Company and its subsidiary bank remained well in excess of the minimum amounts needed for capital adequacy purposes. 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 September 30, 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 September 30, 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 $4,000 in cash and its ability to downstream additional capital to the Bank.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 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 September 30, 2016 and 2015 based on the current estimate of the effective annual rate. The effective tax rate for the third quarter of 2016 was 26.0% versus 24.1% for the same period 2015. For the first nine months of 2016 and 2015, the effective tax rate was 23.5% versus 22.0% respectively. The increase in the third quarter effective tax rate was due to the increase in pre-tax earnings while tax exempt interest remained flat. The Company’s effective tax rate was lower than its blended statutory rate due to the Company’s investments in tax-exempt securities, tax-exempt loans, company-owned life insurance, and a subsidiary company domiciled in a state with no state or local income tax.

DERIVATIVES

DERIVATIVES	9 Months Ended
	Sep. 30, 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 $124.1 million at September 30, 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 of interest rate swaps are summarized below: September 30, 2016 December 31, 2015 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps at Fair Value $ $ $ $ Included in Other Liabilities: Interest Rate Swaps at Fair Value $ $ $ $ The effect of derivative instruments on the Consolidated Statement of Income is presented below: Three Months Ended September 30, 2016 2015 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ $ Nine Months Ended September 30, 2016 2015 Interest Rate Swaps – Fee Income Included in Other Income / (Expense) $ $

ACQUISITION

ACQUISITION	9 Months Ended
	Sep. 30, 2016
ACQUISITION
ACQUISITION	NOTE 12 – ACQUISITION On May 20, 2016, the Company acquired 100% of the outstanding common shares of Cheviot Financial Corp. (“Cheviot”) and its subsidiary Cheviot Savings Bank in exchange for stock and cash. Shareholders of Cheviot were entitled to merger consideration in accordance with the terms of the merger agreement. At the time of the merger, stockholders of Cheviot received 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 approximately 50% common stock and approximately 50% cash. In total, the Company issued 2,351,816 shares of common stock and paid $49.7 million in cash to the former shareholders of Cheviot. With the acquisition, the Company expanded its presence in the greater Cincinnati area. The acquisition offers the Company the opportunity to increase profitability by introducing new products and services to the acquired customer base and adding new customers in the expanded region. Cheviot’s results of operations were included in the Company’s results beginning May 21, 2016. Acquisition-related costs of $601 and $6,964 were included in the Company’s income statement for the three month and nine month period ended September 30, 2016, respectively. The fair value of the common shares issued as part of the consideration paid for Cheviot was determined on the basis of the closing price of the Company’s common shares on the acquisition date. Goodwill of $24,936 arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies. Goodwill will not be deductible for income tax purposes. The following table summarizes the consideration paid for Cheviot and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date: Consideration Cash $ Equity Instruments Fair Value of Total Consideration $ Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed Cash and cash equivalents $ Securities Federal Home Loan Bank stock Loans Premises and equipment Core deposit intangibles Bank owned life insurance Other assets Total assets acquired Deposits Federal Home Loan Bank advances Other liabilities Total liabilities assumed Total identifiable net assets $ Goodwill $ The Company will be completing its final fair value adjustments in the fourth quarter of 2016. The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Receivables acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $344,639 and $350,869 on the date of acquisition. The following table presents pro forma information as if the acquisition had occurred at the beginning of 2015. The pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates. 3 months 3 months 9 months 9 months 9/30/2016 9/30/2015 9/30/2016 9/30/2015 Net interest income $ $ $ $ Net income Basic earnings per share Diluted earnings per share Acquisition costs of $460 and $4,801, net of taxes, were excluded from the above table in the three month period ending September 30, 2016 and nine month period ending September 30, 2016, respectively. 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. The terms of the settlement were disclosed to former Cheviot stockholders pursuant to a Notice mailed on September 27, 2016. The court is scheduled to consider the final settlement at a hearing to be held on December 2, 2016. The Company does not anticipate a material financial impact as a result of the Actions, the MOU, or the settlement.

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
STOCK PLANS AND STOCK BASED COMPENSATION
Summary of stock option activity	Nine Months Ended September 30, 2016 Weighted Average Exercise Options Shares Price Outstanding, beginning of year $ Granted — — Exercised Forfeited or expired Outstanding at end of period $ Exercisable at end of period $ Fully vested and expected to vest $
Schedule of details of stock options outstanding	September 30, 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) October 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 September 30, 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 2016 1Q 2016 2Q

SECURITIES (Tables)

SECURITIES (Tables)	9 Months Ended
	Sep. 30, 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 September 30, 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 September 30, 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)	9 Months Ended
	Sep. 30, 2016
LOANS AND ALLOWANCE FOR LOAN LOSSES
Schedule of loans	September 30, 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	September 30, December 31, 2016 2015 Commercial and industrial $ $ Agricultural — Construction and development Farm real estate — Hotel — Other real estate 1-4 family Home equity Direct $ $
Schedule of activity in the allowance for loan losses	Activity in the allowance for loan losses for the three months ended September 30, 2016 and 2015 was as follows: Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, July 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, July 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $ Activity in the allowance for loan losses for the nine months ended September 30, 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, September 30 $ $ $ $ $ Commercial 2015 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ $ $ $ $ Provision charged to expense Losses charged off Recoveries Balance, September 30 $ $ $ $ $
Schedule of balance in the allowance for loan losses and the recorded investment by portfolio segment and impairment method	Commercial September 30, 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 $6,911 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 September 30, 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 nine months ending September 30, 2016 and September 30, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Nine months ended September 30, 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 Nine months ended September 30, 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 tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending September 30, 2016 and September 30, 2015, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended September 30, 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 September 30, 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 September 30, 2016 December 31, 2015 September 30, 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 September 30, 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 $6,911 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	The following table presents loans by class modified as troubled debt restructurings that occurred during the nine month period ending September 30, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the nine months ended September 30, 2016 Number of Loans Investment Investment Commercial Agricultural $ $ Commercial Real Estate Other Residential 1-4 Family Home Equity Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the nine month period ending September 30, 2015: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the nine months ended September 30, 2015 Number of Loans Investment Investment Commercial Commercial and industrial $ $ Commercial real estate Other Residential 1-4 Family Home Equity Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending September 30, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended September 30, 2016 Number of Loans Investment Investment Commercial real estate Other $ $ Total $ $ The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending September 30, 2015: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended September 30, 2015 Number of Loans Investment Investment Commercial real estate Other $ $ Residential 1-4 Family 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	The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the nine month period ending September 30, 2016: For the nine months ended September 30, 2016 Number of Loans Recorded Investment Commercial real estate Other $ Residential 1-4 Family Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the nine month period ending September 30, 2015: For the nine months ended September 30, 2015 Number of Loans Recorded Investment Commercial real estate Other $ Residential 1-4 Family Home Equity Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three month period ending September 30, 2016: For the three months ended September 30, 2016 Number of Loans Recorded Investment Residential 1-4 Family $ Total $ The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three month period ending September 30, 2015: For the three months ended September 30, 2015 Number of Loans Recorded Investment Commercial real estate: Other $ Residential 1-4 Family Home Equity Total $
Schedule of risk category of loans by class of loans	As of September 30, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special September 30, 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	September 30, 2016 Performing Watch Substandard Commercial Commercial and industrial $ $ $ Agricultural Commercial Real Estate Construction and development Farm — — Hotel — — Other Total $ $ $ December 31, 2015 Performing Watch Substandard Commercial Commercial and industrial $ $ — $ Agricultural — Commercial Real Estate Construction and development Farm — — Other Total $ $ $ September 30, 2016 Performing Watch Substandard Residential 1-4 family $ $ $ Home equity Total $ $ $ September 30, 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)	9 Months Ended
	Sep. 30, 2016
OTHER REAL ESTATE OWNED
Schedule of activity in other real estate owned	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning Balance $ $ $ $ Transfer to other real estate owned Sale — Out of other real estate owned Acquisition — — — Write-down — Ending Balance $ $ $ $
Schedule of activity in the valuation account for other real estate	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning Balance — $ $ $ $ Impairments during year — Recovery on impairments — — Reductions — — Ending Balance — September 30 $ $ $ $
Schedule of net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Write-downs $ $ — $ $ Losses/(gains)on sales Net loss/(gain) $ $ $ $ Operating expenses $ $ $ $

