ACQUISITION

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

ACQUISITION

NOTE 3: ACQUISITION

On November 9, 2012, the Corporation completed its acquisition of Dupont State Bank, an Indiana commercial bank wholly owned by Citizens Union Bancorp of Shelbyville, Inc. In conjunction with the acquisition, River Valley Financial Bank (Bank) merged with and into Dupont State Bank, which changed its name to River Valley Financial Bank, effecting the conversion of the Bank from a federally chartered thrift to a state chartered commercial bank. Under the terms of the acquisition, the Bank paid $5,700,000 for the stock of Dupont State Bank with a resulting bargain purchase gain, after application of purchase accounting adjustments, of $988,000. The bargain gain was recorded as other income in the three-month period ended December 31, 2012. For the twelve-month period ended December 31, 2012, the Corporation had approximately $382,000 in costs relative to the acquisition. Acquisition expense for the same period ended December 31, 2011 was approximately $212,000. Acquisition expense for the three- and six-month periods ended June 30, 2013 was $9,000 and $18,000 as compared to $81,000 and $124,000 for the three and six months ended June 30, 2012. As a result of the acquisition, and the addition of two market areas, the Corporation will have an opportunity to expand both lending and deposit services. Cost savings are expected through economies of scale and consolidation of operating centers.

Under the purchase method of accounting for purchases, the total purchase price is allocated to the net tangible and intangible assets based on their current estimated fair values as of the date of acquisition. Based on independent, third party valuation of the fair value of those assets acquired, and liabilities assumed, the purchase price for the Dupont State Bank acquisition was allocated as follows (in thousands):

Consideration: Cash paid	$	5,700
Fair value of assets acquired:
Cash and cash equivalents		14,893
Investment securities available-for-sale		12,139
Loans		52,125
Property and equipment		3,160
Federal Home Loan Bank Stock		369
Real estate, held for sale		334
Core deposit intangible		514
Interest receivable		364
Other assets		1,243
Total assets acquired		85,141
Fair value of liabilities assumed:
Deposits		78,300
Interest payable		69
Other liabilities		84
Total liabilities assumed		78,453
Bargain purchase gain	$	(988	)

At the time of acquisition, the fair value of the assets acquired included loans with a fair value of $52,125,000. The gross principal and contractual interest due under the contracts was $53,982,000, of which $2,960,000 was expected to be uncollectible.