Mainsource Financial (MSFG) 10-Q 9 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 09, 2017
Document and Entity Information
Entity Registrant Name	MAINSOURCE FINANCIAL GROUP
Entity Central Index Key	720,002
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
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		25,548,300
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 72,454	$ 75,778
Money market funds and federal funds sold	5,033	10,774
Cash and cash equivalents	77,487	86,552
Interest bearing time deposits	1,670	1,960
Securities available for sale	1,022,208	1,007,540
Loans held for sale	4,370	12,479
Loans, net of allowance for loan losses of $22,369 and $22,499	2,592,241	2,629,174
FHLB and other stock, at cost	23,960	21,693
Premises and equipment, net	76,391	76,426
Goodwill	101,875	101,315
Purchased intangible assets	8,305	7,419
Cash surrender value of life insurance	80,944	80,539
Interest receivable and other assets	53,024	55,160
Total assets	4,042,475	4,080,257
Deposits
Noninterest bearing	812,301	767,159
Interest bearing	2,342,836	2,343,712
Total deposits	3,155,137	3,110,871
Other borrowings	137,197	209,672
Long term Federal Home Loan Bank (FHLB) advances	229,737	249,658
Subordinated debentures	41,239	41,239
Other liabilities	19,386	19,323
Total liabilities	3,582,696	3,630,763
Commitments and contingent liabilities
Shareholders' equity
Preferred stock, no par value Authorized shares - 400,000 Issued shares - 0 Outstanding shares - 0
Common stock $ .50 stated value: Authorized shares - 100,000,000 Issued shares - 24,694,991 and 24,682,189 Outstanding shares - 24,148,132 and 24,067,364	12,524	12,463
Treasury stock ? 546,859 and 614,825 shares, at cost	(9,815)	(10,909)
Additional paid-in capital	299,076	299,116
Retained earnings	153,956	145,745
Accumulated other comprehensive income	4,038	3,079
Total shareholders' equity	459,779	449,494
Total liabilities and shareholders' equity	$ 4,042,475	$ 4,080,257

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
CONSOLIDATED BALANCE SHEETS
Loans, allowance for loan losses (in dollars)	$ 22,369	$ 22,499
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
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	24,694,991	24,682,189
Common stock, Outstanding shares	24,148,132	24,067,364
Treasury stock, shares	546,859	614,825

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest income
Loans, including fees	$ 27,752	$ 22,471
Securities
Taxable	4,176	3,246
Tax exempt	3,212	2,987
Other interest income	66	42
Total interest income	35,206	28,746
Interest expense
Deposits	970	918
Federal Home Loan Bank advances	1,074	1,100
Subordinated debentures	381	343
Other borrowings	494	13
Total interest expense	2,919	2,374
Net interest income	32,287	26,372
Provision for loan losses		500
Net interest income after provision for loan losses	32,287	25,872
Non-interest income
Service charges on deposit accounts	4,791	4,682
Interchange income	3,054	2,635
Mortgage banking	2,392	1,790
Trust and investment product fees	1,197	1,210
Increase in cash surrender value of life insurance	405	302
Net realized gains on securities (includes $13 and $17 accumulated other comprehensive income (AOCI)	13	17
(Gain)/Loss on sale and write-down of OREO	122	149
Other income	1,022	804
Total non-interest income	12,996	11,589
Non-interest expense
Salaries and employee benefits	17,717	14,860
Net occupancy	2,429	2,261
Equipment	3,384	3,063
Intangibles amortization	304	328
Telecommunications	371	369
Stationery printing and supplies	299	307
FDIC assessment	324	420
Marketing	765	654
Collection expense	231	252
Interchange expense	797	813
Other expenses	2,808	2,830
Total non-interest expense	29,429	26,157
Income before income tax	15,854	11,304
Income tax expense (includes $5 and $6 income tax expense from AOCI reclassification items)	3,781	2,538
Net income attributable to common shareholders	$ 12,073	$ 8,766
Net income per common share:
Basic	$ 0.50	$ 0.41
Diluted	0.49	0.40
Dividend per share	$ 0.16	$ 0.15

CONSOLIDATED STATEMENTS OF INC5

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016
CONSOLIDATED STATEMENTS OF INCOME
Accumulated other comprehensive income (AOCI) reclassifications for realized net gains on available for sale securities	$ 13	$ 17
Income tax expense from AOCI reclassification items	$ 5		$ 6

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 12,073	$ 8,766
Other comprehensive income:
Unrealized holding gains/(losses) on securities available for sale	1,488	10,259
Reclassification adjustment for (gains) included in net income	(13)	(17)
Tax effect	(516)	(3,584)
Other comprehensive income	959	6,658
Comprehensive income	$ 13,032	$ 15,424

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating Activities
Net income	$ 12,073	$ 8,766
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		500
Depreciation expense	931	1,709
Amortization of mortgage servicing rights	341	286
Securities amortization, net	955	1,170
Amortization of purchased intangible assets	304	328
Earnings on cash surrender value of life insurance policies	(405)	(302)
Securities gains, net	(13)	(17)
Gain on loans sold	(1,417)	(1,413)
Loans originated for sale	(47,958)	(42,816)
Proceeds from loan sales	57,484	46,248
Stock based compensation expense	259	197
Stock portion of director retainer fee expense	100	89
(Gain)/Loss on sale and write-down of OREO	122	149
Change in other assets and liabilities	900	(4,887)
Net cash provided by operating activities	23,432	9,709
Investing Activities
Net change in short term investments	290	245
Purchases of securities available for sale	(47,392)	(35,903)
Proceeds from calls, maturities, and payments on securities available for sale	30,157	28,317
Proceeds from sales of securities available for sale	3,100	4,235
Loan originations and payments, net	36,492	(6,583)
Purchases of premises and equipment	(896)	(3,116)
Proceeds from sale of OREO	655	735
Proceeds from redemption of restricted stock	204
Purchase of restricted stock	(2,471)	(3,283)
Cash received/(paid) from business acquisitions, net	(1,400)
Net cash used by investing activities	18,739	(15,353)
Financing Activities
Net change in deposits	44,266	(5,931)
Net change in other borrowings	(70,808)	2,796
Proceeds from FHLB advances		260,000
Repayment of FHLB advances	(19,921)	(243,931)
Cash dividends on common stock	(3,862)	(3,241)
Purchase of treasury shares	(242)	(95)
Repayment on term debt	(1,667)
Proceeds from exercise of stock options, including tax benefit	998	470
Net cash provided by financing activities	(51,236)	10,068
Net change in cash and cash equivalents	(9,065)	4,424
Cash and cash equivalents, beginning of year	86,552	67,578
Cash and cash equivalents, end of period	77,487	72,002
Supplemental cash flow information
Interest paid	3,168	2,368
Income taxes paid		851
Supplemental non cash disclosure
Loan balances transferred to foreclosed real estate	$ 441	$ 537

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2017
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, 2016. Adoption of New Accounting Standards and Newly-Issued, Not Yet Effective Accounting Standards In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606 ) ” ASU 2014-09 says that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. On July 9, 2015, the FASB approved amendments deferring the effective date by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments can be applied retrospectively to each prior reporting period or retrospectively with the cumulative effect of initially applying this Update recognized at the date of initial application. Early application is permitted but not before the original public entity effective date, i.e ., annual periods beginning after December 15, 2016. The Company has determined that ASU No 2014-09 will not have a significant impact on its financial statements as a significant portion of the Company’s revenue is scoped out of the standard. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” ASU 2016-02 requires lessees and lessors to classify leases as either capital leases or operating leases. ASU 2016-02 also requires lessees to recognize assets and liabilities for all leases with the exception of short term leases. There are new disclosure requirements for these leases which will provide users of financial statements with information to understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 will become effective for fiscal years beginning after December 15, 2018. The Company currently has prepared a worksheet of all of its leases and will reviewing them during the next two years to determine the impact on the Company’s financial statements In March 2016, the FASB issued (ASU) No. 2016-09 “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than previously allotted for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. ASU 2016-09 is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those years. The Company implemented this ASU in the first quarter of 2017. The impact of this ASU resulted in a $274 reduction in income tax expense for the first quarter of 2017. The Company has also elected to recognize forfeitures as they occur. There was no cumulative adjustment to retained earnings to account for these forfeitures as the estimated forfeiture rate previously used was minimal. 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 as far as it can reasonably estimate. 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 has captured loan level loss data since 2011. The Company will be starting its segregation of loans during 2017. The Company anticipates that its allowance for loan losses will increase with the adoption of this standard. In January 2017, the FASB issued (ASU) No. 2017-04 “Intangibles – Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ” ASU 2017-04 eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company has assessed ASU 2017-04 and does not expect it to have a material impact on its accounting and disclosures. In March 2017, the FASB issued (ASU) No. 2017-08 " Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20). ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. ASU 2017-08 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company elected to adopt this ASU in the first quarter of 2017. The impact of this adoption on the Company’s earnings was minimal.

STOCK PLANS AND STOCK BASED COM

STOCK PLANS AND STOCK BASED COMPENSATION	3 Months Ended
	Mar. 31, 2017
STOCK PLANS AND STOCK BASED COMPENSATION
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: Weighted Average Weighted Remaining Average Contractual Aggregate Exercise Term Intrinsic Options Shares Price (years) Value Outstanding, beginning of year 193,114 $ 12.09 Granted — — Exercised (75,297) 13.25 Forfeited or expired — — Outstanding at end of period 117,817 $ 11.34 4.7 $ 2,544 Exercisable at end of period 106,413 $ 10.82 4.4 $ 2,353 The following table details stock options outstanding: March 31, December 31, 2017 2016 Stock options vested and currently exercisable: Number 106,413 181,710 Weighted average exercise price $ $ 11.83 Aggregate intrinsic value $ 2,353 $ 4,101 Weighted average remaining life (in years) 3.8 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 $8 and $22 in stock compensation expense during the three months ended March 31, 2017 and 2016 respectively to salaries and employee benefits. There were no options granted in the first quarter of 2017 or 2016. Unrecognized stock option compensation expense related to unvested awards for the remainder of 2017 is estimated as follows: Year (in thousands) April 2017 - December 2017 $ During 2016 and the first quarter of 2017, 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 12,802 and 24,152 shares of common stock were granted in the first quarters of 2017 and 2016 at a weighted average cost of $34.99 and $21.47 per share, respectively. A summary of changes in the Company’s nonvested restricted shares for 2017 follows: Weighted Average Restricted Grant Date Shares Fair Value Nonvested at January 1, 2017 104,319 $ 20.03 Granted 12,802 34.99 Vested (18,322) 16.13 Forfeited — — Nonvested at March 31, 2017 98,799 $ 22.69 As of March 31, 2017, there was $1,382 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 2.4 years. The recognized compensation costs related to the plans were $202 and $149 for the three month periods ending March 31, 2017 and 2016, respectively. Additionally, in the first quarters of 2017 and 2016, 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 100 % Superior 150 % 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, 2018 or 2019, 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 50 % Peer Total Shareholder Return 25 % Peer Earnings Per Share 25 % 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 6,528 performance share units were granted in the first quarter of 2017 at a weighted average cost of $35.04 per share. 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. 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. $49 and $26 of expense was recognized on these awards for the three month periods ending March 31, 2017 and 2016. A total of $524 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 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 358 19.89 2016 2Q 17,976 21.89 A total of $100 and $89 was recognized as other expense in the first quarter of 2017 and 2016 respectively.

SECURITIES

SECURITIES	3 Months Ended
	Mar. 31, 2017
SECURITIES
SECURITIES	NOTE 3 - SECURITIES The amortized cost and fair value of securities available for sale and related unrealized gains/losses recognized in accumulated other comprehensive income was as follows: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of March 31, 2017 Available for Sale U. S. government agency $ 383 $ 3 $ — $ 386 State and municipal 367,296 11,714 (2,377) 376,633 Mortgage-backed securities-residential (Government Sponsored Entity) 437,264 1,250 (4,439) 434,075 Collateralized mortgage obligations (Government Sponsored Entity) 199,857 1,436 (1,452) 199,841 Equity securities 4,670 — — 4,670 Other securities 6,526 77 — 6,603 Total available for sale $ 1,015,996 $ 14,480 $ (8,268) $ 1,022,208 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of December 31, 2016 Available for Sale U. S. government agency $ 951 $ 4 $ — $ 955 State and municipal 361,335 10,799 (2,848) 369,286 Mortgage-backed securities-residential (Government Sponsored Entity) 450,006 1,253 (4,629) 446,630 Collateralized mortgage obligations (Government Sponsored Entity) 179,314 1,514 (1,427) 179,401 Equity securities 4,670 — — 4,670 Other securities 6,527 71 — 6,598 Total available for sale $ 1,002,803 $ 13,641 $ (8,904) $ 1,007,540 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 $ 15,973 $ 16,266 One through five years 80,903 84,512 Six through ten years 102,654 107,190 After ten years 174,675 175,654 Mortgage-backed securities-residential (Government Sponsored Entity) 437,264 434,075 Collateralized mortgage obligations (Government Sponsored Entity) 199,857 199,841 Equity securities 4,670 4,670 Total available for sale securities $ 1,015,996 $ 1,022,208 Proceeds from sales of securities available for sale were $3,100 and $4,235 for the three months ended March 31, 2017 and 2016, respectively. Gross gains of $14 and $17 and gross losses of $1 and $0 were realized on these sales during 2017 and 2016, respectively. Income taxes on these net gains were $5 and $6 in 2017 and 2016. Below is a summary of securities with unrealized losses as of March 31, 2017 and December 31, 2016 presented by length of time the securities have been in a continuous unrealized loss position. Less than 12 months 12 months or longer Total March 31, 2017 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal 73,729 (2,377) — — 73,729 (2,377) Mortgage-backed securities-residential (Government Sponsored Entity) 310,779 (4,439) — — 310,779 (4,439) Collateralized mortgage obligations (Government Sponsored Entity) 94,141 (1,231) 8,150 (221) 102,291 (1,452) Other securities — — — — — — Total temporarily impaired $ 478,649 $ (8,047) $ 8,150 $ (221) $ 486,799 $ (8,268) Less than 12 months 12 months or longer Total December 31, 2016 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal 95,822 (2,848) — — 95,822 (2,848) Mortgage-backed securities-residential (Government Sponsored Entity) 335,668 (4,629) — — 335,668 (4,629) Collateralized mortgage obligations (Government Sponsored Entity) 77,694 (1,202) 8,518 (225) 86,212 (1,427) Other securities — — — — — — Total temporarily impaired $ 509,184 $ (8,679) $ 8,518 $ (225) $ 517,702 $ (8,904) Other-Than-Temporary-Impairment Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations that had credit ratings at the time of purchase of below AA are evaluated using the model outlined in ASC 325-10 . In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. When OTTI occurs under either model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. As of March 31, 2017, the Company’s securities portfolio consisted of 981 securities, 202 of which were in an unrealized loss position. Unrealized losses on state and municipal securities of $2,377 have not been recognized into income because management has the ability to hold for a period of time sufficient to allow for any anticipated recovery in fair value and it is unlikely that management will be required to sell the securities before their anticipated recovery. The decline in value is primarily attributable to changes in interest rates. The Company monitors the financial condition of these issuers. The fair value of these debt securities is expected to recover as the securities approach their maturity date. At March 31, 2017, 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 $4,439 is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2017. The Company’s collateralized mortgage obligation securities portfolio includes agency collateralized mortgage obligations with a market value of $102,291 which had unrealized losses of approximately $1,452 at March 31, 2017. As noted above, the decline in fair value is attributable to changes in interest rates and illiquidity and not credit quality. The Company monitors to insure it has adequate credit support and as of March 31, 2017, the Company believes there is no OTTI and does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. All securities are investment grade.

