10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2017

Commission File Number 001-15877

German American Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Indiana	35-1547518
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

711 Main Street, Jasper, Indiana 47546

(Address of Principal Executive Offices and Zip Code)

Registrant’s telephone number, including area code: (812) 482-1314

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES   x      NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES   x      NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company:

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): 

YES   ¨      NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 1, 2017
Common Shares, no par value	22,929,417

CAUTION REGARDING FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Information included in or incorporated by reference in this Quarterly Report on Form 10-Q, our other filings with the Securities and Exchange Commission (the “SEC”) and our press releases or other public statements, contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to the discussions of our forward-looking statements and associated risks in our Annual Report on Form 10-K for the year ended December 31, 2016, in Item 1, “Business – Forward-Looking Statements and Associated Risks” and our discussion of risk factors in Item 1A, “Risk Factors” of that Annual Report on Form 10-K, as updated from time to time in our subsequent SEC filings, including by Item 2 of Part I of this Report (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) at the conclusion of that Item 2 under the heading “Forward-Looking Statements and Associated Risks.”

2

*****

INDEX

PART I.            FINANCIAL INFORMATION		4
Item 1.	Unaudited Financial Statements	4
	Consolidated Balance Sheets – March 31, 2017 and December 31, 2016	4
	Consolidated Statements of Income – Three Months Ended March 31, 2017 and 2016	5
	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2017 and 2016	6
	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2017 and 2016	7
	Notes to Consolidated Financial Statements – March 31, 2017	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.           OTHER INFORMATION		43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
SIGNATURES		44
INDEX OF EXHIBITS		45

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PART I.FINANCIAL INFORMATION

Item 1.           Financial Statements

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, dollars in thousands except share and per share data)

	March 31, 2017			December 31, 2016
ASSETS
Cash and Due from Banks	$	30,151		$	48,467
Federal Funds Sold and Other Short-term Investments	7,288			16,349
Cash and Cash Equivalents	37,439			64,816
Securities Available-for-Sale, at Fair Value	726,352			709,786
Loans Held-for-Sale, at Fair Value	6,856			15,273
Loans	1,986,929			1,993,404
Less: Unearned Income	(3,357		)	(3,449		)
Allowance for Loan Losses	(15,166		)	(14,808		)
Loans, Net	1,968,406			1,975,147
Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost	13,048			13,048
Premises, Furniture and Equipment, Net	49,718			48,230
Other Real Estate	208			242
Goodwill	54,058			54,058
Intangible Assets	2,791			2,835
Company Owned Life Insurance	46,903			46,642
Accrued Interest Receivable and Other Assets	27,365			25,917
TOTAL ASSETS	$	2,933,144		$	2,955,994
LIABILITIES
Non-interest-bearing Demand Deposits	$	572,874		$	571,989
Interest-bearing Demand, Savings, and Money Market Accounts	1,389,763			1,399,381
Time Deposits	363,835			378,181
Total Deposits	2,326,472			2,349,551
FHLB Advances and Other Borrowings	241,358			258,114
Accrued Interest Payable and Other Liabilities	24,098			18,062
TOTAL LIABILITIES	2,591,928			2,625,727
SHAREHOLDERS’ EQUITY
Preferred Stock, no par value; 500,000 shares authorized, no shares issued	—			—
Common Stock, no par value, $1 stated value; 45,000,000 shares authorized (1)	15,287			15,261
Additional Paid-in Capital	172,013			171,744
Retained Earnings	156,322			149,666
Accumulated Other Comprehensive Loss	(2,406		)	(6,404		)
TOTAL SHAREHOLDERS’ EQUITY	341,216			330,267
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,933,144		$	2,955,994
End of period shares issued and outstanding (1)	22,929,417			22,904,157

⁽¹⁾ Share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

See accompanying notes to consolidated financial statements.

4

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, dollars in thousands except per share data)