DEPOSITS & REPURCHASE AGREEME24

DEPOSITS & REPURCHASE AGREEMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
DEPOSITS & REPURCHASE AGREEMENTS
Schedule of deposits	September 30, 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)	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
Schedule of earnings per common share (EPS) computation	2016 2015 Net Average Share Net Average Share Three Months Ended September 30, 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)	9 Months Ended
	Sep. 30, 2016
FAIR VALUE.
Schedule of assets and liabilities measured at fair value on a recurring basis	Fair Value Measurements at September 30, 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 September 30: States and municipal 2016 2015 Beginning balance, July 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Settlements Ending balance, September 30 $ $ Other securities 2016 2015 Beginning balance, July 1 $ $ Total gains or losses (realized / unrealized) Purchases — — Included in other comprehensive income Ending balance, September 30 $ $ Nine months ended September 30: States and municipal 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income Settlements Ending balance, September 30 $ $ Other securities 2016 2015 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Purchases — Included in other comprehensive income Ending balance, September 30 $ $
Schedule of assets and liabilities measured at fair value on a non-recurring basis	Fair Value Measurements at September 30, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable September 30, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ $ Agricultural Farm real estate 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 $ $ $ Agricultural Farm real estate 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/ September 30, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales 15% - 25% 21% Avg Agricultural Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Farm real estate Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Other real estate Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 15% - 25% 20% Avg $ Mortgage servicing rights $ Cash flow analysis Discount rate 10% 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 10% 10% Avg Other Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 0% - 20% $ 10% Avg Mortgage servicing rights $ Cash flow analysis Discount rate 10%
Schedule of carrying amounts and estimated fair values of financial instruments	Carrying September 30, 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)	9 Months Ended
	Sep. 30, 2016
REGULATORY CAPITAL
Schedule of actual and required capital amounts and ratios	Required for To Be Actual Adequate Capital Well Capitalized September 30, 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)	9 Months Ended
	Sep. 30, 2016
DERIVATIVES
Schedule of fair value hedges	September 30, 2016 December 31, 2015 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps at Fair Value $ $ $ $ Included in Other Liabilities: Interest Rate Swaps at Fair Value $ $ $ $
Summary of the effect of derivative instruments on the Consolidated Statement of Income	Three Months Ended September 30, 2016 2015 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ $ Nine Months Ended September 30, 2016 2015 Interest Rate Swaps – Fee Income Included in Other Income / (Expense) $ $

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2016
ACQUISITION
Summary of the amounts of assets acquired and liabilities assumed recognized at the acquisition date	Consideration Cash $ Equity Instruments Fair Value of Total Consideration $ Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed Cash and cash equivalents $ Securities Federal Home Loan Bank stock Loans Premises and equipment Core deposit intangibles Bank owned life insurance Other assets Total assets acquired Deposits Federal Home Loan Bank advances Other liabilities Total liabilities assumed Total identifiable net assets $ Goodwill $
Pro forma information	3 months 3 months 9 months 9 months 9/30/2016 9/30/2015 9/30/2016 9/30/2015 Net interest income $ $ $ $ Net income Basic earnings per share Diluted earnings per share

STOCK PLANS AND STOCK BASED COM

STOCK PLANS AND STOCK BASED COMPENSATION - Stock Incentive Plans (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Jan. 19, 2015	Apr. 26, 2007
Stock options
Unrecognized stock option compensation expense related to unvested awards
April 2016 - December 2016	$ 22
2,017	$ 35
2015 Plan
Stock-based compensation
Number of shares reserved for issuance under the plan		1,000,000
2007 Stock Incentive 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	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Shares
Outstanding, beginning of year (in shares)	310,665
Exercised (in shares)	(59,625)
Forfeited or expired (in shares)	(12,125)
Outstanding at end of year	238,915		310,665
Exercisable at year end (in shares)	198,065
Fully vested and expected to vest(in shares)	237,727
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share)	$ 12.83
Exercised (in dollars per share)	14.20
Forfeited or expired (in dollars per share)	12.16
Outstanding, period end (in dollars per share)	12.52		$ 12.83
Exercisable at year end (in dollars per share)	11.99
Fully vested and expected to vest (in dollars per share)	$ 12.50
Stock options vested and currently exercisable
Number (in shares)	198,065
Weighted average exercise price (in dollars per share)	$ 11.99
Stock options
Shares
Granted (in shares)	0	0
Exercisable at year end (in shares)	198,065		269,415
Weighted Average Exercise Price
Exercisable at year end (in dollars per share)	$ 11.99		$ 12.48
Stock options vested and currently exercisable
Number (in shares)	198,065		269,415
Weighted average exercise price (in dollars per share)	$ 11.99		$ 12.48
Aggregate intrinsic value	$ 2,567		$ 2,801
Weighted average remaining life	3 years 3 months 18 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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Additional disclosures
Compensation expense	$ 103	$ 70	$ 282	$ 230
Stock options
Additional disclosures
Compensation expense	21	$ 48	64	$ 133
Performance units | Executive officers
Additional disclosures
Compensation expense	$ 55		$ 137

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					9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation
Closing price of common stock (in dollars per share)	$ 21.89		$ 19.89			$ 21.89
Shares of common stock granted	17,976		358,000
Shares
Granted (in shares)	17,976		358,000
Additional disclosures
Compensation expense	$ 103			$ 70		$ 282	$ 230
Restricted stock
Stock-based compensation
Shares of common stock granted						40,152
Shares
Nonvested at the beginning of the period (in shares)			101,631			101,631
Granted (in shares)						40,152
Vested (in shares)						(30,048)
Forfeited (in shares)						(500)
Nonvested at the end of the period (in shares)	111,235					111,235
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period (in dollars per share)			$ 16.57			$ 16.57
Granted (in dollars per share)						21.91
Vested (in dollars per share)						13.75
Forfeited (in dollars per share)						16.55
Nonvested at the end of the period (in dollars per share)	$ 19.26					$ 19.26
Restricted stock | 2007 Stock Incentive Plan
Additional disclosures
Unrecognized compensation costs	$ 1,089					$ 1,089
Compensation expense	$ 160			143		$ 512	447
Weighted-average period of expected recognition of the cost						2 years 1 month 6 days
Restricted stock | Executive officer and other employees
Stock-based compensation
Vesting percentage of stock awards on third anniversary of grant date	100.00%					100.00%
Shares of common stock granted	16,000	24,152			28,955
Shares
Granted (in shares)	16,000	24,152			28,955
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 22.57	$ 21.47			$ 19.57
Performance units | Executive officer and other employees
Additional disclosures
Compensation expense				$ 27			$ 53
Performance units | Executive officers
Stock-based compensation
Shares of common stock granted		16,152		16,205
Shares
Granted (in shares)		16,152		16,205
Weighted Average Grant Date Fair Value
Granted (in dollars per share)		$ 21.41		$ 19.57
Additional disclosures
Unrecognized compensation costs	$ 447					$ 447
Compensation expense	$ 55					$ 137