LOANS AND ALLOWANCE

LOANS AND ALLOWANCE	3 Months Ended
	Mar. 31, 2017
LOANS AND ALLOWANCE
LOANS AND ALLOWANCE	NOTE 4 - LOANS AND ALLOWANCE Loans were as follows: March 31, December 31, 2017 2016 Commercial Commercial and industrial $ 458,019 $ 461,092 Agricultural 70,147 73,467 Commercial Real Estate Farm 108,037 111,807 Hotel 101,685 91,213 Construction and development 84,939 102,598 Other 848,552 857,078 Residential 1-4 family 601,338 608,366 Home equity 279,465 284,147 Consumer Direct 62,132 61,574 Indirect 296 331 Total loans 2,614,610 2,651,673 Allowance for loan losses (22,369) (22,499) Net loans $ 2,592,241 $ 2,629,174 The Company purchased some financing receivables in the last several years. The investment by portfolio class at March 31, 2017 and December 31, 2016 is as follows. These loans are included in the above table and all other tables below at the recorded investment amount. There were no purchases or sales from the portfolio of financing receivables in the first quarters of 2017 or 2016. March 31, December 31, 2017 2016 Commercial and industrial $ 11,656 $ 13,875 Agricultural 820 872 Construction and development 16,374 16,634 Farm real estate 389 389 Hotel 2,983 2,983 Other real estate 141,659 164,505 1-4 family 194,868 206,044 Home equity 12,673 14,342 Direct 2,283 2,517 $ 383,705 $ 422,161 The remaining accretable discount on the above loans was $6,471 and $7,313 at March 31, 2017 and December 31, 2016 respectively with the non-accretable discount being $4,069 and $4,262 at March 31, 2017 and December 31, 2016. Activity in the allowance for loan losses for the three months ended March 31, 2017 and 2016 was as follows: Commercial 2017 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ 9,654 $ 7,706 $ 4,247 $ 892 $ 22,499 Provision charged to expense (30) (160) (249) 439 — Losses charged off (474) (205) (183) (886) (1,748) Recoveries 70 596 172 780 1,618 Balance, March 31 $ 9,220 $ 7,937 $ 3,987 $ 1,225 $ 22,369 Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ 6,511 $ 10,702 $ 3,859 $ 948 $ 22,020 Provision charged to expense (110) (587) 1,084 113 500 Losses charged off (562) (503) (503) (874) (2,442) Recoveries 150 56 113 682 1,001 Balance, March 31 $ 5,989 $ 9,668 $ 4,553 $ 869 $ 21,079 The following table presents the balance in the allowance for loan losses and the recorded investment by portfolio segment and based on impairment method at March 31, 2017 and December 31, 2016. Commercial March 31, 2017 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ 749 $ 875 $ 146 $ — $ 1,770 Ending Balance collectively evaluated for impairment 8,471 6,827 3,841 1,225 20,364 Ending Balance acquired with deteriorated credit quality — 235 — — 235 Total ending allowance balance $ 9,220 $ 7,937 $ 3,987 $ 1,225 $ 22,369 Loans Ending Balance individually evaluated for impairment $ 2,303 $ 10,824 $ 9,891 $ 1,031 $ 24,049 Ending Balance collectively evaluated for impairment 525,863 1,125,400 869,458 61,397 2,582,118 Ending Balance acquired with deteriorated credit quality — 6,989 1,454 — 8,443 Total ending loan balance excludes $7,211 of accrued interest $ 528,166 $ 1,143,213 $ 880,803 $ 62,428 $ 2,614,610 Commercial December 31, 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ 898 $ 755 $ 147 $ — $ 1,800 Ending Balance collectively evaluated for impairment 8,756 6,951 4,100 892 20,699 Total ending allowance balance $ 9,654 $ 7,706 $ 4,247 $ 892 $ 22,499 Loans Ending Balance individually evaluated for impairment $ 2,705 $ 7,904 $ 10,458 $ 130 $ 21,197 Ending Balance collectively evaluated for impairment 531,854 1,147,536 880,357 61,775 2,621,522 Ending Balance acquired with deteriorated credit quality — 7,256 1,698 — 8,954 Total ending loan balance excludes $7,342 of accrued interest $ 534,559 $ 1,162,696 $ 892,513 $ 61,905 $ 2,651,673 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 $2,025 at March 31, 2017 and $2,697 at December 31, 2016. In connection with the previous acquisitions, the Company acquired $16,175 of purchased credit impaired loans with $4,615 of non accretable yield and no accretable yield. The Company provided an additional allowance for loan losses of $235 on these loans at March 31, 2017. The recorded investment in loans excludes accrued interest receivable due to immateriality. The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2017 and December 31, 2016. Performing troubled debt restructurings totaling $396 and $1,925 were excluded as allowed by ASC 310-40. Allowance Unpaid for Loan Principal Recorded Losses March 31, 2017 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ 329 $ 295 $ 73 Agricultural 1,595 1,595 676 Commercial Real Estate Farm 1,372 1,371 528 Hotel 4,196 2,983 201 Construction and development — — — Other 1,887 1,765 381 Residential 1-4 Family 1,082 1,038 145 Home Equity 103 103 1 Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded 10,564 9,150 2,005 With no related allowance recorded Commercial Commercial and industrial $ 853 $ 140 $ — Agricu ltural 273 273 — Commercial Real Estate Farm 582 320 — Hotel — — — Construction and development 1,926 1,564 — Other 3,224 2,424 — Residential 1-4 Family 8,517 6,838 — Home Equity 2,183 1,912 — Consumer Direct 1,118 1,031 — Indirect — — — Subtotal — impaired with no allowance recorded 18,676 14,502 — Total impaired loans $ 29,240 $ 23,652 $ 2,005 Allowance Unpaid for Loan Principal Recorded Losses December 31, 2016 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ 719 $ 689 $ 429 Agricultural 1,441 1,441 469 Commercial Real Estate Farm 1,106 1,105 360 Hotel — — — Construction and development — — — Other 1,900 1,755 395 Residential 1-4 Family 1,091 1,046 146 Home Equity 15 105 1 Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded 6,272 6,141 1,800 With no related allowance recorded Commercial Commercial and industrial $ 1,028 $ 322 $ — Agricultural 254 253 — Commercial Real Estate Farm 506 241 — Hotel 64 64 — Construction and development 239 162 — Other 3,558 2,652 — Residential 1-4 Family 9,215 7,432 — Home Equity 2,233 1,875 — Consumer Direct 139 130 — Indirect — — — Subtotal — impaired with no allowance recorded 17,236 13,131 — Total impaired loans $ 23,508 $ 19,272 $ 1,800 The following tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending March 31, 2017 and March 31, 2016, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended March 31, 2017 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ 723 $ 92 $ 92 Agricultural 1,781 — — Commercial Real Estate Farm 1,518 — — Hotel 1,524 — — Construction and development 863 — — Other 4,298 127 127 Residential 1-4 family 8,177 40 40 Home equity 1,998 24 24 Consumer Direct 581 3 3 Indirect — — — Total loans $ 21,463 $ 286 $ 286 Average Interest Cash Basis Balance Income Income Three months ended March 31, 2016 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ 781 $ 13 $ 13 Agricultural 7 — — Commercial Real Estate Farm 302 — — Hotel — — — Construction and development 185 — — Other 5,006 26 26 Residential 1-4 family 6,568 10 10 Home equity 2,458 5 5 Consumer Direct 115 4 4 Indirect 1 1 1 Total loans $ 15,423 $ 59 $ 59 The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2017 and December 31, 2016: Past due over 90 days and Non-accrual still accruing March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 Commercial Commercial and industrial $ 431 $ 882 $ — $ — Agricultural 1,805 1,631 — — Commercial Real Estate Farm 1,691 1,347 — — Hotel 2,983 64 — — Construction and development 1,525 122 — 2,135 Other 3,015 3,219 — — Residential 1-4 Family 6,399 7,163 — — Home Equity 1,323 1,273 — — Consumer Direct 1,009 107 — — Indirect — — — — Total $ 20,181 $ 15,808 $ — $ 2,135 Included in the above non-accrual loans at March 31, 2017 and December 31, 2016 are $7,005 and $3,564 of loans from the Cheviot acquisition. The following tables present the aging of the recorded investment in past due loans as of March 31, 2017 and December 31, 2016 by class of loans: Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not March 31, 2017 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ 458,019 $ 21 $ 10 $ 103 $ 134 $ 457,885 Agricultural 70,147 130 39 1,612 1,781 68,366 Commercial Real Estate Farm 108,037 2 — 1,568 1,570 106,467 Hotel 101,685 — — — — 101,685 Construction and development 84,939 — — 1,506 1,506 83,433 Other 848,552 1,967 188 1,229 3,384 845,168 Residential 1-4 Family 601,338 4,874 636 2,628 8,138 593,200 Home Equity 279,465 394 44 911 1,349 278,116 Consumer Direct 62,132 38 — 978 1,016 61,116 Indirect 296 — — — — 296 Total — excludes $7,211 of accrued interest $ 2,614,610 $ 7,426 $ 917 $ 10,535 $ 18,878 $ 2,595,732 Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not December 31, 2016 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ 461,092 $ — $ — $ 176 $ 176 $ 460,916 Agricultural 73,467 215 — 1,606 1,821 71,646 Commercial Real Estate Farm 111,807 81 — 1,243 1,324 110,483 Hotel 91,213 — — 63 63 91,150 Construction and development 102,598 1,416 — 2,223 3,639 98,959 Other 857,078 1,268 90 1,812 3,170 853,908 Residential 1-4 Family 608,366 4,884 2,002 3,262 10,148 598,218 Home Equity 284,147 830 137 914 1,881 282,266 Consumer Direct 61,574 936 — 66 1,002 60,572 Indirect 331 10 — — 10 321 Total — excludes $7,342 of accrued interest $ 2,651,673 $ 9,640 $ 2,229 $ 11,365 $ 23,234 $ 2,628,439 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 March 31, 2017 and December 31, 2016 was $4,736 and $6,474 respectively. The Company has allocated $404 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2017. 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, 2016, the comparable numbers were $508 of specific reserves and $0 of commitments. The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2017: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2017 Number of Loans Investment Investment Commercial Real Estate Other 1 53 53 Residential 1-4 Family 1 330 330 Total 2 $ 383 $ 383 The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2016 Number of Loans Investment Investment Residential Home Equity 76 76 Total 4 $ 76 $ 76 There were no troubled debt restructurings where there was a payment default within twelve months following the modification during the three month periods ending March 31, 2017 or 2016. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The troubled debt restructurings that subsequently defaulted described above did not increase the allowance for loan losses or result in any charge offs during the three month periods ending March 31, 2017 and 2016, respectively. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The terms of certain other loans were modified during the three month periods ending March 31, 2017 and 2016 that did not meet the definition of a troubled debt restructuring. These modified loans had a total recorded investment of $5,168 and $983 for the three month period ending March 31, 2017 and 2016 respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be significant. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of the borrower to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial and commercial real estate loans individually by classifying the loans as to credit risk. This analysis includes credit relationships with an outstanding balance greater than $1 million on an annual basis. Only credit relationships over $250 are risk graded. The Company uses the following definitions for risk ratings: Special Mention — Loans classified as special mention have above average risk that requires management’s ongoing attention. The borrower may have demonstrated the inability to generate profits or to maintain net worth, chronic delinquency and/or a demonstrated lack of willingness or capacity to meet obligations. Substandard — Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are classified by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Non-accrual — Loans classified as non-accrual are loans where the further accrual of interest is stopped because payment in full of principal and interest is not expected. In most cases, the principal and interest has been in default for a period of 90 days or more. As of March 31, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special March 31, 2017 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ 413,011 $ 4,076 $ 4,033 $ 367 Agricultural 61,333 383 — 1,595 Commercial Real Estate Farm 86,076 2,147 680 1,540 Hotel 98,702 — — 2,983 Construction and development 61,177 3,605 652 1,441 Other 753,249 5,321 7,496 1,961 Total $ 1,473,548 $ 15,532 $ 12,861 $ 9,887 At December 31, 2016, the risk category of loans by class of loans was as follows: Special December 31, 2016 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ 415,064 $ 3,347 $ 5,297 $ 827 Agricultural 61,637 2,283 — 1,441 Commercial Real Estate Farm 89,297 2,209 694 1,340 Hotel 88,166 — 2,983 64 Construction and development 74,811 3,600 2,287 31 Other 752,063 9,087 7,365 2,141 Total $ 1,481,038 $ 20,526 $ 18,626 $ 5,844 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 March 31, 2017 and December 31, 2016, the grading of loans by category of loans is as follows: March 31, 2017 Performing Watch Substandard Commercial Commercial and industrial $ 36,468 $ — $ 64 Agricultural 6,626 — 210 Commercial Real Estate Farm 17,443 — 151 Construction and development 17,980 — 84 Other 79,471 — 1,054 Total $ 157,988 $ — $ 1,563 December 31, 2016 Performing Watch Substandard Commercial Commercial and industrial $ 36,502 $ — $ 55 Agricultural 7,916 — 190 Commercial Real Estate Farm 18,260 — 7 Construction and development 21,778 — 91 Other 85,254 90 1,078 Total $ 169,710 $ 90 $ 1,421 March 31, 2017 Performing Watch Substandard Residential 1-4 family $ 598,074 $ 636 $ 2,628 Home equity 278,510 44 911 Total $ 876,584 $ 680 $ 3,539 March 31, 2017 Performing Substandard Loss Consumer Direct $ 61,154 $ 949 $ 29 Indirect 296 — — Total $ 61,450 $ 949 $ 29 December 31, 2016 Performing Watch Substandard Residential 1-4 family $ 603,102 $ 2,002 $ 3,262 Home equity 283,096 137 914 Total $ 886,198 $ 2,139 $ 4,176 December 31, 2016 Performing Substandard Loss Consumer Direct $ 61,508 $ 4 $ 62 Indirect 331 — — Total $ 61,839 $ 4 $ 62 Purchased Credit Impaired Loans The Company has purchased loans, for which there was, at acquisition, evidence of credit deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of these loans is as follows: March 31, December 31, 2017 2016 Commercial $ 10,447 $ 10,817 1-4 Family 2,066 2,399 Outstanding Balance $ 12,513 $ 13,216 Carrying amount, net of allowance of $235 and $0 $ 8,209 $ 8,954 For those purchased credit impaired loans (PCI) disclosed above, the Company increased the allowance for loan losses by $235 and $0 for the first quarter of 2017 and 2016 respectively.

OTHER REAL ESTATE OWNED

OTHER REAL ESTATE OWNED	3 Months Ended
	Mar. 31, 2017
OTHER REAL ESTATE OWNED
OTHER REAL ESTATE OWNED	NOTE 5 — OTHER REAL ESTATE OWNED Other real estate owned is recorded in other assets on the balance sheet. Activity in other real estate owned was as follows: Three months ended March 31, 2017 2016 Beginning Balance $ 1,875 $ Transfer to other real estate owned 441 537 Sale — Out of other real estate owned (496) (586) Write-down (37) (19) Ending Balance $ 1,783 $ 1,891 The value of the sale amount above is the carrying value of the property when it was sold. Activity in the valuation account for other real estate was as follows: Three months ended March 31, 2017 2016 Beginning Balance — $ (236) $ (217) Impairments during year (37) (19) Recovery on impairments 11 — Ending Balance — $ (262) $ (236) Expenses related to foreclosed assets for the period ending March 31 include: Three months ended March 31, 2017 2016 Write-downs $ 37 $ 19 Losses/(gains)on sales (159) (168) Net loss/(gain) $ (122) $ (149) Operating expenses $ 43 $ 5 Foreclosed residential real estate properties included in other assets on the Consolidated Balance Sheets totaled $1,108 and $1,443 at March 31, 2017 and December 31, 2016, respectively. Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $4,344 and $3,266 at March 31, 2017 and December 31, 2016, respectively.

DEPOSITS & REPURCHASE AGREEMENT

DEPOSITS & REPURCHASE AGREEMENTS	3 Months Ended
	Mar. 31, 2017
DEPOSITS & REPURCHASE AGREEMENTS
DEPOSITS & REPURCHASE AGREEMENTS	NOTE 6 — DEPOSITS & REPURCHASE AGREEMENTS March 31, December 31, 2017 2016 Non-interest-bearing demand $ 812,301 $ Interest-bearing demand 1,141,042 Savings 783,344 Certificates of deposit of $250 or more 66,052 Other certificates and time deposits 352,398 Total deposits $ 3,155,137 $ The Company has entered into repurchase agreements with some of its customers. The agreements are one day in length. At March 31, 2017, these agreements totaled $37,530 and were secured by a pledged amount of $54,072 of mortgage backed securities. At December 31, 2016, these agreements totaled $38,339 and were secured by a pledged amount of $58,001. 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 SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2017
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 7 - EARNINGS PER SHARE Earnings per common share (EPS) were computed as follows: 2017 2016 Net Average Share Net Average Share Three Months Ended March 31, Income Shares Amount Income Shares Amount Basic Earnings Per Common Share Net income $ $ $ $ Effect of dilutive warrants Dilutive effect of stock compensation 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 March 31, 2017 or 2016.

FAIR VALUE

FAIR VALUE	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 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 $ 386 $ — $ 386 $ — States and municipal 376,633 — 366,959 9,674 Mortgage-backed securities — residential — Government Sponsored Entity 434,075 — 434,075 — Collateralized mortgage obligations — Government Sponsored Entity 199,841 — 199,841 — Equity securities 4,670 4,670 — — Other securities 6,603 — — 6,603 Total investment securities available-for-sale $ 1,022,208 $ 4,670 $ 1,001,261 $ 16,277 Mortgage banking derivatives $ 821 — $ 821 — Interest rate swap asset $ 3,457 — $ 3,457 — Interest rate swap liability $ (3,457) — $ (3,457) — Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ 955 $ — $ 955 $ — States and municipal 369,286 — 359,166 10,120 Mortgage-backed securities — residential — Government Sponsored Entity 446,630 — 446,630 — Collateralized mortgage obligations — Government Sponsored Entity 179,401 — 179,401 — Equity securities 4,670 4,670 — — Other securities 6,598 — — 6,598 Total investment securities available-for-sale $ 1,007,540 $ 4,670 $ 986,152 $ 16,718 Mortgage banking derivative $ 648 — $ 648 — Interest rate swap asset $ 3,003 — $ 3,003 — Interest rate swap liability $ (3,003) — $ (3,003) — There were no transfers between Level 1 and Level 2 during the first quarter of 2017 or 2016. The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month periods ended March 31, 2017 and 2016: Three months ended March 31: States and municipal 2017 2016 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income (3) 1 Settlements (443) (430) Ending balance, March 31 $ 9,674 $ 10,429 Other securities 2017 2016 Beginning balance, January 1 $ 6,598 $ Total gains or losses (realized / unrealized) Purchases — — Included in other comprehensive income 5 (1) Ending balance, March 31 $ 6,603 $ 6,523 The Company’s state and municipal security valuations were supported by analysis prepared by an independent third party. Fair values are derived through consideration of funding type, maturity and other features of the issuance, and include reviewing financial statements, earnings forecasts, industry trends and the valuation of comparative issuers. In most cases, the book value of the security is used as the fair value as meaningful pricing data is not readily available. The Company’s other security valuation was supported by analysis prepared by an independent third party. Fair values are derived through consideration of funding type, maturity and other features of the issuance, and include reviewing financial statements, earnings forecasts, industry trends and the valuation of comparative issuers. In most cases, the book value of the security is used as the fair value as meaningful pricing data is not readily available. Assets and Liabilities Measured on a Non-Recurring Basis Assets and liabilities measured at fair value on a non-recurring basis are summarized below: Fair Value Measurements at March 31, 2017 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable March 31, Identical Assets Inputs Inputs 2017 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ 222 $ 222 Agricultural 919 919 Hotel 2,782 2,782 Farm real estate 843 843 Other real estate 741 741 Total impaired loans $ 5,507 $ 5,507 Impaired servicing rights $ 1,039 $ 1,039 Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable December 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ 260 $ 260 Agricultural 972 972 Farm real estate 745 745 Other real estate 560 560 Total impaired loans $ 2,537 $ 2,537 Impaired servicing rights $ 1,083 $ 1,083 Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $7,304, with a valuation allowance of $1,797 at March 31, 2017. The Company recorded a charge of $666 to provision expense associated with these loans for the three months ended March 31, 2017 and a charge of $125 to provision expense with these loans for the three month period ending March 31, 2016. At December 31, 2016, impaired loans had a gross carrying amount of $4,008 with a valuation allowance of $1,471. A breakdown of these loans by portfolio class at March 31, 2017 is as follows: Gross Valuation Balance Allowance Net Commercial and industrial $ 295 $ 73 $ 222 Agricultural 1,595 676 919 Hotel 2,983 201 2,782 Farm real estate 1,371 528 843 Other real estate 1,060 319 741 Ending Balance $ 7,304 $ 1,797 $ 5,507 Impaired tranches of servicing rights were carried at a fair value of $1,039, which is made up of the gross outstanding balance of $1,239 net of a valuation allowance of $200. No change occurred in the valuation allowance in the first quarters of 2017 or 2016. At December 31, 2016, impaired servicing rights were carried at a fair value of $1,083 which was made up of the gross outstanding balance of $1,283, net of a valuation allowance of $200. The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2017 and December 31, 2016. Impaired commercial loans, commercial real estate loans, and other real estate owned that are deemed collateral dependent are valued based on the fair value of the underlying collateral. These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the collateral. The fair value of the mortgage servicing rights is valued based on present value of future cash flows to be received taking into account the coupon rate on the mortgage as well as estimated prepayment speeds. Fair Value Valuation Unobservable Range/ March 31, 2017 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ 222 Sales comparison approach Adjustment for differences between comparable sales 19% - 30% 24% Avg Agricultural 919 Sales comparison approach Adjustment for differences between comparable sales 16%-25% 24% Avg Hotel 2,782 Sales comparison approach Adjustment for differences between comparable sales 40% 40% Avg Farm real estate 843 Sales comparison approach Adjustment for differences between comparable sales 16%-25% 22% Avg Other real estate 741 Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 19% - 40% 27% Avg $ 5,507 Mortgage servicing rights $ 1,039 Cash flow analysis Discount rate 10% Fair Value Valuation Unobservable Range/ December 31, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales 10% - 30% 18% Avg Agricultural Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Farm real estate 745 Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Other real estate 560 Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 16% - 31% 27% Avg $ 2,537 Mortgage servicing rights $ 1,083 Cash flow analysis Discount rate 10% The carrying amounts and estimated fair values of financial instruments, not previously presented, is as follows: Carrying March 31, 2017 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 77,487 $ 72,454 $ 5,033 $ $ 77,487 Interest bearing time deposits 1,670 1,670 1,670 Loans including loans held for sale, net 2,591,104 4,378 2,624,768 2,629,146 FHLB and other stock 23,960 N/A Interest receivable 12,561 5,350 7,211 12,561 Liabilities Deposits (3,155,137) (812,301) (2,339,824) (3,152,125) Other borrowings (137,197) (137,197) (137,197) FHLB advances (229,737) (228,539) (228,539) Interest payable (629) (629) (629) Subordinated debentures (41,239) (34,084) (34,084) Carrying December 31, 2016 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 86,552 $ 75,778 $ 10,774 $ $ 86,552 Interest bearing time deposits 1,960 1,960 1,960 Loans including loans held for sale, net 2,639,046 12,598 2,662,431 2,675,029 FHLB and other stock 21,693 N/A Interest receivable 12,576 5,234 7,342 12,576 Liabilities Deposits (3,110,871) (767,159) (2,340,824) (3,107,983) Other borrowings (209,672) (209,686) (209,686) FHLB advances (249,658) (248,944) (248,944) Interest payable (642) (642) (642) Subordinated debentures (41,239) (34,084) (34,084) The difference between the loan balance included above and the amounts shown in Note 4 are the impaired loans discussed above. The methods and assumptions, not previously presented, used to estimate fair values are described as follows: (a) Cash and Cash Equivalents The carrying amounts of cash, short-term instruments, and interest bearing time deposits approximate fair values and are classified as either Level 1 or Level 2. Noninterest bearing deposits are Level 1 whereas interest bearing, due from bank accounts, and fed funds sold are Level 2. (b) FHLB and other stock It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. (c) Loans, Net Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. (d) Deposits The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate interest bearing deposits approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate interest bearing deposits are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. (e) Borrowings The fair values of the Company’s FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification. The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification. (f) Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.

REGULATORY CAPITAL

REGULATORY CAPITAL	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017, the capital conservation buffer is 1.250%. At March 31, 2017, the capital levels for the Company and its subsidiary bank remained 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 March 31, 2017 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ 414,150 % $ 227,265 % N/A N/A Tier 1 capital (to risk-weighted assets) 391,781 170,449 N/A N/A Common equity Tier 1 capital (to risk-weighted assets) 350,872 127,837 N/A N/A Tier 1 capital (to average assets) 391,781 157,897 N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ 406,790 % $ 227,322 % $ 284,152 % Tier 1 capital (to risk-weighted assets) 384,421 170,491 227,322 Common equity Tier 1 capital (to risk-weighted assets) 384,421 127,869 184,699 Tier 1 capital (to average assets) 384,421 157,616 197,021 Required for To Be Actual Adequate Capital Well Capitalized December 31, 2016 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ % $ % $ % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets) Management believes as of March 31, 2017, 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 $14,000 in cash and its ability to downstream additional capital to the Bank.

INCOME TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2017
INCOME TAXES
INCOME TAXES	NOTE 10 — INCOME TAXES In accordance with ASC 740-270-50-1, Accounting for Interim Reporting, the provision for income taxes was recorded at March 31, 2017 and 2016 based on the current estimate of the effective annual rate. The effective tax rate for the first quarter of 2017 was 23.8% versus 22.5% for the same period in 2016. The increase in the first quarter effective tax rate was due to pre-tax earnings increasing at a greater rate than earnings from tax exempt investments. 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	3 Months Ended
	Mar. 31, 2017
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 $167.6 million at March 31, 2017 and $143.3 million at December 31, 2016. 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: March 31, 2017 December 31, 2016 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps at Fair Value $ 167,585 $ 3,457 $ 143,300 $ 3,003 Included in Other Liabilities: Interest Rate Swaps at Fair Value $ 167,585 $ 3,457 $ 143,300 $ 3,003 The effect of derivative instruments on the Consolidated Statement of Income is presented below: Three Months Ended March 31, 2017 2016 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ 335 $ 81

ACQUISITIONS

ACQUISITIONS	3 Months Ended
	Mar. 31, 2017
ACQUISITIONS
ACQUISITIONS	NOTE 12 – ACQUISITION On February 17, 2017, MainSource Bank entered into an agreement with First Service Capital Management, Inc. (“First Service”), located in Elizabethtown, Kentucky, to acquire the assets under management. The transaction closed on February 17, 2017. In connection with the acquisition, the Bank also agreed to hire all of the First Service employees, including its four brokers. The purchase price of approximately $1,750 resulted in intangible assets including goodwill and a customer relationship intangible. Preliminary amounts have been recorded in the first quarter of 2017 but are still being finalized. $1,400 was paid on February 17, 2017 upon closing of the transaction and the remaining balance will be earned over the next two years. On December 19, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with FCB Bancorp, Inc., a Kentucky corporation (“FCB”), pursuant to which FCB will merge with and into the Company, whereupon the separate corporate existence of FCB will cease and MainSource will survive (the “Merger”). After the Merger, The First Capital Bank of Kentucky, a Kentucky-chartered bank and a wholly-owned subsidiary of FCB (“FCB Bank”), will be a wholly-owned subsidiary of MainSource. The Company anticipates that FCB Bank will merge with and into MainSource Bank during the second quarter, with MainSource Bank as the surviving bank. FCB’s stockholders approved the merger on April 26, 2017 and the acquisition was completed on April 30, 2017. At the time of the Merger, stockholders of FCB received (i) 0.9 shares of MainSource common stock (the “Exchange Ratio”) and (ii) $7.00 in cash for each share of FCB common stock owned. In lieu of any fractional shares of MainSource common stock, MainSource distributed an amount in cash equal to such fraction multiplied by the average of the daily closing sales price of MainSource common stock as reported by NASDAQ for the 10 consecutive trading days ending on the third business day preceding the Closing Date . Additionally, all outstanding and unexercised options to purchase FCB stock vested in full and were converted automatically into the right to receive an amount of cash equal to the product of (i) the difference between (A) $7.00 plus the product of (y) 0.9 and (z) the average of the daily closing sales prices of a share of MainSource common stock as reported on the NASDAQ for the 10 consecutive trading days ending on the third business day preceding the Closing Date minus (B) the exercise price of such FCB stock option, multiplied by (ii) the number of shares of FCB common stock subject to such FCB stock option. Using the closing price of MSFG stock at April 28, 2017 of $34.20, the value of the acquisition was approximately $59 million. FCB is the holding company of FCB Bank. FCB Bank was founded in 1911 as a Kentucky-chartered savings and loan association. FCB Bank continues to operate 7 full service branches in Jefferson County, Kentucky. As of March 31, 2017, FCB had $51 9,206 of total assets, $436,596 of loans, $38 3,402 of deposits and total equity of $ 30,396 . Additional disclosures required by ASC 805 have been omitted because the information needed for this disclosure is not available due to the close proximity of the closing of this transaction with the date these financial statements are being issued.

BRANCH CLOSURES

BRANCH CLOSURES	3 Months Ended
	Mar. 31, 2017
BRANCH CLOSURES
BRANCH CLOSURES	NOTE 13 – BRANCH CLOSURES In the fourth quarter of 2016, the Company announced that it would be closing the following branches in the first quarter of 2017: Bloomfield and Jasonville, Indiana and Piqua, Ohio. As of December 31, 2016, the three branches had approximately $53 million in total deposits. These branches were closed March 1, 2017. There was no material impact to the first quarter 2017 earnings, as all costs connected with these closures were accrued in the fourth quarter of 2016 when the Company made the announcement.

SUBSEQUENT EVENT

SUBSEQUENT EVENT	3 Months Ended
	Mar. 31, 2017
SUBSEQUENT EVENT.
SUBSEQUENT EVENT	NOTE 14 – SUBSEQUENT EVENT On May 1, 2017, MainSource Bank entered into an agreement with Capstone Investment Management, LLC. (“Capstone”), located in Greenwood, Indiana to acquire the assets under management. In connection with the acquisition, the Bank also agreed to hire all of Capstone’s employees. The purchase price of approximately $1,750 will result in intangible assets including goodwill and a customer relationship intangible. These amounts are currently being calculated and the amounts will be included in the second quarter of 2017 results.