STOCK PLANS AND STOCK BASED C34

STOCK PLANS AND STOCK BASED COMPENSATION - Performance Measures and Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Additional disclosures
Shares of common stock granted	17,976		358,000
Compensation expense	$ 103			$ 70	$ 282	$ 230
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		16,205
Compensation expense	$ 55				$ 137
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			9 Months Ended
	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Additional disclosures
Shares of common stock granted	17,976	358,000
Price Per Share	$ 21.89	$ 19.89		$ 21.89
Compensation expense	$ 103		$ 70	$ 282	$ 230
Restricted stock
Additional disclosures
Shares of common stock granted				40,152
Restricted stock | Directors
Additional disclosures
Quarterly vesting percentage of stock awards	25.00%			25.00%

SECURITIES - Fair Value and Rel

SECURITIES - Fair Value and Related Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available for sale securities
Amortized Cost	$ 991,538	$ 905,857
Gross Unrealized Gains	33,751	21,972
Gross Unrealized Losses	(241)	(2,550)
Fair Value	1,025,048	925,279
U. S. government agency
Available for sale securities
Amortized Cost	426	499
Gross Unrealized Gains	10	5
Fair Value	436	504
State and municipal
Available for sale securities
Amortized Cost	339,261	332,999
Gross Unrealized Gains	20,529	17,802
Gross Unrealized Losses	(93)	(68)
Fair Value	359,697	350,733
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for sale securities
Amortized Cost	446,989	332,525
Gross Unrealized Gains	9,478	2,199
Gross Unrealized Losses	(3)	(644)
Fair Value	456,464	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Available for sale securities
Amortized Cost	192,100	228,621
Gross Unrealized Gains	3,664	1,966
Gross Unrealized Losses	(145)	(1,838)
Fair Value	195,619	228,749
Equity securities
Available for sale securities
Amortized Cost	6,233	4,689
Fair Value	6,233	4,689
Other securities
Available for sale securities
Amortized Cost	6,529	6,524
Gross Unrealized Gains	70
Fair Value	$ 6,599	$ 6,524

SECURITIES - Contractual Maturi

SECURITIES - Contractual Maturities of Securities Available for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available for Sale, Amortized Cost
Within one year	$ 11,347
One through five years	70,884
Six through ten years	112,190
After ten years	151,795
Amortized Cost, Equity securities	6,233
Amortized Cost	991,538	$ 905,857
Available for Sale, Fair Value
Within one year	11,456
One through five years	74,840
Six through ten years	119,436
After ten years	161,000
Equity securities	6,233
Fair Value	1,025,048	925,279
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	446,989
Amortized Cost	446,989	332,525
Available for Sale, Fair Value
Debt securities without single maturity date	456,464
Fair Value	456,464	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	192,100
Amortized Cost	192,100	228,621
Available for Sale, Fair Value
Debt securities without single maturity date	195,619
Fair Value	$ 195,619	$ 228,749

SECURITIES - Additional Informa

SECURITIES - Additional Information - (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Available for sale securities
Gross proceeds from sales of securities	$ 7,615	$ 57,208	$ 85,738	$ 139,547
Gross gains realized on sales	23	203	144	1,515
Gross losses realized on sales	0	158	0	1,155
Tax provision related to net realized gains	$ 8	$ 16	$ 50	$ 126

SECURITIES - Securities in an U

SECURITIES - Securities in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 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	$ 38,568	$ 227,076
Less than 12 months, Unrealized Losses	(173)	(1,268)
12 months or longer, Fair Value	9,068	53,428
12 months or longer, Unrealized Losses	(68)	(1,282)
Total Fair Value	47,636	280,504
Total Unrealized Losses	(241)	(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	10,825	4,802
Less than 12 months, Unrealized Losses	(93)	(33)
12 months or longer, Fair Value		1,367
12 months or longer, Unrealized Losses		(35)
Total Fair Value	10,825	6,169
Total Unrealized Losses	(93)	(68)
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	10,175	168,950
Less than 12 months, Unrealized Losses	(3)	(644)
Total Fair Value	10,175	168,950
Total Unrealized Losses	(3)	(644)
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	17,568	53,324
Less than 12 months, Unrealized Losses	(77)	(591)
12 months or longer, Fair Value	9,068	52,061
12 months or longer, Unrealized Losses	(68)	(1,247)
Total Fair Value	26,636	105,385
Total Unrealized Losses	$ (145)	$ (1,838)