STOCK PLANS AND STOCK BASED C22

STOCK PLANS AND STOCK BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2017
STOCK PLANS AND STOCK BASED COMPENSATION
Summary of stock option activity	Weighted Average Weighted Remaining Average Contractual Aggregate Exercise Term Intrinsic Options Shares Price (years) Value Outstanding, beginning of year 193,114 $ 12.09 Granted — — Exercised (75,297) 13.25 Forfeited or expired — — Outstanding at end of period 117,817 $ 11.34 4.7 $ 2,544 Exercisable at end of period 106,413 $ 10.82 4.4 $ 2,353
Schedule of details of stock options outstanding	March 31, December 31, 2017 2016 Stock options vested and currently exercisable: Number 106,413 181,710 Weighted average exercise price $ $ 11.83 Aggregate intrinsic value $ 2,353 $ 4,101 Weighted average remaining life (in years) 3.8
Schedule of unrecognized stock option compensation expense related to unvested awards	Year (in thousands) April 2017 - December 2017 $
Summary of changes in the nonvested shares	Weighted Average Restricted Grant Date Shares Fair Value Nonvested at January 1, 2017 104,319 $ 20.03 Granted 12,802 34.99 Vested (18,322) 16.13 Forfeited — — Nonvested at March 31, 2017 98,799 $ 22.69
Summary of executive's payout percentage from the LTIP upon achievement of certain performance levels	Performance Payout Threshold % Target 100 % Superior 150 %
Schedule of executive's eligibility for payout of shares determined by certain measures	Evaluated Performance Measure Weight vs. Return on Assets 50 % Peer Total Shareholder Return 25 % Peer Earnings Per Share 25 % Goal
Schedule of shares awarded by quarter	Quarter Shares Price per Share 2016 1Q 358 19.89 2016 2Q 17,976 21.89

SECURITIES (Tables)

SECURITIES (Tables)	3 Months Ended
	Mar. 31, 2017
SECURITIES
Schedule of amortized cost and fair value of securities available for sale and related unrealized gains/losses recognized in accumulated other comprehensive income	Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of March 31, 2017 Available for Sale U. S. government agency $ 383 $ 3 $ — $ 386 State and municipal 367,296 11,714 (2,377) 376,633 Mortgage-backed securities-residential (Government Sponsored Entity) 437,264 1,250 (4,439) 434,075 Collateralized mortgage obligations (Government Sponsored Entity) 199,857 1,436 (1,452) 199,841 Equity securities 4,670 — — 4,670 Other securities 6,526 77 — 6,603 Total available for sale $ 1,015,996 $ 14,480 $ (8,268) $ 1,022,208 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value As of December 31, 2016 Available for Sale U. S. government agency $ 951 $ 4 $ — $ 955 State and municipal 361,335 10,799 (2,848) 369,286 Mortgage-backed securities-residential (Government Sponsored Entity) 450,006 1,253 (4,629) 446,630 Collateralized mortgage obligations (Government Sponsored Entity) 179,314 1,514 (1,427) 179,401 Equity securities 4,670 — — 4,670 Other securities 6,527 71 — 6,598 Total available for sale $ 1,002,803 $ 13,641 $ (8,904) $ 1,007,540
Schedule of contractual maturities of securities	Available for Sale Amortized Cost Fair Value Within one year $ 15,973 $ 16,266 One through five years 80,903 84,512 Six through ten years 102,654 107,190 After ten years 174,675 175,654 Mortgage-backed securities-residential (Government Sponsored Entity) 437,264 434,075 Collateralized mortgage obligations (Government Sponsored Entity) 199,857 199,841 Equity securities 4,670 4,670 Total available for sale securities $ 1,015,996 $ 1,022,208
Schedule of securities in a continuous unrealized loss position with unrealized losses presented by length of time	Less than 12 months 12 months or longer Total March 31, 2017 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal 73,729 (2,377) — — 73,729 (2,377) Mortgage-backed securities-residential (Government Sponsored Entity) 310,779 (4,439) — — 310,779 (4,439) Collateralized mortgage obligations (Government Sponsored Entity) 94,141 (1,231) 8,150 (221) 102,291 (1,452) Other securities — — — — — — Total temporarily impaired $ 478,649 $ (8,047) $ 8,150 $ (221) $ 486,799 $ (8,268) Less than 12 months 12 months or longer Total December 31, 2016 Unrealized Unrealized Unrealized Description of securities Fair Value Losses Fair Value Losses Fair Value Losses U. S. government agency $ — $ — $ — $ — $ — $ — State and municipal 95,822 (2,848) — — 95,822 (2,848) Mortgage-backed securities-residential (Government Sponsored Entity) 335,668 (4,629) — — 335,668 (4,629) Collateralized mortgage obligations (Government Sponsored Entity) 77,694 (1,202) 8,518 (225) 86,212 (1,427) Other securities — — — — — — Total temporarily impaired $ 509,184 $ (8,679) $ 8,518 $ (225) $ 517,702 $ (8,904)

LOANS AND ALLOWANCE (Tables)

LOANS AND ALLOWANCE (Tables)	3 Months Ended
	Mar. 31, 2017
LOANS AND ALLOWANCE
Schedule of loans	March 31, December 31, 2017 2016 Commercial Commercial and industrial $ 458,019 $ 461,092 Agricultural 70,147 73,467 Commercial Real Estate Farm 108,037 111,807 Hotel 101,685 91,213 Construction and development 84,939 102,598 Other 848,552 857,078 Residential 1-4 family 601,338 608,366 Home equity 279,465 284,147 Consumer Direct 62,132 61,574 Indirect 296 331 Total loans 2,614,610 2,651,673 Allowance for loan losses (22,369) (22,499) Net loans $ 2,592,241 $ 2,629,174
Schedule of loans acquired through purchase	March 31, December 31, 2017 2016 Commercial and industrial $ 11,656 $ 13,875 Agricultural 820 872 Construction and development 16,374 16,634 Farm real estate 389 389 Hotel 2,983 2,983 Other real estate 141,659 164,505 1-4 family 194,868 206,044 Home equity 12,673 14,342 Direct 2,283 2,517 $ 383,705 $ 422,161
Schedule of activity in the allowance for loan losses	Activity in the allowance for loan losses for the three months ended March 31, 2017 and 2016 was as follows: Commercial 2017 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ 9,654 $ 7,706 $ 4,247 $ 892 $ 22,499 Provision charged to expense (30) (160) (249) 439 — Losses charged off (474) (205) (183) (886) (1,748) Recoveries 70 596 172 780 1,618 Balance, March 31 $ 9,220 $ 7,937 $ 3,987 $ 1,225 $ 22,369 Commercial 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Balance, January 1 $ 6,511 $ 10,702 $ 3,859 $ 948 $ 22,020 Provision charged to expense (110) (587) 1,084 113 500 Losses charged off (562) (503) (503) (874) (2,442) Recoveries 150 56 113 682 1,001 Balance, March 31 $ 5,989 $ 9,668 $ 4,553 $ 869 $ 21,079
Schedule of balance in the allowance for loan losses and the recorded investment by portfolio segment and impairment method	Commercial March 31, 2017 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ 749 $ 875 $ 146 $ — $ 1,770 Ending Balance collectively evaluated for impairment 8,471 6,827 3,841 1,225 20,364 Ending Balance acquired with deteriorated credit quality — 235 — — 235 Total ending allowance balance $ 9,220 $ 7,937 $ 3,987 $ 1,225 $ 22,369 Loans Ending Balance individually evaluated for impairment $ 2,303 $ 10,824 $ 9,891 $ 1,031 $ 24,049 Ending Balance collectively evaluated for impairment 525,863 1,125,400 869,458 61,397 2,582,118 Ending Balance acquired with deteriorated credit quality — 6,989 1,454 — 8,443 Total ending loan balance excludes $7,211 of accrued interest $ 528,166 $ 1,143,213 $ 880,803 $ 62,428 $ 2,614,610 Commercial December 31, 2016 Commercial Real Estate Residential Consumer Total Allowance for loan losses Ending Balance individually evaluated for impairment $ 898 $ 755 $ 147 $ — $ 1,800 Ending Balance collectively evaluated for impairment 8,756 6,951 4,100 892 20,699 Total ending allowance balance $ 9,654 $ 7,706 $ 4,247 $ 892 $ 22,499 Loans Ending Balance individually evaluated for impairment $ 2,705 $ 7,904 $ 10,458 $ 130 $ 21,197 Ending Balance collectively evaluated for impairment 531,854 1,147,536 880,357 61,775 2,621,522 Ending Balance acquired with deteriorated credit quality — 7,256 1,698 — 8,954 Total ending loan balance excludes $7,342 of accrued interest $ 534,559 $ 1,162,696 $ 892,513 $ 61,905 $ 2,651,673
Schedule of loans individually evaluated for impairment by class of loans	Allowance Unpaid for Loan Principal Recorded Losses March 31, 2017 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ 329 $ 295 $ 73 Agricultural 1,595 1,595 676 Commercial Real Estate Farm 1,372 1,371 528 Hotel 4,196 2,983 201 Construction and development — — — Other 1,887 1,765 381 Residential 1-4 Family 1,082 1,038 145 Home Equity 103 103 1 Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded 10,564 9,150 2,005 With no related allowance recorded Commercial Commercial and industrial $ 853 $ 140 $ — Agricu ltural 273 273 — Commercial Real Estate Farm 582 320 — Hotel — — — Construction and development 1,926 1,564 — Other 3,224 2,424 — Residential 1-4 Family 8,517 6,838 — Home Equity 2,183 1,912 — Consumer Direct 1,118 1,031 — Indirect — — — Subtotal — impaired with no allowance recorded 18,676 14,502 — Total impaired loans $ 29,240 $ 23,652 $ 2,005 Allowance Unpaid for Loan Principal Recorded Losses December 31, 2016 Balance Investment Allocated With an allowance recorded Commercial Commercial and industrial $ 719 $ 689 $ 429 Agricultural 1,441 1,441 469 Commercial Real Estate Farm 1,106 1,105 360 Hotel — — — Construction and development — — — Other 1,900 1,755 395 Residential 1-4 Family 1,091 1,046 146 Home Equity 15 105 1 Consumer Direct — — — Indirect — — — Subtotal — impaired with allowance recorded 6,272 6,141 1,800 With no related allowance recorded Commercial Commercial and industrial $ 1,028 $ 322 $ — Agricultural 254 253 — Commercial Real Estate Farm 506 241 — Hotel 64 64 — Construction and development 239 162 — Other 3,558 2,652 — Residential 1-4 Family 9,215 7,432 — Home Equity 2,233 1,875 — Consumer Direct 139 130 — Indirect — — — Subtotal — impaired with no allowance recorded 17,236 13,131 — Total impaired loans $ 23,508 $ 19,272 $ 1,800
Schedule of average balance of impaired loans and interest income and cash basis interest recognized	The following tables present the average balance of impaired loans and interest income and cash basis interest recognized for the three months ending March 31, 2017 and March 31, 2016, excluding performing troubled debt restructurings as allowed by ASC 310-40. Average Interest Cash Basis Balance Income Income Three months ended March 31, 2017 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ 723 $ 92 $ 92 Agricultural 1,781 — — Commercial Real Estate Farm 1,518 — — Hotel 1,524 — — Construction and development 863 — — Other 4,298 127 127 Residential 1-4 family 8,177 40 40 Home equity 1,998 24 24 Consumer Direct 581 3 3 Indirect — — — Total loans $ 21,463 $ 286 $ 286 Average Interest Cash Basis Balance Income Income Three months ended March 31, 2016 Impaired Loans Recognized Recognized Commercial Commercial and industrial $ 781 $ 13 $ 13 Agricultural 7 — — Commercial Real Estate Farm 302 — — Hotel — — — Construction and development 185 — — Other 5,006 26 26 Residential 1-4 family 6,568 10 10 Home equity 2,458 5 5 Consumer Direct 115 4 4 Indirect 1 1 1 Total loans $ 15,423 $ 59 $ 59
Schedule of recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans	Past due over 90 days and Non-accrual still accruing March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 Commercial Commercial and industrial $ 431 $ 882 $ — $ — Agricultural 1,805 1,631 — — Commercial Real Estate Farm 1,691 1,347 — — Hotel 2,983 64 — — Construction and development 1,525 122 — 2,135 Other 3,015 3,219 — — Residential 1-4 Family 6,399 7,163 — — Home Equity 1,323 1,273 — — Consumer Direct 1,009 107 — — Indirect — — — — Total $ 20,181 $ 15,808 $ — $ 2,135
Schedule of aging of the recorded investment in past due loans	Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not March 31, 2017 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ 458,019 $ 21 $ 10 $ 103 $ 134 $ 457,885 Agricultural 70,147 130 39 1,612 1,781 68,366 Commercial Real Estate Farm 108,037 2 — 1,568 1,570 106,467 Hotel 101,685 — — — — 101,685 Construction and development 84,939 — — 1,506 1,506 83,433 Other 848,552 1,967 188 1,229 3,384 845,168 Residential 1-4 Family 601,338 4,874 636 2,628 8,138 593,200 Home Equity 279,465 394 44 911 1,349 278,116 Consumer Direct 62,132 38 — 978 1,016 61,116 Indirect 296 — — — — 296 Total — excludes $7,211 of accrued interest $ 2,614,610 $ 7,426 $ 917 $ 10,535 $ 18,878 $ 2,595,732 Greater than Total 30-59 Days 60-89 Days 90 Days Total Loans Not December 31, 2016 Loans Past Due Past Due Past Due Past Due Past Due Commercial Commercial and industrial $ 461,092 $ — $ — $ 176 $ 176 $ 460,916 Agricultural 73,467 215 — 1,606 1,821 71,646 Commercial Real Estate Farm 111,807 81 — 1,243 1,324 110,483 Hotel 91,213 — — 63 63 91,150 Construction and development 102,598 1,416 — 2,223 3,639 98,959 Other 857,078 1,268 90 1,812 3,170 853,908 Residential 1-4 Family 608,366 4,884 2,002 3,262 10,148 598,218 Home Equity 284,147 830 137 914 1,881 282,266 Consumer Direct 61,574 936 — 66 1,002 60,572 Indirect 331 10 — — 10 321 Total — excludes $7,342 of accrued interest $ 2,651,673 $ 9,640 $ 2,229 $ 11,365 $ 23,234 $ 2,628,439
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 three month period ending March 31, 2017: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2017 Number of Loans Investment Investment Commercial Real Estate Other 1 53 53 Residential 1-4 Family 1 330 330 Total 2 $ 383 $ 383 The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2016: Pre-Modification Post-Modification Outstanding Recorded Outstanding Recorded For the three months ended March 31, 2016 Number of Loans Investment Investment Residential Home Equity 76 76 Total 4 $ 76 $ 76
Schedule of loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification	There were no troubled debt restructurings where there was a payment default within twelve months following the modification during the three month periods ending March 31, 2017 or 2016.
Schedule of risk category of loans by class of loans	As of March 31, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Special March 31, 2017 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ 413,011 $ 4,076 $ 4,033 $ 367 Agricultural 61,333 383 — 1,595 Commercial Real Estate Farm 86,076 2,147 680 1,540 Hotel 98,702 — — 2,983 Construction and development 61,177 3,605 652 1,441 Other 753,249 5,321 7,496 1,961 Total $ 1,473,548 $ 15,532 $ 12,861 $ 9,887 At December 31, 2016, the risk category of loans by class of loans was as follows: Special December 31, 2016 Pass Mention Substandard Non-accrual Commercial Commercial and industrial $ 415,064 $ 3,347 $ 5,297 $ 827 Agricultural 61,637 2,283 — 1,441 Commercial Real Estate Farm 89,297 2,209 694 1,340 Hotel 88,166 — 2,983 64 Construction and development 74,811 3,600 2,287 31 Other 752,063 9,087 7,365 2,141 Total $ 1,481,038 $ 20,526 $ 18,626 $ 5,844
Schedule of performing/non performing loans by category of loans	March 31, 2017 Performing Watch Substandard Commercial Commercial and industrial $ 36,468 $ — $ 64 Agricultural 6,626 — 210 Commercial Real Estate Farm 17,443 — 151 Construction and development 17,980 — 84 Other 79,471 — 1,054 Total $ 157,988 $ — $ 1,563 December 31, 2016 Performing Watch Substandard Commercial Commercial and industrial $ 36,502 $ — $ 55 Agricultural 7,916 — 190 Commercial Real Estate Farm 18,260 — 7 Construction and development 21,778 — 91 Other 85,254 90 1,078 Total $ 169,710 $ 90 $ 1,421 March 31, 2017 Performing Watch Substandard Residential 1-4 family $ 598,074 $ 636 $ 2,628 Home equity 278,510 44 911 Total $ 876,584 $ 680 $ 3,539 March 31, 2017 Performing Substandard Loss Consumer Direct $ 61,154 $ 949 $ 29 Indirect 296 — — Total $ 61,450 $ 949 $ 29 December 31, 2016 Performing Watch Substandard Residential 1-4 family $ 603,102 $ 2,002 $ 3,262 Home equity 283,096 137 914 Total $ 886,198 $ 2,139 $ 4,176 December 31, 2016 Performing Substandard Loss Consumer Direct $ 61,508 $ 4 $ 62 Indirect 331 — — Total $ 61,839 $ 4 $ 62
Purchased credit impaired loans for which it was probable that all contractually required payments would not be collected	March 31, December 31, 2017 2016 Commercial $ 10,447 $ 10,817 1-4 Family 2,066 2,399 Outstanding Balance $ 12,513 $ 13,216 Carrying amount, net of allowance of $235 and $0 $ 8,209 $ 8,954