SECURITIES - Other-Than-Tempora

SECURITIES - Other-Than-Temporary Impairment and Other Disclosures (Details) $ in Thousands	9 Months Ended
	Sep. 30, 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	938
Number of portfolio security in unrealized loss position | item	28
Market value of unrealized loss	$ 47,636	$ 280,504
Unrealized losses of collateralized mortgage obligation securities	241	2,550
State and municipal
Other-Than-Temporary-Impairment
Market value of unrealized loss	10,825	6,169
Unrealized losses of collateralized mortgage obligation securities	93	68
Collateralized mortgage obligations (Government Sponsored Entity)
Other-Than-Temporary-Impairment
Market value of unrealized loss	26,636	105,385
Unrealized losses of collateralized mortgage obligation securities	145	$ 1,838
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	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Loans and allowance
Total loans	$ 2,584,907		$ 2,155,392
Allowance for loan losses	(21,828)	$ (21,468)	(22,020)	$ (22,023)	$ (22,473)	$ (23,250)
Net loans	2,563,079		2,133,372
Financing receivables	442,595		163,764
Remaining discount on financing receivables	7,308		2,198
Commercial and industrial
Loans and allowance
Financing receivables	16,337		9,406
Agricultural
Loans and allowance
Financing receivables	1,025
Farm
Loans and allowance
Financing receivables	221
Hotel
Loans and allowance
Financing receivables	1,615
Construction and development
Loans and allowance
Financing receivables	14,136		3,666
Other real estate
Loans and allowance
Financing receivables	175,387		81,831
1-4 family
Loans and allowance
Financing receivables	216,057		46,967
Home equity
Loans and allowance
Financing receivables	14,959		19,076
Direct
Loans and allowance
Financing receivables	2,858		2,818
Commercial
Loans and allowance
Total loans	490,359		445,664
Allowance for loan losses	(8,590)	(6,940)	(6,511)	(6,198)	(5,394)	(2,977)
Commercial | Commercial and industrial
Loans and allowance
Total loans	422,614		380,960
Commercial | Agricultural
Loans and allowance
Total loans	67,745		64,704
Commercial Real Estate
Loans and allowance
Total loans	1,125,996		925,884
Allowance for loan losses	(7,920)	(8,780)	(10,702)	(11,546)	(12,689)	(15,605)
Commercial Real Estate | Farm
Loans and allowance
Total loans	109,507		97,916
Commercial Real Estate | Hotel
Loans and allowance
Total loans	90,929		72,193
Commercial Real Estate | Construction and development
Loans and allowance
Total loans	87,722		77,394
Commercial Real Estate | Other
Loans and allowance
Total loans	837,838		678,381
Residential
Loans and allowance
Total loans	907,525		727,073
Allowance for loan losses	(4,404)	(4,677)	(3,859)	(3,088)	(3,264)	(3,501)
Residential | 1-4 family
Loans and allowance
Total loans	621,259		438,808
Residential | Home equity
Loans and allowance
Total loans	286,266		288,265
Consumer
Loans and allowance
Total loans	61,027		56,771
Allowance for loan losses	(914)	$ (1,071)	(948)	$ (1,191)	$ (1,126)	$ (1,167)
Consumer | Direct
Loans and allowance
Total loans	60,675		56,312
Consumer | Indirect
Loans and allowance
Total loans	$ 352		$ 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		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Sep. 30, 2016	Dec. 31, 2015
Allowance for loan losses
Balance at the beginning of the period	$ 21,468	$ 22,473	$ 22,020	$ 23,250	$ 23,250
Provision charged to expense	150	800	855	800
Losses charged off	(1,209)	(2,351)	(4,979)	(5,620)
Recoveries	1,419	1,101	3,932	3,593
Balance at the end of the period	21,828	22,023	21,828	22,023	22,020
Loans
Ending Balance individually evaluated for impairment						$ 1,252	$ 1,429
Ending Balance collectively evaluated for impairment						20,576	20,591
Total ending allowance balance	21,468	22,473	22,020	23,250	23,250	21,828	22,020
Loans
Ending Balance individually evaluated for impairment						20,412	18,989
Ending Balance collectively evaluated for impairment						2,564,495	2,136,403
Total ending loan balance excluding accrued interest						2,584,907	2,155,392
Accrued interest						6,911	5,878
Allowance that includes a probability of default for subject loans			2,410		1,583
Commercial
Allowance for loan losses
Balance at the beginning of the period	6,940	5,394	6,511	2,977	2,977
Provision charged to expense	1,525	1,331	2,352	3,822
Losses charged off	(23)	(773)	(650)	(900)
Recoveries	148	246	377	299
Balance at the end of the period	8,590	6,198	8,590	6,198	6,511
Loans
Ending Balance individually evaluated for impairment						454	92
Ending Balance collectively evaluated for impairment						8,136	6,419
Total ending allowance balance	6,940	5,394	6,511	2,977	2,977	8,590	6,511
Loans
Ending Balance individually evaluated for impairment						2,329	812
Ending Balance collectively evaluated for impairment						488,030	444,852
Total ending loan balance excluding accrued interest						490,359	445,664
Commercial Real Estate
Allowance for loan losses
Balance at the beginning of the period	8,780	12,689	10,702	15,605	15,605
Provision charged to expense	(1,225)	(1,349)	(3,314)	(5,298)
Losses charged off	(33)	(101)	(614)	(538)
Recoveries	398	307	1,146	1,777
Balance at the end of the period	7,920	11,546	7,920	11,546	10,702
Loans
Ending Balance individually evaluated for impairment						650	1,166
Ending Balance collectively evaluated for impairment						7,270	9,536
Total ending allowance balance	8,780	12,689	10,702	15,605	15,605	7,920	10,702
Loans
Ending Balance individually evaluated for impairment						7,870	8,909
Ending Balance collectively evaluated for impairment						1,118,126	916,975
Total ending loan balance excluding accrued interest						1,125,996	925,884
Residential
Allowance for loan losses
Balance at the beginning of the period	4,677	3,264	3,859	3,501	3,501
Provision charged to expense	(257)	154	1,214	927
Losses charged off	(122)	(401)	(967)	(1,606)
Recoveries	106	71	298	266
Balance at the end of the period	4,404	3,088	4,404	3,088	3,859
Loans
Ending Balance individually evaluated for impairment						148	171
Ending Balance collectively evaluated for impairment						4,256	3,688
Total ending allowance balance	4,677	3,264	3,859	3,501	3,501	4,404	3,859
Loans
Ending Balance individually evaluated for impairment						10,092	9,155
Ending Balance collectively evaluated for impairment						897,433	717,918
Total ending loan balance excluding accrued interest						907,525	727,073
Consumer
Allowance for loan losses
Balance at the beginning of the period	1,071	1,126	948	1,167	1,167
Provision charged to expense	107	664	603	1,349
Losses charged off	(1,031)	(1,076)	(2,748)	(2,576)
Recoveries	767	477	2,111	1,251
Balance at the end of the period	914	1,191	914	1,191	948
Loans
Ending Balance collectively evaluated for impairment						914	948
Total ending allowance balance	$ 1,071	$ 1,126	$ 948	$ 1,167	$ 1,167	914	948
Loans
Ending Balance individually evaluated for impairment						121	113
Ending Balance collectively evaluated for impairment						60,906	56,658
Total ending loan balance excluding accrued interest						61,027	$ 56,771
Cheviot Financial Corp.
Loans
Purchased credit impaired loans						16,175
Non accretable yield						4,615
Accretable yield						0
Allowance for loan losses on loans acquired in transfer						$ 0

LOANS AND ALLOWANCE FOR LOAN 43

LOANS AND ALLOWANCE FOR LOAN LOSSES - Nonperforming Loans - (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
LOANS AND ALLOWANCE FOR LOAN LOSSES
Troubled debt restructurings	$ 6,669	$ 8,389
Non-accrual loans	14,944	12,843
Total ending loan balance excluding accrued interest	$ 2,584,907	$ 2,155,392

LOANS AND ALLOWANCE FOR LOAN 44

LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan Impairment - (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Loans individually evaluated for impairment and average balance of impaired loans
Performing troubled debt restructurings excluded as allowed	$ 1,954		$ 1,954		$ 2,760
Unpaid Principal Balance
With an allowance recorded	5,922		5,922		4,146
With no related allowance recorded	17,094		17,094		15,230
Total impaired loans	23,016		23,016		19,376
Recorded Investment
With an allowance recorded	5,747		5,747		3,981
With no related allowance recorded	12,711		12,711		12,248
Total impaired loans	18,458		18,458		16,229
Allowance for Loan Losses Allocated
With an allowance recorded	1,252		1,252		1,429
Total impaired loans	1,252		1,252		1,429
Average recorded investment
Average Balance	19,177	$ 18,592	17,300	$ 20,938
Interest Income Recognized
Total impaired loans - interest income recognized	71	107	269	276
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	71	107	269	276
Commercial
Allowance for Loan Losses Allocated
With an allowance recorded	454		454		92
Commercial | Commercial and industrial
Unpaid Principal Balance
With an allowance recorded	371		371		150
With no related allowance recorded	1,078		1,078		676
Recorded Investment
With an allowance recorded	344		344		150
With no related allowance recorded	352		352		655
Allowance for Loan Losses Allocated
With an allowance recorded	85		85		92
Average recorded investment
Average Balance	725	1,677	753	1,256
Interest Income Recognized
Total impaired loans - interest income recognized	12	6	43	12
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	12	6	43	12
Commercial | Agricultural
Unpaid Principal Balance
With an allowance recorded	1,450		1,450
With no related allowance recorded	183		183		7
Recorded Investment
With an allowance recorded	1,450		1,450
With no related allowance recorded	183		183		7
Allowance for Loan Losses Allocated
With an allowance recorded	369		369
Average recorded investment
Average Balance	1,640		824	38
Commercial | Farm
Unpaid Principal Balance
With an allowance recorded	1,106		1,106
With no related allowance recorded	501		501
Recorded Investment
With an allowance recorded	1,105		1,105
With no related allowance recorded	246		246
Allowance for Loan Losses Allocated
With an allowance recorded	282		282
Commercial | Hotel
Unpaid Principal Balance
With no related allowance recorded	64		64
Recorded Investment
With no related allowance recorded	64		64
Commercial | Construction and development
Unpaid Principal Balance
With no related allowance recorded	158		158
Recorded Investment
With no related allowance recorded	84		84
Commercial | Other
Unpaid Principal Balance
With an allowance recorded	1,788		1,788
With no related allowance recorded	3,872		3,872
Recorded Investment
With an allowance recorded	1,682		1,682
With no related allowance recorded	2,736		2,736
Allowance for Loan Losses Allocated
With an allowance recorded	368		368
Commercial Real Estate
Allowance for Loan Losses Allocated
With an allowance recorded	650		650		1,166
Commercial Real Estate | Farm
Unpaid Principal Balance
With no related allowance recorded					496
Recorded Investment
With no related allowance recorded					309
Average recorded investment
Average Balance	1,357	405	830	424
Interest Income Recognized
Total impaired loans - interest income recognized				4
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized				4
Commercial Real Estate | Hotel
Average recorded investment
Average Balance	32		16	3,563
Commercial Real Estate | Construction and development
Unpaid Principal Balance
With no related allowance recorded					189
Recorded Investment
With no related allowance recorded					186
Average recorded investment
Average Balance	124		155	20
Interest Income Recognized
Total impaired loans - interest income recognized				47
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized				47
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
Average recorded investment
Average Balance	4,791	6,298	4,898	5,753
Interest Income Recognized
Total impaired loans - interest income recognized	35	86	152	141
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	35	86	152	141
Residential
Allowance for Loan Losses Allocated
With an allowance recorded	148		148		171
Residential | 1-4 family
Unpaid Principal Balance
With an allowance recorded	1,100		1,100		1,357
With no related allowance recorded	8,984		8,984		6,718
Recorded Investment
With an allowance recorded	1,059		1,059		1,309
With no related allowance recorded	7,040		7,040		5,391
Allowance for Loan Losses Allocated
With an allowance recorded	147		147		167
Average recorded investment
Average Balance	8,299	7,343	7,433	7,527
Interest Income Recognized
Total impaired loans - interest income recognized	17	8	44	43
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	17	8	44	43
Residential | Home equity
Unpaid Principal Balance
With an allowance recorded	107		107		159
With no related allowance recorded	2,127		2,127		2,589
Recorded Investment
With an allowance recorded	107		107		159
With no related allowance recorded	1,886		1,886		2,296
Allowance for Loan Losses Allocated
With an allowance recorded	1		1		4
Average recorded investment
Average Balance	2,083	2,707	2,270	2,221
Interest Income Recognized
Total impaired loans - interest income recognized	4	2	20	10
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	4	2	20	10
Residential | Direct
Unpaid Principal Balance
With no related allowance recorded	127		127
Recorded Investment
With no related allowance recorded	120		120
Consumer | Direct
Unpaid Principal Balance
With no related allowance recorded					126
Recorded Investment
With no related allowance recorded					$ 113
Average recorded investment
Average Balance	126	162	121	134
Interest Income Recognized
Total impaired loans - interest income recognized	3	4	9	14
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized	$ 3	4	9	14
Consumer | Indirect
Average recorded investment
Average Balance				2
Interest Income Recognized
Total impaired loans - interest income recognized		1	1	5
Cash Basis Income Recognized
Total impaired loans - cash basis income recognized		$ 1	$ 1	$ 5

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	Sep. 30, 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	$ 14,944	$ 12,843
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	2,584,907	2,155,392
Total Past Due	15,137	14,853
Loans Not Past Due	2,569,770	2,140,539
Accrued interest	6,911	5,878
30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	3,057	5,164
60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	2,822	2,597
Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	9,258	7,092
Commercial
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	490,359	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	569	654
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	422,614	380,960
Total Past Due	479	342
Loans Not Past Due	422,135	380,618
Commercial | Commercial and industrial | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	172	93
Commercial | Commercial and industrial | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	98
Commercial | Commercial and industrial | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	209	249
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	1,548	7
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	67,745	64,704
Total Past Due	1,614	27
Loans Not Past Due	66,131	64,677
Commercial | Agricultural | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	17	20
Commercial | Agricultural | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	49
Commercial | Agricultural | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,548	7
Commercial Real Estate
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	1,125,996	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	1,352	308
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	109,507	97,916
Total Past Due	1,249	119
Loans Not Past Due	108,258	97,797
Commercial Real Estate | Farm | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	316
Commercial Real Estate | Farm | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	933	119
Commercial Real Estate | Hotel
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	63
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	90,929	72,193
Total Past Due	64	13
Loans Not Past Due	90,865	72,180
Commercial Real Estate | Hotel | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due		13
Commercial Real Estate | Hotel | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	64
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	44	144
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	87,722	77,394
Total Past Due	67	211
Loans Not Past Due	87,655	77,183
Commercial Real Estate | Construction and development | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	23	67
Commercial Real Estate | Construction and development | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	44	144
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	3,219	4,791
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	837,838	678,381
Total Past Due	2,381	3,576
Loans Not Past Due	835,457	674,805
Commercial Real Estate | Other | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	445	873
Commercial Real Estate | Other | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	344	102
Commercial Real Estate | Other | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,592	2,601
Residential
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	907,525	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	6,810	5,211
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	621,259	438,808
Total Past Due	7,600	8,401
Loans Not Past Due	613,659	430,407
Residential | 1-4 family | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,795	3,726
Residential | 1-4 family | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,766	1,904
Residential | 1-4 family | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	4,039	2,771
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	1,242	1,639
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	286,266	288,265
Total Past Due	1,554	1,989
Loans Not Past Due	284,712	286,276
Residential | Home equity | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	586	410
Residential | Home equity | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	206	446
Residential | Home equity | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	762	1,133
Consumer
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	61,027	56,771
Consumer | Direct
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	97	89
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	60,675	56,312
Total Past Due	129	173
Loans Not Past Due	60,546	56,139
Consumer | Direct | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	42	40
Consumer | Direct | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	20	65
Consumer | Direct | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	67	68
Consumer | Indirect
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	352	459
Total Past Due		2
Loans Not Past Due	$ 352	457
Consumer | Indirect | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due		$ 2

LOANS AND ALLOWANCE FOR LOAN 46

LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructurings - (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)item	Sep. 30, 2015USD ($)item	Sep. 30, 2016USD ($)item	Sep. 30, 2015USD ($)item	Dec. 31, 2015USD ($)
Troubled debt restructurings
Total of troubled debt restructurings	$ 6,669		$ 6,669		$ 8,389
Allocated specific reserves	501		501		863
Amounts Company has committed to lend to customers with outstanding loans classified as troubled debt restructurings	$ 0		$ 0		$ 0
Loans by class modified as troubled debt restructurings
Number of Loans | item	2	5	8	16
Pre-Modification Outstanding Recorded Investment	$ 298	$ 295	$ 587	$ 2,085
Post-Modification Outstanding Recorded Investment	$ 298	$ 295	$ 587	$ 1,824
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Number of Loans | item	1	4	3	5
Recorded Investment	$ 104	$ 1,034	$ 375	$ 1,062
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	$ 7,895	$ 5,511	$ 10,784	$ 6,586
Commercial | Agricultural
Loans by class modified as troubled debt restructurings
Number of Loans | item	2		1
Pre-Modification Outstanding Recorded Investment	$ 298		$ 89
Post-Modification Outstanding Recorded Investment	$ 298		$ 89
Commercial | Commercial and industrial
Loans by class modified as troubled debt restructurings
Number of Loans | item				3
Pre-Modification Outstanding Recorded Investment				$ 216
Post-Modification Outstanding Recorded Investment				$ 216
Commercial Real Estate | Other
Loans by class modified as troubled debt restructurings
Number of Loans | item		1	2	8
Pre-Modification Outstanding Recorded Investment		$ 42	$ 298	$ 1,610
Post-Modification Outstanding Recorded Investment		$ 42	$ 298	$ 1,349
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Number of Loans | item		2	1	3
Recorded Investment		$ 835	$ 125	$ 863
Residential | 1-4 family
Loans by class modified as troubled debt restructurings
Number of Loans | item		3	1	3
Pre-Modification Outstanding Recorded Investment		$ 215	$ 124	$ 215
Post-Modification Outstanding Recorded Investment		$ 215	$ 124	$ 215
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Number of Loans | item	1	1	2	1
Recorded Investment	$ 104	$ 152	$ 250	$ 152
Residential | Home equity
Loans by class modified as troubled debt restructurings
Number of Loans | item		1	4	2
Pre-Modification Outstanding Recorded Investment		$ 38	$ 76	$ 44
Post-Modification Outstanding Recorded Investment		$ 38	$ 76	$ 44
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Number of Loans | item		1		1
Recorded Investment		$ 47		$ 47