OTHER REAL ESTATE OWNED (Tables

OTHER REAL ESTATE OWNED (Tables)	3 Months Ended
	Mar. 31, 2017
OTHER REAL ESTATE OWNED
Schedule of activity in other real estate owned	Three months ended March 31, 2017 2016 Beginning Balance $ 1,875 $ Transfer to other real estate owned 441 537 Sale — Out of other real estate owned (496) (586) Write-down (37) (19) Ending Balance $ 1,783 $ 1,891
Schedule of activity in the valuation account for other real estate	Three months ended March 31, 2017 2016 Beginning Balance — $ (236) $ (217) Impairments during year (37) (19) Recovery on impairments 11 — Ending Balance — $ (262) $ (236)
Schedule of net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets	Three months ended March 31, 2017 2016 Write-downs $ 37 $ 19 Losses/(gains)on sales (159) (168) Net loss/(gain) $ (122) $ (149) Operating expenses $ 43 $ 5

DEPOSITS & REPURCHASE AGREEME26

DEPOSITS & REPURCHASE AGREEMENTS (Tables)	3 Months Ended
	Mar. 31, 2017
DEPOSITS & REPURCHASE AGREEMENTS
Schedule of deposits	March 31, December 31, 2017 2016 Non-interest-bearing demand $ 812,301 $ Interest-bearing demand 1,141,042 Savings 783,344 Certificates of deposit of $250 or more 66,052 Other certificates and time deposits 352,398 Total deposits $ 3,155,137 $

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	3 Months Ended
	Mar. 31, 2017
EARNINGS PER SHARE
Schedule of earnings per common share (EPS) computation	2017 2016 Net Average Share Net Average Share Three Months Ended March 31, Income Shares Amount Income Shares Amount Basic Earnings Per Common Share Net income $ $ $ $ Effect of dilutive warrants Dilutive effect of stock compensation Diluted Earnings Per Common Share Net income attributable to common shareholders and assumed conversions $ $ $ $

FAIR VALUE (Tables)

FAIR VALUE (Tables)	3 Months Ended
	Mar. 31, 2017
FAIR VALUE
Schedule of assets and liabilities measured at fair value on a recurring basis	Fair Value Measurements at March 31, 2017 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 $ 386 $ — $ 386 $ — States and municipal 376,633 — 366,959 9,674 Mortgage-backed securities — residential — Government Sponsored Entity 434,075 — 434,075 — Collateralized mortgage obligations — Government Sponsored Entity 199,841 — 199,841 — Equity securities 4,670 4,670 — — Other securities 6,603 — — 6,603 Total investment securities available-for-sale $ 1,022,208 $ 4,670 $ 1,001,261 $ 16,277 Mortgage banking derivatives $ 821 — $ 821 — Interest rate swap asset $ 3,457 — $ 3,457 — Interest rate swap liability $ (3,457) — $ (3,457) — Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable Carrying Identical Assets Inputs Inputs (Dollars in thousands) Value (Level 1) (Level 2) (Level 3) Financial Assets Investment securities available-for-sale U. S. government agency $ 955 $ — $ 955 $ — States and municipal 369,286 — 359,166 10,120 Mortgage-backed securities — residential — Government Sponsored Entity 446,630 — 446,630 — Collateralized mortgage obligations — Government Sponsored Entity 179,401 — 179,401 — Equity securities 4,670 4,670 — — Other securities 6,598 — — 6,598 Total investment securities available-for-sale $ 1,007,540 $ 4,670 $ 986,152 $ 16,718 Mortgage banking derivative $ 648 — $ 648 — Interest rate swap asset $ 3,003 — $ 3,003 — Interest rate swap liability $ (3,003) — $ (3,003) —
Schedule of reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)	Three months ended March 31: States and municipal 2017 2016 Beginning balance, January 1 $ $ Total gains or losses (realized / unrealized) Included in other comprehensive income (3) 1 Settlements (443) (430) Ending balance, March 31 $ 9,674 $ 10,429 Other securities 2017 2016 Beginning balance, January 1 $ 6,598 $ Total gains or losses (realized / unrealized) Purchases — — Included in other comprehensive income 5 (1) Ending balance, March 31 $ 6,603 $ 6,523
Schedule of assets and liabilities measured at fair value on a non-recurring basis	Fair Value Measurements at March 31, 2017 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable March 31, Identical Assets Inputs Inputs 2017 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ 222 $ 222 Agricultural 919 919 Hotel 2,782 2,782 Farm real estate 843 843 Other real estate 741 741 Total impaired loans $ 5,507 $ 5,507 Impaired servicing rights $ 1,039 $ 1,039 Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Significant Active Markets for Other Observable Unobservable December 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Impaired loans Commercial and industrial $ 260 $ 260 Agricultural 972 972 Farm real estate 745 745 Other real estate 560 560 Total impaired loans $ 2,537 $ 2,537 Impaired servicing rights $ 1,083 $ 1,083
Schedule of breakdown of impaired loans by portfolio class	Gross Valuation Balance Allowance Net Commercial and industrial $ 295 $ 73 $ 222 Agricultural 1,595 676 919 Hotel 2,983 201 2,782 Farm real estate 1,371 528 843 Other real estate 1,060 319 741 Ending Balance $ 7,304 $ 1,797 $ 5,507
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis	Fair Value Valuation Unobservable Range/ March 31, 2017 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ 222 Sales comparison approach Adjustment for differences between comparable sales 19% - 30% 24% Avg Agricultural 919 Sales comparison approach Adjustment for differences between comparable sales 16%-25% 24% Avg Hotel 2,782 Sales comparison approach Adjustment for differences between comparable sales 40% 40% Avg Farm real estate 843 Sales comparison approach Adjustment for differences between comparable sales 16%-25% 22% Avg Other real estate 741 Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 19% - 40% 27% Avg $ 5,507 Mortgage servicing rights $ 1,039 Cash flow analysis Discount rate 10% Fair Value Valuation Unobservable Range/ December 31, 2016 (in thousands) Technique(s) Input(s) Average Impaired Loans: Commercial and industrial $ Sales comparison approach Adjustment for differences between comparable sales 10% - 30% 18% Avg Agricultural Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Farm real estate 745 Sales comparison approach Adjustment for differences between comparable sales 10% 10% Avg Other real estate 560 Sales comparison approach Adjustment for differences between comparable sales, type of property, current status of property 16% - 31% 27% Avg $ 2,537 Mortgage servicing rights $ 1,083 Cash flow analysis Discount rate 10%
Schedule of carrying amounts and estimated fair values of financial instruments	Carrying March 31, 2017 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 77,487 $ 72,454 $ 5,033 $ $ 77,487 Interest bearing time deposits 1,670 1,670 1,670 Loans including loans held for sale, net 2,591,104 4,378 2,624,768 2,629,146 FHLB and other stock 23,960 N/A Interest receivable 12,561 5,350 7,211 12,561 Liabilities Deposits (3,155,137) (812,301) (2,339,824) (3,152,125) Other borrowings (137,197) (137,197) (137,197) FHLB advances (229,737) (228,539) (228,539) Interest payable (629) (629) (629) Subordinated debentures (41,239) (34,084) (34,084) Carrying December 31, 2016 Amount Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 86,552 $ 75,778 $ 10,774 $ $ 86,552 Interest bearing time deposits 1,960 1,960 1,960 Loans including loans held for sale, net 2,639,046 12,598 2,662,431 2,675,029 FHLB and other stock 21,693 N/A Interest receivable 12,576 5,234 7,342 12,576 Liabilities Deposits (3,110,871) (767,159) (2,340,824) (3,107,983) Other borrowings (209,672) (209,686) (209,686) FHLB advances (249,658) (248,944) (248,944) Interest payable (642) (642) (642) Subordinated debentures (41,239) (34,084) (34,084)

REGULATORY CAPITAL (Tables)

REGULATORY CAPITAL (Tables)	3 Months Ended
	Mar. 31, 2017
REGULATORY CAPITAL
Schedule of actual and required capital amounts and ratios	Required for To Be Actual Adequate Capital Well Capitalized March 31, 2017 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ 414,150 % $ 227,265 % N/A N/A Tier 1 capital (to risk-weighted assets) 391,781 170,449 N/A N/A Common equity Tier 1 capital (to risk-weighted assets) 350,872 127,837 N/A N/A Tier 1 capital (to average assets) 391,781 157,897 N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ 406,790 % $ 227,322 % $ 284,152 % Tier 1 capital (to risk-weighted assets) 384,421 170,491 227,322 Common equity Tier 1 capital (to risk-weighted assets) 384,421 127,869 184,699 Tier 1 capital (to average assets) 384,421 157,616 197,021 Required for To Be Actual Adequate Capital Well Capitalized December 31, 2016 Amount Ratio Amount Ratio Amount Ratio MainSource Financial Group Total capital (to risk-weighted assets) $ % $ % N/A N/A Tier 1 capital (to risk-weighted assets) N/A N/A Common equity Tier 1 capital (to risk-weighted assets) N/A N/A Tier 1 capital (to average assets) N/A N/A MainSource Bank Total capital (to risk-weighted assets) $ % $ % $ % Tier 1 capital (to risk-weighted assets) Common equity Tier 1 capital (to risk-weighted assets) Tier 1 capital (to average assets)

DERIVATIVES (Tables)

DERIVATIVES (Tables)	3 Months Ended
	Mar. 31, 2017
DERIVATIVES
Schedule of fair value hedges	March 31, 2017 December 31, 2016 Notional Notional Amount Fair Value Amount Fair Value Included in Other Assets: Interest Rate Swaps at Fair Value $ 167,585 $ 3,457 $ 143,300 $ 3,003 Included in Other Liabilities: Interest Rate Swaps at Fair Value $ 167,585 $ 3,457 $ 143,300 $ 3,003
Summary of the effect of derivative instruments on the Consolidated Statement of Income	Three Months Ended March 31, 2017 2016 Interest Rate Swaps - Fee Income Included in Other Income / (Expense) $ 335 $ 81

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income tax expense	$ 3,781	$ 2,538
Accounting Standards Update 2016-09
Income tax expense	(274)
Cumulative adjustment to retained earnings	$ 0

STOCK PLANS AND STOCK BASED C32

STOCK PLANS AND STOCK BASED COMPENSATION - Stock Incentive Plans (Details) - shares	Jan. 19, 2015	Apr. 26, 2007
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 C33

STOCK PLANS AND STOCK BASED COMPENSATION - Activity in Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Shares
Outstanding, beginning of year (in shares)	193,114
Exercised (in shares)	(75,297)
Outstanding at end of period (in shares)	117,817		193,114
Exercisable end of period (in shares)	106,413
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share)	$ 12.09
Exercised (in dollars per share)	13.25
Outstanding, period end (in dollars per share)	11.34		$ 12.09
Exercisable at end of period (in dollars per share)	$ 10.82
Stock options vested and currently exercisable
Outstanding at end of period, Weighted average remaining contractual term (years)	4 years 8 months 12 days
Outstanding at end of period, Aggregate intrinsic value	$ 2,544
Exercisable at end of period, Weighted average remaining contractual term (years)	4 years 4 months 24 days
Exercisable at end of period, Aggregate intrinsic value	$ 2,353
Stock options
Shares
Granted (in shares)	0	0
Exercisable end of period (in shares)	106,413		181,710
Weighted Average Exercise Price
Exercisable at end of period (in dollars per share)	$ 10.82		$ 11.83
Stock options vested and currently exercisable
Exercisable at end of period, Weighted average remaining contractual term (years)	4 years 4 months 24 days		3 years 9 months 18 days
Exercisable at end of period, Aggregate intrinsic value	$ 2,353		$ 4,101

STOCK PLANS AND STOCK BASED C34

STOCK PLANS AND STOCK BASED COMPENSATION - Intrinsic Value of Stock Options and Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Additional disclosures
Compensation expense	$ 100	$ 89
Stock options
Additional disclosures
Compensation expense	$ 8	$ 22
Options granted	0	0
Unrecognized stock option compensation expense related to unvested awards
April 2017 - December 2017	$ 22

STOCK PLANS AND STOCK BASED C35

STOCK PLANS AND STOCK BASED COMPENSATION - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Jun. 30, 2016	Mar. 31, 2016
Stock-based compensation
Shares of common stock granted		17,976	358,000
Closing price of common stock (in dollars per share)		$ 21.89	$ 19.89
Shares
Granted (in shares)		17,976	358,000
Additional disclosures
Compensation expense	$ 100		$ 89
Restricted stock
Stock-based compensation
Shares of common stock granted	12,802
Shares
Nonvested at the beginning of the period (in shares)	104,319
Granted (in shares)	12,802
Vested (in shares)	(18,322)
Nonvested at the end of the period (in shares)	98,799
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period (in dollars per share)	$ 20.03
Granted (in dollars per share)	34.99
Vested (in dollars per share)	16.13
Nonvested at the end of the period (in dollars per share)	$ 22.69
Restricted stock | 2007 Stock Incentive Plan
Additional disclosures
Unrecognized compensation costs	$ 1,382
Weighted-average period of expected recognition of the cost	2 years 4 months 24 days
Compensation expense	$ 202		$ 149
Restricted stock | Executive officer and other employees
Stock-based compensation
Shares of common stock granted	12,802		24,152
Vesting percentage of stock awards on third anniversary of grant date	100.00%
Shares
Granted (in shares)	12,802		24,152
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 34.99		$ 21.47
Performance units | Executive officers
Stock-based compensation
Shares of common stock granted	6,528		16,152
Shares
Granted (in shares)	6,528		16,152
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 35.04		$ 21.41
Additional disclosures
Unrecognized compensation costs	$ 524
Compensation expense	$ 49		$ 26