LOANS AND ALLOWANCE FOR LOAN 47

LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk Categories of Loans by Class of Loans - (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Risk category of loans
Loans	$ 2,584,907	$ 2,155,392
Pass
Risk category of loans
Loans	1,397,432	1,181,671
Special Mention
Risk category of loans
Loans	20,050	19,019
Substandard
Risk category of loans
Loans	19,805	7,157
Substandard Commercial
Risk category of loans
Loans	1,038	1,117
Non-accrual
Risk category of loans
Loans	5,757	4,787
Performing
Risk category of loans
Loans	171,772	157,628
Watch
Risk category of loans
Loans	501	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	$ 490,359	445,664
Commercial | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial | Commercial and industrial
Risk category of loans
Loans	422,614	380,960
Commercial | Commercial and industrial | Pass
Risk category of loans
Loans	376,585	338,436
Commercial | Commercial and industrial | Special Mention
Risk category of loans
Loans	2,526	8,324
Commercial | Commercial and industrial | Substandard
Risk category of loans
Loans	5,845	636
Commercial | Commercial and industrial | Substandard Commercial
Risk category of loans
Loans	62	99
Commercial | Commercial and industrial | Non-accrual
Risk category of loans
Loans	507	555
Commercial | Commercial and industrial | Performing
Risk category of loans
Loans	37,072	32,910
Commercial | Commercial and industrial | Watch
Risk category of loans
Loans	17
Commercial | Agricultural
Risk category of loans
Loans	67,745	64,704
Commercial | Agricultural | Pass
Risk category of loans
Loans	55,797	58,253
Commercial | Agricultural | Special Mention
Risk category of loans
Loans	2,461
Commercial | Agricultural | Substandard
Risk category of loans
Loans		7
Commercial | Agricultural | Substandard Commercial
Risk category of loans
Loans	98
Commercial | Agricultural | Non-accrual
Risk category of loans
Loans	1,450
Commercial | Agricultural | Performing
Risk category of loans
Loans	7,929	6,444
Commercial | Agricultural | Watch
Risk category of loans
Loans	10
Commercial Real Estate
Risk category of loans
Loans	1,125,996	925,884
Commercial Real Estate | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial Real Estate | Farm
Risk category of loans
Loans	109,507	97,916
Commercial Real Estate | Farm | Pass
Risk category of loans
Loans	86,685	75,924
Commercial Real Estate | Farm | Special Mention
Risk category of loans
Loans	2,238	328
Commercial Real Estate | Farm | Substandard
Risk category of loans
Loans	696	713
Commercial Real Estate | Farm | Non-accrual
Risk category of loans
Loans	1,352	308
Commercial Real Estate | Farm | Performing
Risk category of loans
Loans	18,536	20,643
Commercial Real Estate | Hotel
Risk category of loans
Loans	90,929	72,193
Commercial Real Estate | Hotel | Pass
Risk category of loans
Loans	87,883	72,193
Commercial Real Estate | Hotel | Substandard
Risk category of loans
Loans	2,983
Commercial Real Estate | Construction and development
Risk category of loans
Loans	87,722	77,394
Commercial Real Estate | Construction and development | Pass
Risk category of loans
Loans	61,333	60,246
Commercial Real Estate | Construction and development | Special Mention
Risk category of loans
Loans	3,596
Commercial Real Estate | Construction and development | Substandard
Risk category of loans
Loans	2,344	2,499
Commercial Real Estate | Construction and development | Substandard Commercial
Risk category of loans
Loans	13	31
Commercial Real Estate | Construction and development | Non-accrual
Risk category of loans
Loans	31	113
Commercial Real Estate | Construction and development | Performing
Risk category of loans
Loans	20,391	14,438
Commercial Real Estate | Construction and development | Watch
Risk category of loans
Loans	14	67
Commercial Real Estate | Other
Risk category of loans
Loans	837,838	678,381
Commercial Real Estate | Other | Pass
Risk category of loans
Loans	729,149	576,619
Commercial Real Estate | Other | Special Mention
Risk category of loans
Loans	9,229	10,367
Commercial Real Estate | Other | Substandard
Risk category of loans
Loans	7,937	3,309
Commercial Real Estate | Other | Substandard Commercial
Risk category of loans
Loans	802	980
Commercial Real Estate | Other | Non-accrual
Risk category of loans
Loans	2,417	3,811
Commercial Real Estate | Other | Performing
Risk category of loans
Loans	87,844	83,193
Commercial Real Estate | Other | Watch
Risk category of loans
Loans	460	102
Residential
Risk category of loans
Loans	907,525	727,073
Residential | Substandard
Risk category of loans
Loans	4,801	3,904
Residential | Performing
Risk category of loans
Loans	900,752	720,819
Residential | Watch
Risk category of loans
Loans	1,972	2,350
Residential | 1-4 family
Risk category of loans
Loans	621,259	438,808
Residential | 1-4 family | Substandard
Risk category of loans
Loans	4,039	2,771
Residential | 1-4 family | Performing
Risk category of loans
Loans	615,454	434,133
Residential | 1-4 family | Watch
Risk category of loans
Loans	1,766	1,904
Residential | Home equity
Risk category of loans
Loans	286,266	288,265
Residential | Home equity | Substandard
Risk category of loans
Loans	762	1,133
Residential | Home equity | Performing
Risk category of loans
Loans	285,298	286,686
Residential | Home equity | Watch
Risk category of loans
Loans	206	446
Consumer
Risk category of loans
Loans	61,027	56,771
Consumer | Substandard
Risk category of loans
Loans	20	101
Consumer | Performing
Risk category of loans
Loans	60,940	56,638
Consumer | Loss
Risk category of loans
Loans	67	32
Consumer | Direct
Risk category of loans
Loans	60,675	56,312
Consumer | Direct | Substandard
Risk category of loans
Loans	20	101
Consumer | Direct | Performing
Risk category of loans
Loans	60,588	56,179
Consumer | Direct | Loss
Risk category of loans
Loans	67	32
Consumer | Indirect
Risk category of loans
Loans	352	459
Consumer | Indirect | Performing
Risk category of loans
Loans	$ 352	$ 459

OTHER REAL ESTATE OWNED - Infor

OTHER REAL ESTATE OWNED - Information Regarding Other Real Estate Owned (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Activity in other real estate owned
Beginning Balance	$ 3,180	$ 2,065	$ 1,959	$ 2,688	$ 2,688
Transfer to other real estate owned	564	801	1,547	1,164
Sale - Out of other real estate owned	(1,441)	(429)	(2,841)	(1,377)
Acquisition			1,668
Write-down	(61)		(91)	(38)	(91)	$ (38)
Ending Balance	2,242	2,437	2,242	2,437	1,959	2,688
Valuation allowance on other real estate owned
Beginning Balance	(234)	(323)	(217)	(448)	(448)
Impairments during year	(61)		(91)	(38)
Recovery on impairments	5		18
Reductions		37		200
Ending Balance	(290)	(286)	(290)	(286)	(217)	(448)
Net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets
Write-downs	61		91	38	91	$ 38
Losses/(gains) on sales	(128)	19	(344)	25
Net loss/(gain)	(67)	19	(253)	63
Operating expenses	46	$ 30	103	$ 124
Foreclosed residential real estate properties
Foreclosed residential real estate properties	$ 1,669		1,669		915
Retail mortgage loans, foreclosure proceedings in process			$ 3,161		$ 2,407