STOCK PLANS AND STOCK BASED C36

STOCK PLANS AND STOCK BASED COMPENSATION - Performance Measures and Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Jun. 30, 2016	Mar. 31, 2016
Additional disclosures
Shares of common stock granted		17,976	358,000
Compensation expense	$ 100		$ 89
Performance units | Executive officers
Stock-based compensation
Performance period	3 years
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	6,528		16,152
Compensation expense	$ 49		$ 26
Restricted stock
Additional disclosures
Shares of common stock granted	12,802
Restricted stock | Directors
Additional disclosures
Quarterly vesting percentage of stock awards	25.00%
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%

SECURITIES - Amortized Cost and

SECURITIES - Amortized Cost and Fair Value of Securities Available for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available for sale securities
Amortized Cost	$ 1,015,996	$ 1,002,803
Gross Unrealized Gains	14,480	13,641
Gross Unrealized Losses	(8,268)	(8,904)
Fair Value	1,022,208	1,007,540
U. S. government agency
Available for sale securities
Amortized Cost	383	951
Gross Unrealized Gains	3	4
Fair Value	386	955
State and municipal
Available for sale securities
Amortized Cost	367,296	361,335
Gross Unrealized Gains	11,714	10,799
Gross Unrealized Losses	(2,377)	(2,848)
Fair Value	376,633	369,286
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for sale securities
Amortized Cost	437,264	450,006
Gross Unrealized Gains	1,250	1,253
Gross Unrealized Losses	(4,439)	(4,629)
Fair Value	434,075	446,630
Collateralized mortgage obligations (Government Sponsored Entity)
Available for sale securities
Amortized Cost	199,857	179,314
Gross Unrealized Gains	1,436	1,514
Gross Unrealized Losses	(1,452)	(1,427)
Fair Value	199,841	179,401
Equity securities
Available for sale securities
Amortized Cost	4,670	4,670
Fair Value	4,670	4,670
Other securities
Available for sale securities
Amortized Cost	6,526	6,527
Gross Unrealized Gains	77	71
Fair Value	$ 6,603	$ 6,598

SECURITIES - Contractual Maturi

SECURITIES - Contractual Maturities of Securities Available for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available for Sale, Amortized Cost
Within one year	$ 15,973
One through five years	80,903
Six through ten years	102,654
After ten years	174,675
Equity securities	4,670
Amortized Cost	1,015,996	$ 1,002,803
Available for Sale, Fair Value
Within one year	16,266
One through five years	84,512
Six through ten years	107,190
After ten years	175,654
Equity securities	4,670
Fair Value	1,022,208	1,007,540
Mortgage-backed securities-residential (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	437,264
Amortized Cost	437,264	450,006
Available for Sale, Fair Value
Debt securities without single maturity date	434,075
Fair Value	434,075	446,630
Collateralized mortgage obligations (Government Sponsored Entity)
Available for Sale, Amortized Cost
Debt securities without single maturity date	199,857
Amortized Cost	199,857	179,314
Available for Sale, Fair Value
Debt securities without single maturity date	199,841
Fair Value	$ 199,841	$ 179,401

SECURITIES - Additional Informa

SECURITIES - Additional Information - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Available for sale securities
Gross proceeds from sales of securities	$ 3,100	$ 4,235
Gross gains realized on sales	14	17
Gross losses realized on sales	1	0
Tax provision related to net realized gains	$ 5	$ 6

SECURITIES - Securities in an U

SECURITIES - Securities in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value	$ 478,649	$ 509,184
Less than 12 months, Unrealized Losses	(8,047)	(8,679)
12 months or longer, Fair Value	8,150	8,518
12 months or longer, Unrealized Losses	(221)	(225)
Total Fair Value	486,799	517,702
Total Unrealized Losses	(8,268)	(8,904)
State and municipal
Securities in a continuous unrealized loss position with unrealized losses presented by length of time
Less than 12 months, Fair Value	73,729	95,822
Less than 12 months, Unrealized Losses	(2,377)	(2,848)
Total Fair Value	73,729	95,822
Total Unrealized Losses	(2,377)	(2,848)
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	310,779	335,668
Less than 12 months, Unrealized Losses	(4,439)	(4,629)
Total Fair Value	310,779	335,668
Total Unrealized Losses	(4,439)	(4,629)
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	94,141	77,694
Less than 12 months, Unrealized Losses	(1,231)	(1,202)
12 months or longer, Fair Value	8,150	8,518
12 months or longer, Unrealized Losses	(221)	(225)
Total Fair Value	102,291	86,212
Total Unrealized Losses	$ (1,452)	$ (1,427)

SECURITIES - Other-Than-Tempora

SECURITIES - Other-Than-Temporary Impairment and Other Disclosures (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)item	Dec. 31, 2016USD ($)
Other-Than-Temporary-Impairment
Number of general segments segregated in investment securities portfolio | item	2
Number of security in the portfolio | item	981
Number of portfolio security in unrealized loss position | item	202
Market value of securities in unrealized loss position	$ 486,799	$ 517,702
Unrealized losses of collateralized mortgage obligation securities	8,268	8,904
State and municipal
Other-Than-Temporary-Impairment
Market value of securities in unrealized loss position	73,729	95,822
Unrealized losses of collateralized mortgage obligation securities	2,377	2,848
Mortgage-backed securities
Other-Than-Temporary-Impairment
Unrealized losses of collateralized mortgage obligation securities	4,439
Collateralized mortgage obligations (Government Sponsored Entity)
Other-Than-Temporary-Impairment
Market value of securities in unrealized loss position	102,291	86,212
Unrealized losses of collateralized mortgage obligation securities	1,452	$ 1,427
Other than temporary impairment on available for sale securities	$ 0

LOANS AND ALLOWANCE - Loans and

LOANS AND ALLOWANCE - Loans and Allowance For Loan Losses - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Loans and allowance
Total loans	$ 2,614,610		$ 2,651,673
Allowance for loan losses	(22,369)	$ (21,079)	(22,499)	$ (22,020)
Net loans	2,592,241		2,629,174
Financing receivables	383,705		422,161
Financing receivables- purchases	0	0
Financing receivables - sales	0	0
Remaining discount on financing receivables	6,471		7,313
Non accretable yield	4,069		4,262
Cheviot Financial Corp.
Loans and allowance
Allowance for loan losses	(235)
Non accretable yield	4,615
Commercial and industrial
Loans and allowance
Financing receivables	11,656		13,875
Agricultural
Loans and allowance
Financing receivables	820		872
Farm
Loans and allowance
Financing receivables	389		389
Hotel
Loans and allowance
Financing receivables	2,983		2,983
Construction and development
Loans and allowance
Financing receivables	16,374		16,634
Other real estate
Loans and allowance
Financing receivables	141,659		164,505
1-4 family
Loans and allowance
Financing receivables	194,868		206,044
Home equity
Loans and allowance
Financing receivables	12,673		14,342
Direct
Loans and allowance
Financing receivables	2,283		2,517
Commercial
Loans and allowance
Total loans	528,166		534,559
Allowance for loan losses	(9,220)	(5,989)	(9,654)	(6,511)
Commercial | Commercial and industrial
Loans and allowance
Total loans	458,019		461,092
Commercial | Agricultural
Loans and allowance
Total loans	70,147		73,467
Commercial Real Estate
Loans and allowance
Total loans	1,143,213		1,162,696
Allowance for loan losses	(7,937)	(9,668)	(7,706)	(10,702)
Commercial Real Estate | Farm
Loans and allowance
Total loans	108,037		111,807
Commercial Real Estate | Hotel
Loans and allowance
Total loans	101,685		91,213
Commercial Real Estate | Construction and development
Loans and allowance
Total loans	84,939		102,598
Commercial Real Estate | Other
Loans and allowance
Total loans	848,552		857,078
Residential
Loans and allowance
Total loans	880,803		892,513
Allowance for loan losses	(3,987)	(4,553)	(4,247)	(3,859)
Residential | 1-4 family
Loans and allowance
Total loans	601,338		608,366
Residential | Home equity
Loans and allowance
Total loans	279,465		284,147
Consumer
Loans and allowance
Total loans	62,428		61,905
Allowance for loan losses	(1,225)	$ (869)	(892)	$ (948)
Consumer | Direct
Loans and allowance
Total loans	62,132		61,574
Consumer | Indirect
Loans and allowance
Total loans	$ 296		$ 331

LOANS AND ALLOWANCE - Allowance

LOANS AND ALLOWANCE - Allowance for Loan Losses and Recorded Investment By Portfolio Segment - (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Mar. 31, 2017	Dec. 31, 2016
Allowance for loan losses
Balance at the beginning of the period	$ 22,499	$ 22,020	$ 22,020
Provision charged to expense		500
Losses charged off	(1,748)	(2,442)
Ending Balance acquired with deteriorated credit	1,618	1,001
Balance at the end of the period	22,369	21,079	22,499
Ending Balance individually evaluated for impairment				$ 2,005	$ 1,800
Ending Balance collectively evaluated for impairment				20,364	20,699
Total ending allowance balance	22,499	22,020	22,020	22,369	22,499
Loans
Ending Balance individually evaluated for impairment					21,197
Ending Balance collectively evaluated for impairment				2,582,118	2,621,522
Total ending loan balance excluding accrued interest				2,614,610	2,651,673
Accrued interest				7,211	7,342
Allowance that includes a probability of default for subject loans	2,025		2,697
Purchased credit impaired loans				8,209	8,954
Non accretable yield				4,069	4,262
Allowance for loan losses	(22,499)	(22,020)	(22,020)	(22,369)	(22,499)
Excluding loans acquired with deteriorated credit quality
Allowance for loan losses
Ending Balance individually evaluated for impairment				1,770
Loans
Ending Balance individually evaluated for impairment				24,049
Acquired with deteriorated credit quality
Allowance for loan losses
Balance at the end of the period	235
Total ending allowance balance	235			235
Loans
Total ending loan balance excluding accrued interest				8,443	8,954
Allowance for loan losses	(235)			(235)
Commercial
Allowance for loan losses
Balance at the beginning of the period	9,654	6,511	6,511
Provision charged to expense	(30)	(110)
Losses charged off	(474)	(562)
Ending Balance acquired with deteriorated credit	70	150
Balance at the end of the period	9,220	5,989	9,654
Ending Balance individually evaluated for impairment					898
Ending Balance collectively evaluated for impairment				8,471	8,756
Total ending allowance balance	9,654	6,511	6,511	9,220	9,654
Loans
Ending Balance individually evaluated for impairment					2,705
Ending Balance collectively evaluated for impairment				525,863	531,854
Total ending loan balance excluding accrued interest				528,166	534,559
Allowance for loan losses	(9,654)	(6,511)	(6,511)	(9,220)	(9,654)
Commercial | Excluding loans acquired with deteriorated credit quality
Allowance for loan losses
Ending Balance individually evaluated for impairment				749
Loans
Ending Balance individually evaluated for impairment				2,303
Commercial Real Estate
Allowance for loan losses
Balance at the beginning of the period	7,706	10,702	10,702
Provision charged to expense	(160)	(587)
Losses charged off	(205)	(503)
Ending Balance acquired with deteriorated credit	596	56
Balance at the end of the period	7,937	9,668	7,706
Ending Balance individually evaluated for impairment					755
Ending Balance collectively evaluated for impairment				6,827	6,951
Total ending allowance balance	7,706	10,702	10,702	7,937	7,706
Loans
Ending Balance individually evaluated for impairment					7,904
Ending Balance collectively evaluated for impairment				1,125,400	1,147,536
Total ending loan balance excluding accrued interest				1,143,213	1,162,696
Allowance for loan losses	(7,706)	(10,702)	(10,702)	(7,937)	(7,706)
Commercial Real Estate | Excluding loans acquired with deteriorated credit quality
Allowance for loan losses
Ending Balance individually evaluated for impairment				875
Loans
Ending Balance individually evaluated for impairment				10,824
Commercial Real Estate | Acquired with deteriorated credit quality
Allowance for loan losses
Balance at the end of the period	235
Total ending allowance balance	235			235
Loans
Total ending loan balance excluding accrued interest				6,989	7,256
Allowance for loan losses	(235)			(235)
Residential
Allowance for loan losses
Balance at the beginning of the period	4,247	3,859	3,859
Provision charged to expense	(249)	1,084
Losses charged off	(183)	(503)
Ending Balance acquired with deteriorated credit	172	113
Balance at the end of the period	3,987	4,553	4,247
Ending Balance individually evaluated for impairment					147
Ending Balance collectively evaluated for impairment				3,841	4,100
Total ending allowance balance	4,247	3,859	3,859	3,987	4,247
Loans
Ending Balance individually evaluated for impairment					10,458
Ending Balance collectively evaluated for impairment				869,458	880,357
Total ending loan balance excluding accrued interest				880,803	892,513
Allowance for loan losses	(4,247)	(3,859)	(3,859)	(3,987)	(4,247)
Residential | Excluding loans acquired with deteriorated credit quality
Allowance for loan losses
Ending Balance individually evaluated for impairment				146
Loans
Ending Balance individually evaluated for impairment				9,891
Residential | Acquired with deteriorated credit quality
Loans
Total ending loan balance excluding accrued interest				1,454	1,698
Consumer
Allowance for loan losses
Balance at the beginning of the period	892	948	948
Provision charged to expense	439	113
Losses charged off	(886)	(874)
Ending Balance acquired with deteriorated credit	780	682
Balance at the end of the period	1,225	869	892
Ending Balance collectively evaluated for impairment				1,225	892
Total ending allowance balance	892	948	948	1,225	892
Loans
Ending Balance individually evaluated for impairment					130
Ending Balance collectively evaluated for impairment				61,397	61,775
Total ending loan balance excluding accrued interest				62,428	61,905
Allowance for loan losses	(892)	$ (948)	$ (948)	(1,225)	$ (892)
Consumer | Excluding loans acquired with deteriorated credit quality
Loans
Ending Balance individually evaluated for impairment				1,031
Cheviot Financial Corp.
Allowance for loan losses
Balance at the end of the period	235
Total ending allowance balance	235			235
Loans
Purchased credit impaired loans				16,175
Non accretable yield				4,615
Accretable yield				0
Allowance for loan losses	$ (235)			$ (235)