DEPOSITS & REPURCHASE AGREEME49

DEPOSITS & REPURCHASE AGREEMENTS - Deposit Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
DEPOSITS & REPURCHASE AGREEMENTS
Non-interest-bearing demand	$ 705,428	$ 641,439
Interest-bearing demand	1,132,290	1,084,786
Savings	756,069	599,729
Certificates of deposit of $250 or more	139,006	73,493
Other certificates and time deposits	391,235	251,328
Total deposits	$ 3,124,028	2,650,775
Repurchase agreement, term	1 day
Securities under repurchase agreements	$ 34,076	28,363
Pledged amount of mortgage backed securities	$ 50,844	$ 48,662

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Income
Net income attributable to common shareholders	$ 11,696	$ 9,111	$ 26,579	$ 26,434
Net income attributable to common shareholders and assumed conversions	$ 11,696	$ 9,111	$ 26,579	$ 26,434
Weighted Average Shares
Net income attributable to common shareholders (in shares)	24,016,237	21,615,263	22,786,961	21,658,088
Effect of dilutive warrants (in shares)	202,238	171,062	182,327	152,171
Effect of dilutive stock options (in shares)	103,137	110,636	101,777	103,053
Net income attributable to common shareholders and assumed conversions (in shares)	24,321,612	21,896,961	23,071,065	21,913,312
Earnings per Common Share
Net income attributable to common shareholders (in dollars per share)	$ 0.49	$ 0.42	$ 1.17	$ 1.22
Net income attributable to common shareholders and assumed conversions (in dollars per share)	$ 0.48	$ 0.42	$ 1.15	$ 1.21
Stock options
Earnings per Common Share
Common shares not considered in computing diluted earnings per share	0		0	10,210

FAIR VALUE - Valuation Inputs -

FAIR VALUE - Valuation Inputs - (Details)	9 Months Ended
	Sep. 30, 2016item
Quantitative information about level 3 fair value measurements for financial instruments measured at 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	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 1,025,048	$ 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	436	504
State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	359,697	350,733
Mortgage-backed securities-residential (Government Sponsored Entity)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	456,464	334,080
Collateralized mortgage obligations (Government Sponsored Entity)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	195,619	228,749
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,233	4,689
Other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,599	6,524
Recurring basis | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	1,025,048	925,279
Mortgage banking derivatives	1,057	700
Fair value, assets	6,255	1,508
Derivative liability	(6,255)	(1,508)
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,233	4,689
Recurring basis | Significant Other Observable Inputs (Level 2) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	1,001,962	903,208
Mortgage banking derivatives	1,057	700
Fair value, assets	6,255	1,508
Derivative liability	(6,255)	(1,508)
Recurring basis | Significant Unobservable Inputs (Level 3) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	16,853	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	436	504
Recurring basis | U. S. government agency | Significant Other Observable Inputs (Level 2) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	436	504
Recurring basis | State and municipal | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	359,697	350,733
Recurring basis | State and municipal | Significant Other Observable Inputs (Level 2) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	349,443	339,875
Recurring basis | State and municipal | Significant Unobservable Inputs (Level 3) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	10,254	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	456,464	334,080
Recurring basis | Mortgage-backed securities-residential (Government Sponsored Entity) | Significant Other Observable Inputs (Level 2) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	456,464	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	195,619	228,749
Recurring basis | Collateralized mortgage obligations (Government Sponsored Entity) | Significant Other Observable Inputs (Level 2) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	195,619	228,749
Recurring basis | Equity securities | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,233	4,689
Recurring basis | Equity securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,233	4,689
Recurring basis | Other securities | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	6,599	6,524
Recurring basis | Other securities | Significant Unobservable Inputs (Level 3) | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 6,599	$ 6,524

FAIR VALUE - Reconciliation Of

FAIR VALUE - Reconciliation Of Gains and Losses on Level 3 Assets - (Details) - Significant Unobservable Inputs (Level 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
State and municipal | Recurring basis
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	$ 10,430	$ 11,863	$ 10,858	$ 12,810
Included in other comprehensive income	6	(6)	8	(36)
Settlements	(182)	(510)	(612)	(1,427)
Balance at the end of the period	10,254	11,347	10,254	11,347
Other securities
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period		2,527
Included in other comprehensive income		(2)
Balance at the end of the period		2,525		2,525
Other securities | Recurring basis
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	6,601		6,524	2,503
Included in other comprehensive income	(2)		75	22
Balance at the end of the period	$ 6,599	$ 2,525	$ 6,599	$ 2,525

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		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Assets:
Total impaired loans	$ 2,751		$ 2,751		$ 1,140
Impaired servicing rights	3,161		3,161		531
Recorded investment of impaired loans	3,700		3,700		2,393
Valuation allowance of impaired loans	949		949		1,253
Provision expenses of impaired loans	228	$ 426	634	$ 1,281
Gross outstanding balance of servicing rights	3,536		3,536		731
Valuation allowance of servicing rights			375		200
Change occurred in the valuation allowance	125	$ 25	175	$ 25
Commercial and industrial
Assets:
Total impaired loans	259		259		58
Recorded investment of impaired loans	344		344
Valuation allowance of impaired loans	85		85
Agricultural
Assets:
Total impaired loans	1,081		1,081
Recorded investment of impaired loans	1,450		1,450
Valuation allowance of impaired loans	369		369
Farm
Assets:
Total impaired loans	823		823
Recorded investment of impaired loans	1,105		1,105
Valuation allowance of impaired loans	282		282
Other
Assets:
Total impaired loans	588		588		1,082
Recorded investment of impaired loans	801		801
Valuation allowance of impaired loans	213		213
Significant Unobservable Inputs (Level 3)
Assets:
Total impaired loans	2,751		2,751		1,140
Impaired servicing rights	3,161		3,161		531
Significant Unobservable Inputs (Level 3) | Commercial and industrial
Assets:
Total impaired loans	259		259		58
Significant Unobservable Inputs (Level 3) | Agricultural
Assets:
Total impaired loans	1,081		1,081
Significant Unobservable Inputs (Level 3) | Farm
Assets:
Total impaired loans	823		823
Significant Unobservable Inputs (Level 3) | Other
Assets:
Total impaired loans	$ 588		$ 588		$ 1,082