LOANS AND ALLOWANCE - Loan Impa

LOANS AND ALLOWANCE - Loan Impairment - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Loans individually evaluated for impairment and average balance of impaired loans
Performing troubled debt restructurings excluded as allowed	$ 396		$ 1,925
Unpaid Principal Balance
With an allowance recorded	10,564		6,272
With no related allowance recorded	18,676		17,236
Total impaired loans	29,240		23,508
Recorded Investment
With an allowance recorded	9,150		6,141
With no related allowance recorded	14,502		13,131
Total impaired loans	23,652		19,272
Allowance for Loan Losses Allocated
With an allowance recorded	2,005		1,800
Total impaired loans	2,005		1,800
Interest Income Recognized
Interest Income Recognized	286	$ 59
Cash Basis Income Recognized
Cash Basis Income Recognized	286	59
Average recorded investment
Average Balance	21,463	15,423
Commercial
Allowance for Loan Losses Allocated
With an allowance recorded			898
Commercial | Commercial and industrial
Unpaid Principal Balance
With an allowance recorded	329		719
With no related allowance recorded	853		1,028
Recorded Investment
With an allowance recorded	295		689
With no related allowance recorded	140		322
Allowance for Loan Losses Allocated
With an allowance recorded	73		429
Interest Income Recognized
Interest Income Recognized	92	13
Cash Basis Income Recognized
Cash Basis Income Recognized	92	13
Average recorded investment
Average Balance	723	781
Commercial | Agricultural
Unpaid Principal Balance
With an allowance recorded	1,595		1,441
With no related allowance recorded	273		254
Recorded Investment
With an allowance recorded	1,595		1,441
With no related allowance recorded	273		253
Allowance for Loan Losses Allocated
With an allowance recorded	676		469
Average recorded investment
Average Balance	1,781	7
Commercial | Farm
Unpaid Principal Balance
With an allowance recorded	1,372
With no related allowance recorded	582
Recorded Investment
With an allowance recorded	1,371
With no related allowance recorded	320
Allowance for Loan Losses Allocated
With an allowance recorded	528
Commercial | Hotel
Unpaid Principal Balance
With an allowance recorded	4,196
Recorded Investment
With an allowance recorded	2,983
Allowance for Loan Losses Allocated
With an allowance recorded	201
Commercial | Construction and development
Unpaid Principal Balance
With no related allowance recorded	1,926
Recorded Investment
With no related allowance recorded	1,564
Commercial | Other
Unpaid Principal Balance
With an allowance recorded	1,887
With no related allowance recorded	3,224
Recorded Investment
With an allowance recorded	1,765
With no related allowance recorded	2,424
Allowance for Loan Losses Allocated
With an allowance recorded	381
Commercial Real Estate
Allowance for Loan Losses Allocated
With an allowance recorded			755
Commercial Real Estate | Farm
Unpaid Principal Balance
With an allowance recorded			1,106
With no related allowance recorded			506
Recorded Investment
With an allowance recorded			1,105
With no related allowance recorded			241
Allowance for Loan Losses Allocated
With an allowance recorded			360
Average recorded investment
Average Balance	1,518	302
Commercial Real Estate | Hotel
Unpaid Principal Balance
With no related allowance recorded			64
Recorded Investment
With no related allowance recorded			64
Average recorded investment
Average Balance	1,524
Commercial Real Estate | Construction and development
Unpaid Principal Balance
With no related allowance recorded			239
Recorded Investment
With no related allowance recorded			162
Average recorded investment
Average Balance	863	185
Commercial Real Estate | Other
Unpaid Principal Balance
With an allowance recorded			1,900
With no related allowance recorded			3,558
Recorded Investment
With an allowance recorded			1,755
With no related allowance recorded			2,652
Allowance for Loan Losses Allocated
With an allowance recorded			395
Interest Income Recognized
Interest Income Recognized	127	26
Cash Basis Income Recognized
Cash Basis Income Recognized	127	26
Average recorded investment
Average Balance	4,298	5,006
Residential
Allowance for Loan Losses Allocated
With an allowance recorded			147
Residential | 1-4 family
Unpaid Principal Balance
With an allowance recorded	1,082		1,091
With no related allowance recorded	8,517		9,215
Recorded Investment
With an allowance recorded	1,038		1,046
With no related allowance recorded	6,838		7,432
Allowance for Loan Losses Allocated
With an allowance recorded	145		146
Interest Income Recognized
Interest Income Recognized	40	10
Cash Basis Income Recognized
Cash Basis Income Recognized	40	10
Average recorded investment
Average Balance	8,177	6,568
Residential | Home equity
Unpaid Principal Balance
With an allowance recorded	103		15
With no related allowance recorded	2,183		2,233
Recorded Investment
With an allowance recorded	103		105
With no related allowance recorded	1,912		1,875
Allowance for Loan Losses Allocated
With an allowance recorded	1		1
Interest Income Recognized
Interest Income Recognized	24	5
Cash Basis Income Recognized
Cash Basis Income Recognized	24	5
Average recorded investment
Average Balance	1,998	2,458
Residential | Direct
Unpaid Principal Balance
With no related allowance recorded	1,118
Recorded Investment
With no related allowance recorded	1,031
Consumer | Direct
Unpaid Principal Balance
With no related allowance recorded			139
Recorded Investment
With no related allowance recorded			$ 130
Interest Income Recognized
Interest Income Recognized	3	4
Cash Basis Income Recognized
Cash Basis Income Recognized	3	4
Average recorded investment
Average Balance	$ 581	115
Consumer | Indirect
Interest Income Recognized
Interest Income Recognized		1
Cash Basis Income Recognized
Cash Basis Income Recognized		1
Average recorded investment
Average Balance		$ 1

LOANS AND ALLOWANCE - Aging of

LOANS AND ALLOWANCE - Aging of the Recorded Investment in Past Due Loans - (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	$ 20,181	$ 15,808
Past due over 90 days and still accruing		2,135
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	2,614,610	2,651,673
Total Past Due	18,878	23,234
Loans Not Past Due	2,595,732	2,628,439
Accrued interest	7,211	7,342
30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	7,426	9,640
60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	917	2,229
Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	10,535	11,365
Cheviot Financial Corp.
Recorded investment in nonaccrual and loans past due over 90 days still on accrual and aging of recorded investment in past due
Non-accrual	7,005	3,564
Commercial
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	528,166	534,559
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	431	882
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	458,019	461,092
Total Past Due	134	176
Loans Not Past Due	457,885	460,916
Commercial | Commercial and industrial | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	21
Commercial | Commercial and industrial | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	10
Commercial | Commercial and industrial | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	103	176
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	1,805	1,631
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	70,147	73,467
Total Past Due	1,781	1,821
Loans Not Past Due	68,366	71,646
Commercial | Agricultural | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	130	215
Commercial | Agricultural | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	39
Commercial | Agricultural | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,612	1,606
Commercial Real Estate
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	1,143,213	1,162,696
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	1,691	1,347
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	108,037	111,807
Total Past Due	1,570	1,324
Loans Not Past Due	106,467	110,483
Commercial Real Estate | Farm | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	2	81
Commercial Real Estate | Farm | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,568	1,243
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	2,983	64
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	101,685	91,213
Total Past Due		63
Loans Not Past Due	101,685	91,150
Commercial Real Estate | Hotel | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due		63
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	1,525	122
Past due over 90 days and still accruing		2,135
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	84,939	102,598
Total Past Due	1,506	3,639
Loans Not Past Due	83,433	98,959
Commercial Real Estate | Construction and development | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due		1,416
Commercial Real Estate | Construction and development | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,506	2,223
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	3,015	3,219
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	848,552	857,078
Total Past Due	3,384	3,170
Loans Not Past Due	845,168	853,908
Commercial Real Estate | Other | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,967	1,268
Commercial Real Estate | Other | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	188	90
Commercial Real Estate | Other | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	1,229	1,812
Residential
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	880,803	892,513
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	6,399	7,163
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	601,338	608,366
Total Past Due	8,138	10,148
Loans Not Past Due	593,200	598,218
Residential | 1-4 family | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	4,874	4,884
Residential | 1-4 family | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	636	2,002
Residential | 1-4 family | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	2,628	3,262
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	1,323	1,273
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	279,465	284,147
Total Past Due	1,349	1,881
Loans Not Past Due	278,116	282,266
Residential | Home equity | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	394	830
Residential | Home equity | 60-89 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	44	137
Residential | Home equity | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	911	914
Consumer
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	62,428	61,905
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	1,009	107
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	62,132	61,574
Total Past Due	1,016	1,002
Loans Not Past Due	61,116	60,572
Consumer | Direct | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	38	936
Consumer | Direct | Greater Than 90 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due	978	66
Consumer | Indirect
Aging of the recorded investment in past due loans
Total ending loan balance excluding accrued interest	296	331
Total Past Due		10
Loans Not Past Due	$ 296	321
Consumer | Indirect | 30-59 Days Past Due
Aging of the recorded investment in past due loans
Total Past Due		$ 10

LOANS AND ALLOWANCE - Troubled

LOANS AND ALLOWANCE - Troubled Debt Restructurings - (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)item	Mar. 31, 2016USD ($)item	Dec. 31, 2016USD ($)
Troubled debt restructurings
Total of troubled debt restructurings	$ 4,736		$ 6,474
Allocated specific reserves	404		508
Amounts Company has committed to lend to customers with outstanding loans classified as troubled debt restructurings	$ 0		$ 0
Loans by class modified as troubled debt restructurings
Number of Loans | item	2	4
Pre-Modification Outstanding Recorded Investment	$ 383	$ 76
Post-Modification Outstanding Recorded Investment	$ 383	76
Loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification
Period of contractually past due loans under the modified terms, to be considered in payment default	90 days
Additional disclosures
Recorded investment in loans modified other than troubled debt restructurings	$ 5,168	$ 983
Commercial Real Estate | Other
Loans by class modified as troubled debt restructurings
Number of Loans | item	1
Pre-Modification Outstanding Recorded Investment	$ 53
Post-Modification Outstanding Recorded Investment	$ 53
Residential | 1-4 family
Loans by class modified as troubled debt restructurings
Number of Loans | item	1
Pre-Modification Outstanding Recorded Investment	$ 330
Post-Modification Outstanding Recorded Investment	$ 330
Residential | Home equity
Loans by class modified as troubled debt restructurings
Number of Loans | item		4
Pre-Modification Outstanding Recorded Investment		$ 76
Post-Modification Outstanding Recorded Investment		$ 76

LOANS AND ALLOWANCE - Risk Cate

LOANS AND ALLOWANCE - Risk Categories of Loans by Class of Loans - (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Risk category of loans
Loans	$ 2,614,610	$ 2,651,673
Pass
Risk category of loans
Loans	1,473,548	1,481,038
Special Mention
Risk category of loans
Loans	15,532	20,526
Substandard
Risk category of loans
Loans	12,861	18,626
Substandard Commercial
Risk category of loans
Loans	1,563	1,421
Non-accrual
Risk category of loans
Loans	9,887	5,844
Performing
Risk category of loans
Loans	157,988	169,710
Watch
Risk category of loans
Loans		90
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	$ 528,166	534,559
Commercial | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial | Commercial and industrial
Risk category of loans
Loans	458,019	461,092
Commercial | Commercial and industrial | Pass
Risk category of loans
Loans	413,011	415,064
Commercial | Commercial and industrial | Special Mention
Risk category of loans
Loans	4,076	3,347
Commercial | Commercial and industrial | Substandard
Risk category of loans
Loans	4,033	5,297
Commercial | Commercial and industrial | Substandard Commercial
Risk category of loans
Loans	64	55
Commercial | Commercial and industrial | Non-accrual
Risk category of loans
Loans	367	827
Commercial | Commercial and industrial | Performing
Risk category of loans
Loans	36,468	36,502
Commercial | Agricultural
Risk category of loans
Loans	70,147	73,467
Commercial | Agricultural | Pass
Risk category of loans
Loans	61,333	61,637
Commercial | Agricultural | Special Mention
Risk category of loans
Loans	383	2,283
Commercial | Agricultural | Substandard
Risk category of loans
Loans		190
Commercial | Agricultural | Substandard Commercial
Risk category of loans
Loans	210
Commercial | Agricultural | Non-accrual
Risk category of loans
Loans	1,595	1,441
Commercial | Agricultural | Performing
Risk category of loans
Loans	6,626	7,916
Commercial Real Estate
Risk category of loans
Loans	1,143,213	1,162,696
Commercial Real Estate | Maximum
Risk category of loans
Loans classified by delinquency	250
Commercial Real Estate | Farm
Risk category of loans
Loans	108,037	111,807
Commercial Real Estate | Farm | Pass
Risk category of loans
Loans	86,076	89,297
Commercial Real Estate | Farm | Special Mention
Risk category of loans
Loans	2,147	2,209
Commercial Real Estate | Farm | Substandard
Risk category of loans
Loans	680	694
Commercial Real Estate | Farm | Substandard Commercial
Risk category of loans
Loans	151	91
Commercial Real Estate | Farm | Non-accrual
Risk category of loans
Loans	1,540	1,340
Commercial Real Estate | Farm | Performing
Risk category of loans
Loans	17,443	21,778
Commercial Real Estate | Hotel
Risk category of loans
Loans	101,685	91,213
Commercial Real Estate | Hotel | Pass
Risk category of loans
Loans	98,702	88,166
Commercial Real Estate | Hotel | Substandard
Risk category of loans
Loans		2,983
Commercial Real Estate | Hotel | Non-accrual
Risk category of loans
Loans	2,983	64
Commercial Real Estate | Construction and development
Risk category of loans
Loans	84,939	102,598
Commercial Real Estate | Construction and development | Pass
Risk category of loans
Loans	61,177	74,811
Commercial Real Estate | Construction and development | Special Mention
Risk category of loans
Loans	3,605	3,600
Commercial Real Estate | Construction and development | Substandard
Risk category of loans
Loans	652	2,287
Commercial Real Estate | Construction and development | Substandard Commercial
Risk category of loans
Loans	84	7
Commercial Real Estate | Construction and development | Non-accrual
Risk category of loans
Loans	1,441	31
Commercial Real Estate | Construction and development | Performing
Risk category of loans
Loans	17,980	18,260
Commercial Real Estate | Other
Risk category of loans
Loans	848,552	857,078
Commercial Real Estate | Other | Pass
Risk category of loans
Loans	753,249	752,063
Commercial Real Estate | Other | Special Mention
Risk category of loans
Loans	5,321	9,087
Commercial Real Estate | Other | Substandard
Risk category of loans
Loans	7,496	7,365
Commercial Real Estate | Other | Substandard Commercial
Risk category of loans
Loans	1,054	1,078
Commercial Real Estate | Other | Non-accrual
Risk category of loans
Loans	1,961	2,141
Commercial Real Estate | Other | Performing
Risk category of loans
Loans	79,471	85,254
Commercial Real Estate | Other | Watch
Risk category of loans
Loans		90
Residential
Risk category of loans
Loans	880,803	892,513
Residential | Substandard
Risk category of loans
Loans	3,539	4,176
Residential | Performing
Risk category of loans
Loans	876,584	886,198
Residential | Watch
Risk category of loans
Loans	680	2,139
Residential | 1-4 family
Risk category of loans
Loans	601,338	608,366
Residential | 1-4 family | Substandard
Risk category of loans
Loans	2,628	3,262
Residential | 1-4 family | Performing
Risk category of loans
Loans	598,074	603,102
Residential | 1-4 family | Watch
Risk category of loans
Loans	636	2,002
Residential | Home equity
Risk category of loans
Loans	279,465	284,147
Residential | Home equity | Substandard
Risk category of loans
Loans	911	914
Residential | Home equity | Performing
Risk category of loans
Loans	278,510	283,096
Residential | Home equity | Watch
Risk category of loans
Loans	44	137
Consumer
Risk category of loans
Loans	62,428	61,905
Consumer | Substandard
Risk category of loans
Loans	949	4
Consumer | Performing
Risk category of loans
Loans	61,450	61,839
Consumer | Loss
Risk category of loans
Loans	29	62
Consumer | Direct
Risk category of loans
Loans	62,132	61,574
Consumer | Direct | Substandard
Risk category of loans
Loans	949	4
Consumer | Direct | Performing
Risk category of loans
Loans	61,154	61,508
Consumer | Direct | Loss
Risk category of loans
Loans	29	62
Consumer | Indirect
Risk category of loans
Loans	296	331
Consumer | Indirect | Performing
Risk category of loans
Loans	$ 296	$ 331

LOANS AND ALLOWANCE - Purchased

LOANS AND ALLOWANCE - Purchased Credit Impaired Loans for Which it Was Probable at Acquistion That All Contractually Required Payments Would Not be Collected (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Contractually required payments receivable of loans purchased during the year
Commercial	$ 10,447	$ 10,817
1-4 Family	2,066	2,399
Total contractually required payments receivable	12,513	13,216
Carrying amount, net of allowance	8,209	8,954
Allowance for loan losses on loans acquired in transfer	$ 235	$ 0