FAIR VALUE - Quantitative Infor

FAIR VALUE - Quantitative Information about Level 3 Value Measurements - (Details) - Non-recurring basis - Significant Unobservable Inputs (Level 3) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Impaired Loans
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 2,751	$ 1,140
Impaired Loans | Commercial and industrial | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 259
Impaired Loans | Commercial and industrial | Sales comparison approach | Minimum
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	15.00%
Impaired Loans | Commercial and industrial | Sales comparison approach | Maximum
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	25.00%
Impaired Loans | Commercial and industrial | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	21.00%
Impaired Loans | Agricultural | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 1,081
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	10.00%
Impaired Loans | Agricultural | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (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	$ 823	$ 58
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	10.00%	10.00%
Impaired Loans | Farm | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	10.00%	10.00%
Impaired Loans | Other real estate | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 588
Impaired Loans | Other real estate | Sales comparison approach | Minimum
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	15.00%
Impaired Loans | Other real estate | Sales comparison approach | Maximum
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	25.00%
Impaired Loans | Other real estate | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (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
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)		0.00%
Impaired Loans | Other | Sales comparison approach | Maximum
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)		20.00%
Impaired Loans | Other | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)		10.00%
Mortgage servicing rights | Cash flow analysis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 3,161	$ 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	Sep. 30, 2016	Dec. 31, 2015
Financial assets
Interest bearing time deposits	$ 1,960	$ 1,960
FHLB and other stock, at cost	21,537	11,300
Interest receivable	6,911	5,878
Carrying Value
Financial assets
Cash and cash equivalents	80,329	67,578
Interest bearing time deposits	1,960	1,960
Loans including loans held for sale, net	2,567,304	2,139,765
FHLB and other stock, at cost	21,537	11,300
Interest receivable	11,995	10,779
Financial liabilities
Deposits	(3,124,028)	(2,650,775)
Other borrowings	(108,076)	(28,363)
FHLB advances	(259,638)	(269,488)
Interest payable	(669)	(560)
Subordinated debentures	(41,239)	(41,239)
Fair Value
Financial assets
Cash and cash equivalents	80,329	67,578
Interest bearing time deposits	1,960	1,960
Loans including loans held for sale, net	2,645,900	2,195,092
Interest receivable	11,995	10,779
Financial liabilities
Deposits	(3,123,928)	(2,648,844)
Other borrowings	(118,876)	(28,363)
FHLB advances	(263,694)	(270,977)
Interest payable	(669)	(560)
Subordinated debentures	(24,212)	(24,212)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets
Cash and cash equivalents	62,809	56,104
Financial liabilities
Deposits	(705,428)	(641,439)
Significant Other Observable Inputs (Level 2)
Financial assets
Cash and cash equivalents	17,520	11,474
Interest bearing time deposits	1,960	1,960
Loans including loans held for sale, net	7,222	7,726
Interest receivable	5,084	4,901
Financial liabilities
Deposits	(2,418,500)	(2,007,405)
Other borrowings	(118,876)	(28,363)
FHLB advances	(263,694)	(270,977)
Interest payable	(669)	(560)
Subordinated debentures	(24,212)	(24,212)
Significant Unobservable Inputs (Level 3)
Financial assets
Loans including loans held for sale, net	2,638,678	2,187,366
Interest receivable	$ 6,911	$ 5,878

REGULATORY CAPITAL (Details)

REGULATORY CAPITAL (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)item	Jan. 01, 2019	Dec. 31, 2015USD ($)	Sep. 30, 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
Basel III and Dodd Frank Rules
Capital conservation buffer, percentage			0.00%
Total capital (to risk-weighted assets)
Actual, Amount	$ 397,269		$ 356,210
Required for Adequate Capital, Amount	$ 215,540		$ 184,170
Actual, Ratio	14.70%		15.50%
Required for Adequate Capital, Ratio	8.00%		8.00%
Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 375,441		$ 334,190
Required for Adequate Capital, Amount	$ 161,655		$ 138,127
Actual, Ratio	13.90%		14.50%
Required for Adequate Capital, Ratio	6.00%		6.00%
Common equity Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 334,567		$ 293,316
Required for Adequate Capital, Amount	$ 121,241		$ 103,595
Actual, Ratio	12.40%		12.70%
Required for Adequate Capital, Ratio	4.50%		4.50%
Tier 1 capital (to average assets)
Actual, Amount	$ 375,441		$ 334,190
Required for Adequate Capital, Amount	$ 155,726		$ 130,845
Actual, Ratio (as a percent)	9.60%		10.20%
Required for Adequate Capital, Ratio	4.00%		4.00%
Cash and cash equivalents	$ 80,329		$ 67,578	$ 112,353	$ 62,485
Federal Reserve Corrective Action Rules
Basel III and Dodd Frank Rules
Capital conservation buffer, percentage	0.625%
Forecast 2,019
Basel III and Dodd Frank Rules
Capital conservation buffer, percentage		2.50%
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	$ 4,000
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	$ 403,466		$ 334,266
Required for Adequate Capital, Amount	215,538		184,168
To Be Well Capitalized, Amount	$ 269,423		$ 230,211
Actual, Ratio	15.00%		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	$ 381,638		$ 312,246
Required for Adequate Capital, Amount	161,654		138,126
To Be Well Capitalized, Amount	$ 215,538		$ 184,168
Actual, Ratio	14.20%		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	$ 381,638		$ 312,246
Required for Adequate Capital, Amount	121,240		103,595
To Be Well Capitalized, Amount	$ 175,125		$ 149,637
Actual, Ratio	14.20%		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	$ 381,638		$ 312,246
Required for Adequate Capital, Amount	155,435		130,555
To Be Well Capitalized, Amount	$ 194,294		$ 163,194
Actual, Ratio (as a percent)	9.80%		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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Differences between effective tax rates and the federal statutory rate applied to income before income taxes
Effective Income Tax Rate Reconciliation, Percent	26.00%	24.10%	23.50%	22.00%

DERIVATIVES (Details)

DERIVATIVES (Details) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Other Income
Derivatives, Fair Value [Line Items]
Fee income (expense)	$ 257	$ 399	$ 766	$ 548
Other Assets
Derivatives, Fair Value [Line Items]
Notional amount, assets	124,063		124,063		$ 53,741
Fair value, assets	6,255		6,255		1,508
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional amount, liabilities	124,063		124,063		53,741
Fair value, liabilities	$ 6,255		$ 6,255		$ 1,508

ACQUISITIONS - Acquisition of C

ACQUISITIONS - Acquisition of Cheviot Financial Corp. (Details) $ / shares in Units, $ in Thousands	May 20, 2016USD ($)shares	Sep. 30, 2016USD ($)$ / shares	Sep. 30, 2015USD ($)$ / shares	Sep. 30, 2016USD ($)$ / shares	Sep. 30, 2015USD ($)$ / shares	Mar. 31, 2016$ / shares	Jan. 15, 2016lawsuit	Dec. 31, 2015USD ($)
ACQUISITIONS
Closing price of common stock (in dollars per share) | $ / shares		$ 21.89		$ 21.89		$ 19.89
Acquisition related costs		$ 601	$ 617	$ 6,964	$ 617
Goodwill		100,889		100,889				$ 75,953
Consideration
Cash paid for bank acquisitions, net				11,289	(57,083)
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Goodwill		$ 100,889		$ 100,889				$ 75,953
Cheviot Financial Corp.
ACQUISITIONS
Acquisition of outstanding common shares (as a percent)	100.00%
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		$ 15
Total consideration in common stock (as a percent)				50.00%
Total consideration in cash (as a percent)				50.00%
Shares issued | shares	2,351,816
Cash paid	$ 49,700
Acquisition related costs		$ 601		$ 6,964
Goodwill	24,936
Consideration
Cash paid for bank acquisitions, net	49,715
Equity Instruments	51,387
Fair Value of Total Consideration	101,102
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash and cash equivalents	38,426
Securities	89,693
Federal Home Loan Bank stock	8,651
Loans	358,535
Premises and equipment	6,674
Core deposit intangibles	4,099
Bank owned life insurance	16,576
Other assets	13,205
Total assets acquired	535,859
Deposits	444,695
Federal Home Loan Bank advances	12,156
Other liabilities	2,842
Total liabilities assumed	459,693
Total identifiable net assets	76,166
Goodwill	24,936
Fair value of acquired receivables	344,639
Gross contractual amounts receivable	$ 350,869
Pro forma financial information
Net interest income		30,990	30,544	86,753	89,836
Net income		$ 12,156	$ 9,884	$ 32,045	$ 29,193
Basic earnings per share | $ / shares		$ 0.51	$ 0.41	$ 1.34	$ 1.22
Diluted earnings per share | $ / shares		$ 0.50	$ 0.41	$ 1.32	$ 1.20
Number of lawsuits | lawsuit							2