OTHER REAL ESTATE OWNED - Infor

OTHER REAL ESTATE OWNED - Information Regarding Other Real Estate Owned (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Activity in other real estate owned
Beginning Balance	$ 1,875	$ 1,959	$ 1,959
Transfer to other real estate owned	441	537
Sale - Out of other real estate owned	(496)	(586)
Write-down	(37)	(19)
Ending Balance	1,783	1,891	1,875
Valuation allowance on other real estate owned
Beginning Balance	(236)	(217)	(217)
Impairments during year	(37)	(19)
Recovery on impairments	11
Ending Balance	(262)	(236)	(236)
Net loss on OREO activity which is included in non-interest income and expenses related to foreclosed assets
Write-downs	37	19
Losses/(gains) on sales	(159)	(168)
Net loss/(gain)	(122)	(149)
Operating expenses	43	$ 5
Foreclosed residential real estate properties
Foreclosed residential real estate properties	1,108		1,443
Retail mortgage loans, foreclosure proceedings in process	$ 4,344		$ 3,266

DEPOSITS - Deposit Liabilities

DEPOSITS - Deposit Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
DEPOSITS & REPURCHASE AGREEMENTS
Non-interest-bearing demand	$ 812,301	$ 767,159
Interest-bearing demand	1,141,042	1,163,010
Savings	783,344	749,391
Certificates of deposit of $250 or more	66,052	65,815
Other certificates and time deposits	352,398	365,496
Total deposits	$ 3,155,137	3,110,871
Repurchase agreement, term	1 day
Pledged amount of mortgage backed securities	$ 54,072	58,001
Securities under repurchase agreements	$ 37,530	$ 38,339

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net Income
Basic Earnings Per Common Share: Net income	$ 12,073	$ 8,766
Diluted Earnings Per Common Share: Net income attributable to common shareholders and assumed conversions	$ 12,073	$ 8,766
Weighted Average Shares
Basic Earnings Per Common Share: Average Shares	24,114,024	21,607,289
Effect of dilutive warrants (in shares)	315,979	161,675
Effect of dilutive stock options (in shares)	156,958	104,074
Diluted Earnings Per Common Share: Average Shares	24,586,961	21,873,038
Earnings per Common Share
Basic Earnings Per Common Share: Net income (in dollars per share)	$ 0.50	$ 0.41
Diluted Earnings Per Common Share: Net income attributable to common shareholders and assumed conversions (in dollars per share)	$ 0.49	$ 0.40
Stock options
Earnings per Common Share
Antidilutive options	0	0

FAIR VALUE - Assets and Liabili

FAIR VALUE - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)item	Dec. 31, 2016USD ($)	Mar. 31, 2016USD ($)
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 | item	2
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	$ 1,022,208	$ 1,007,540
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
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	386	955
State and municipal
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	376,633	369,286
Mortgage-backed securities-residential (Government Sponsored Entity)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	434,075	446,630
Collateralized mortgage obligations (Government Sponsored Entity)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	199,841	179,401
Equity securities
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	4,670	4,670
Other securities
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	6,603	6,598
Recurring basis | Carrying Value
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	1,022,208	1,007,540
Mortgage banking derivatives	821	648
Fair value, assets	3,457	3,003
Derivative liability	(3,457)	(3,003)
Recurring basis | Carrying Value | U. S. government agency
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	386	955
Recurring basis | Carrying Value | State and municipal
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	376,633	369,286
Recurring basis | Carrying Value | Mortgage-backed securities-residential (Government Sponsored Entity)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	434,075	446,630
Recurring basis | Carrying Value | Collateralized mortgage obligations (Government Sponsored Entity)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	199,841	179,401
Recurring basis | Carrying Value | Equity securities
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	4,670	4,670
Recurring basis | Carrying Value | Other securities
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	6,603	6,598
Recurring basis | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	4,670	4,670
Recurring basis | Estimated Fair Value | Significant Other Observable Inputs (Level 2)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	1,001,261	986,152
Mortgage banking derivatives	821	648
Fair value, assets	3,457	3,003
Derivative liability	(3,457)	(3,003)
Recurring basis | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	16,277	16,718
Recurring basis | Estimated Fair Value | U. S. government agency | Significant Other Observable Inputs (Level 2)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	386	955
Recurring basis | Estimated Fair Value | State and municipal | Significant Other Observable Inputs (Level 2)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	366,959	359,166
Recurring basis | Estimated Fair Value | State and municipal | Significant Unobservable Inputs (Level 3)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	9,674	10,120
Recurring basis | Estimated Fair Value | Mortgage-backed securities-residential (Government Sponsored Entity) | Significant Other Observable Inputs (Level 2)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	434,075	446,630
Recurring basis | Estimated Fair Value | Collateralized mortgage obligations (Government Sponsored Entity) | Significant Other Observable Inputs (Level 2)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	199,841	179,401
Recurring basis | Estimated Fair Value | Equity securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	4,670	4,670
Recurring basis | Estimated Fair Value | Other securities | Significant Unobservable Inputs (Level 3)
Assets and Liabilities Measured on a Recurring Basis
Financial Assets	$ 6,603	$ 6,598

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
	Mar. 31, 2017	Mar. 31, 2016
State and municipal | Recurring basis
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	$ 10,120	$ 10,858
Included in other comprehensive income	(3)	1
Settlements	(443)	(430)
Balance at the end of the period	9,674	10,429
Other securities
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period		6,524
Included in other comprehensive income		(1)
Balance at the end of the period		$ 6,523
Other securities | Recurring basis
Reconciliation and income statement classification of gains and losses
Balance at the beginning of the period	6,598
Included in other comprehensive income	5
Balance at the end of the period	$ 6,603

FAIR VALUE - Fair Value of Asse

FAIR VALUE - Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis - (Details) - Non-recurring basis - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Assets:
Impaired servicing rights	$ 1,039		$ 1,083
Total impaired loans	5,507		2,537
Recorded investment of impaired loans	7,304		4,008
Valuation allowance of impaired loans	1,797		1,471
Provision expenses of impaired loans	666	$ 125
Gross outstanding balance of servicing rights	1,239		1,283
Valuation allowance of servicing rights	200		200
Commercial and industrial
Assets:
Total impaired loans	222		260
Recorded investment of impaired loans	295
Valuation allowance of impaired loans	73
Agricultural
Assets:
Total impaired loans	919		972
Recorded investment of impaired loans	1,595
Valuation allowance of impaired loans	676
Hotel
Assets:
Total impaired loans	2,782
Recorded investment of impaired loans	2,983
Valuation allowance of impaired loans	201
Farm
Assets:
Total impaired loans	843		745
Recorded investment of impaired loans	1,371
Valuation allowance of impaired loans	528
Other
Assets:
Total impaired loans	741		560
Recorded investment of impaired loans	1,060
Valuation allowance of impaired loans	319
Significant Unobservable Inputs (Level 3)
Assets:
Impaired servicing rights	1,039		1,083
Total impaired loans	5,507		2,537
Significant Unobservable Inputs (Level 3) | Commercial and industrial
Assets:
Total impaired loans	222		260
Significant Unobservable Inputs (Level 3) | Agricultural
Assets:
Total impaired loans	919		972
Significant Unobservable Inputs (Level 3) | Hotel
Assets:
Total impaired loans	2,782
Significant Unobservable Inputs (Level 3) | Farm
Assets:
Total impaired loans	843		745
Significant Unobservable Inputs (Level 3) | Other
Assets:
Total impaired loans	$ 741		$ 560

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	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Impaired Loans
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 5,507	$ 2,537
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	$ 222	$ 260
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)	19.00%	10.00%
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)	30.00%	30.00%
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)	24.00%	18.00%
Impaired Loans | Agricultural | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 919	$ 972
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)	24.00%	10.00%
Impaired Loans | Hotel | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 2,782
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	40.00%
Impaired Loans | Hotel | Sales comparison approach | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	40.00%
Impaired Loans | Farm | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 843	$ 745
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 | Average
Unobservable Inputs
Adjustment for differences between comparable sales, type of property, current status of property (as a percent)	22.00%	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	$ 741	$ 560
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)	19.00%	16.00%
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)	40.00%	31.00%
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)	27.00%
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)		27.00%
Mortgage servicing rights | Cash flow analysis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value
Fair Value	$ 1,039	$ 1,083
Unobservable Inputs
Discount rate (as a percent)	10.00%	10.00%

FAIR VALUE - Carrying Amounts a

FAIR VALUE - Carrying Amounts and Estimated Fair Values of Financial Instruments - (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financial assets
Interest bearing time deposits	$ 1,670	$ 1,960
FHLB and other stock, at cost	23,960	21,693
Interest receivable	7,211	7,342
Carrying Value
Financial assets
Cash and cash equivalents	77,487	86,552
Interest bearing time deposits	1,670	1,960
Loans including loans held for sale, net	2,591,104	2,639,046
FHLB and other stock, at cost	23,960	21,693
Interest receivable	12,561	12,576
Financial liabilities
Deposits	(3,155,137)	(3,110,871)
Other borrowings	(137,197)	(209,672)
FHLB advances	(229,737)	(249,658)
Interest payable	(629)	(642)
Subordinated debentures	(41,239)	(41,239)
Estimated Fair Value
Financial assets
Cash and cash equivalents	77,487	86,552
Interest bearing time deposits	1,670	1,960
Loans including loans held for sale, net	2,629,146	2,675,029
Interest receivable	12,561	12,576
Financial liabilities
Deposits	(3,152,125)	(3,107,983)
Other borrowings	(137,197)	(209,686)
FHLB advances	(228,539)	(248,944)
Interest payable	(629)	(642)
Subordinated debentures	(34,084)	(34,084)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets
Cash and cash equivalents	72,454	75,778
Financial liabilities
Deposits	(812,301)	(767,159)
Significant Other Observable Inputs (Level 2)
Financial assets
Cash and cash equivalents	5,033	10,774
Interest bearing time deposits	1,670	1,960
Loans including loans held for sale, net	4,378	12,598
Interest receivable	5,350	5,234
Financial liabilities
Deposits	(2,339,824)	(2,340,824)
Other borrowings	(137,197)	(209,686)
FHLB advances	(228,539)	(248,944)
Interest payable	(629)	(642)
Subordinated debentures	(34,084)	(34,084)
Significant Unobservable Inputs (Level 3)
Financial assets
Loans including loans held for sale, net	2,624,768	2,662,431
Interest receivable	$ 7,211	$ 7,342

REGULATORY CAPITAL (Details)

REGULATORY CAPITAL (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)item	Dec. 31, 2019	Dec. 31, 2016USD ($)	Mar. 31, 2016USD ($)	Dec. 31, 2015USD ($)
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	$ 414,150		$ 407,802
Required for Adequate Capital, Amount	$ 227,265		$ 222,095
Actual, Ratio	14.60%		14.70%
Required for Adequate Capital, Ratio	8.00%		8.00%
Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 391,781		$ 385,303
Required for Adequate Capital, Amount	$ 170,449		$ 166,571
Actual, Ratio	13.80%		13.90%
Required for Adequate Capital, Ratio	6.00%		6.00%
Common equity Tier 1 capital (to risk-weighted assets)
Actual, Amount	$ 350,872		$ 344,212
Required for Adequate Capital, Amount	$ 127,837		$ 124,928
Actual, Ratio	12.40%		12.40%
Required for Adequate Capital, Ratio	4.50%		4.50%
Tier 1 capital (to average assets)
Actual, Amount	$ 391,781		$ 385,303
Required for Adequate Capital, Amount	$ 157,897		$ 157,671
Actual, Ratio (as a percent)	9.90%		9.80%
Required for Adequate Capital, Ratio	4.00%		4.00%
Cash and cash equivalents	$ 77,487		$ 86,552	$ 72,002	$ 67,578
Federal Reserve Corrective Action Rules
Basel III and Dodd Frank Rules
Capital conservation buffer, percentage	1.25%
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	$ 14,000
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	$ 406,790		$ 407,939
Required for Adequate Capital, Amount	227,322		222,152
To Be Well Capitalized, Amount	$ 284,152		$ 277,690
Actual, Ratio	14.30%		14.70%
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	$ 384,421		$ 385,440
Required for Adequate Capital, Amount	170,491		166,614
To Be Well Capitalized, Amount	$ 227,322		$ 222,152
Actual, Ratio	13.50%		13.90%
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	$ 384,421		$ 385,440
Required for Adequate Capital, Amount	127,869		124,960
To Be Well Capitalized, Amount	$ 184,699		$ 180,498
Actual, Ratio	13.50%		13.90%
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	$ 384,421		$ 385,440
Required for Adequate Capital, Amount	157,616		157,390
To Be Well Capitalized, Amount	$ 197,021		$ 196,737
Actual, Ratio (as a percent)	9.80%		9.80%
Required for Adequate Capital, Ratio	4.00%		4.00%
To Be Well Capitalized, Ratio	5.00%		5.00%

INCOME TAXES (Details)

INCOME TAXES (Details)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
INCOME TAXES
Effective tax rate (as a percent)	23.80%	22.50%

DERIVATIVES (Details)

DERIVATIVES (Details) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Other Income
Derivatives, Fair Value [Line Items]
Fee income (expense)	$ 335	$ 81
Other Assets
Derivatives, Fair Value [Line Items]
Notional amount, assets	167,585		$ 143,300
Fair value, assets	3,457		3,003
Other Liabilities
Derivatives, Fair Value [Line Items]
Notional amount, liabilities	167,585		143,300
Fair value, liabilities	$ 3,457		$ 3,003

ACQUISITIONS - Acquisition of F

ACQUISITIONS - Acquisition of First Service Capital Management, Inc. (Details) - First Service Capital Management, Inc. $ in Thousands	Feb. 17, 2017USD ($)item
Business Acquisition [Line Items]
Number of brokers of acquiree to be hired | item	4
Purchase price | $	$ 1,750

ACQUISITIONS - Acquisition of61

ACQUISITIONS - Acquisition of FCB Bancorp, Inc. (Details) $ / shares in Units, $ in Thousands	Dec. 19, 2016USD ($)$ / shares	Mar. 31, 2017item	Apr. 28, 2017$ / shares	Jan. 31, 2017USD ($)
FCB Bancorp, Inc.
Business Acquisition [Line Items]
Ratio of shares to be received by acquiree shareholders	0.9
Cash received in exchange for each share of common stock owned (in dollars per share) | $ / shares	$ 7
Closing price per share of common stock | $ / shares			$ 34.20
Approximate value of transaction	$ 59,000
FCB Bancorp, Inc. | Outstanding and Unexercised Options
Business Acquisition [Line Items]
Ratio of shares to be received by acquiree shareholders	0.9
Cash received in exchange for each share of common stock owned (in dollars per share) | $ / shares	$ 7
Period of consecutive trading days used to calculate average daily closing sales price of a share of common stock	10 days
FCB Bank
Business Acquisition [Line Items]
Number of branches acquired | item		7
Assets of acquiree				$ 519,206
Loans receivable of acquiree				436,596
Deposits				383,402
Total equity of acquiree				$ 30,396

BRANCH CLOSURES (Details)

BRANCH CLOSURES (Details) $ in Millions	12 Months Ended
	Dec. 31, 2016USD ($)item
BRANCH CLOSURES
Number of branches at specified location | item	3
Deposits of three branch offices to be closed | $	$ 53

SUBSEQUENT EVENT (Details)

SUBSEQUENT EVENT (Details) $ in Thousands	May 01, 2017USD ($)
Subsequent event | Capstone
SUBSEQUENT EVENT:
Purchase price	$ 1,750