	Three Months Ended   March 31,
	2017		2016
INTEREST INCOME
Interest and Fees on Loans	$	22,262	$	18,664
Interest on Federal Funds Sold and Other Short-term Investments	27		17
Interest and Dividends on Securities:
Taxable	2,719		2,277
Non-taxable	2,025		1,722
TOTAL INTEREST INCOME	27,033		22,680
INTEREST EXPENSE
Interest on Deposits	1,443		1,155
Interest on FHLB Advances and Other Borrowings	865		741
TOTAL INTEREST EXPENSE	2,308		1,896
NET INTEREST INCOME	24,725		20,784
Provision for Loan Losses	500		850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	24,225		19,934
NON-INTEREST INCOME
Trust and Investment Product Fees	1,243		1,021
Service Charges on Deposit Accounts	1,484		1,233
Insurance Revenues	2,640		2,727
Company Owned Life Insurance	254		215
Interchange Fee Income	1,023		788
Other Operating Income	857		513
Net Gains on Sales of Loans	687		720
Net Gains on Securities	—		—
TOTAL NON-INTEREST INCOME	8,188		7,217
NON-INTEREST EXPENSE
Salaries and Employee Benefits	11,444		11,601
Occupancy Expense	1,549		1,379
Furniture and Equipment Expense	633		508
FDIC Premiums	239		328
Data Processing Fees	1,011		2,165
Professional Fees	803		1,318
Advertising and Promotion	778		544
Intangible Amortization	253		208
Other Operating Expenses	2,326		2,189
TOTAL NON-INTEREST EXPENSE	19,036		20,240
Income before Income Taxes	13,377		6,911
Income Tax Expense	3,821		1,765
NET INCOME	$	9,556	$	5,146
Basic Earnings per Share (1)	$	0.42	$	0.25
Diluted Earnings per Share (1)	$	0.42	$	0.25
Dividends per Share (1)	$	0.13	$	0.12

⁽¹⁾ Per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017. 

See accompanying notes to consolidated financial statements.

5

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, dollars in thousands)

	Three Months Ended   March 31,
	2017			2016
NET INCOME	$	9,556		$	5,146
Other Comprehensive Income:
Unrealized Gains on Securities
Unrealized Holding Gain Arising During the Period	6,179			6,209
Reclassification Adjustment for Losses (Gains) Included in Net Income	—			—
Tax Effect	(2,181		)	(2,180		)
Net of Tax	3,998			4,029
Total Other Comprehensive Income	3,998			4,029
COMPREHENSIVE INCOME	$	13,554		$	9,175

See accompanying notes to consolidated financial statements.

6

GERMAN AMERICAN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, dollars in thousands)

	Three Months Ended   March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	9,556		$	5,146
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Net Amortization on Securities	808			823
Depreciation and Amortization	1,127			1,048
Loans Originated for Sale	(24,566		)	(22,256		)
Proceeds from Sales of Loans Held-for-Sale	33,615			25,225
Provision for Loan Losses	500			850
Gain on Sale of Loans, net	(687		)	(720		)
Loss on Disposition and Donation of Premises and Equipment	—			2
Increase in Cash Surrender Value of Company Owned Life Insurance	(261		)	(235		)
Equity Based Compensation	295			261
Change in Assets and Liabilities:
Interest Receivable and Other Assets	(1,602		)	1,462
Interest Payable and Other Liabilities	3,857			(407		)
Net Cash from Operating Activities	22,642			11,199
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturity of Other Short-term Investments	—			(1,000		)
Proceeds from Maturities, Calls, Redemptions of Securities Available-for-Sale	21,154			20,743
Proceeds from Sales of Securities Available-for-Sale	—			62,975
Purchase of Securities Available-for-Sale	(32,351		)	(23,706		)
Proceeds from Maturities of Securities Held-to-Maturity	—			95
Purchase of Federal Home Loan Bank Stock	—			(1,350		)
Purchase of Loans	(59		)	(4,263		)
Loans Made to Customers, net of Payments Received	6,182			(29,023		)
Proceeds from Sales of Other Real Estate	152			717
Property and Equipment Expenditures	(2,433		)	(459		)
Acquisition of River Valley Bank	—			(793		)
Net Cash from Investing Activities	(7,355		)	23,936
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits	(23,003		)	8,826
Change in Short-term Borrowings	(40,985		)	(29,463		)
Advances in Long-term Debt	25,000			—
Repayments of Long-term Debt	(776		)	(15,070		)
Dividends Paid	(2,900		)	(2,391		)
Net Cash from Financing Activities	(42,664		)	(38,098		)
Net Change in Cash and Cash Equivalents	(27,377		)	(2,963		)
Cash and Cash Equivalents at Beginning of Year	64,816			52,009
Cash and Cash Equivalents at End of Period	$	37,439		$	49,046
Cash Paid During the Period for
Interest	$	2,361		$	1,736
Income Taxes	—			1,503
Supplemental Non Cash Disclosures
Loans Transferred to Other Real Estate	$	118		$	9

See accompanying notes to consolidated financial statements.

7

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 1 – Basis of Presentation

German American Bancorp, Inc. operates primarily in the banking industry. The accounting and reporting policies of German American Bancorp, Inc. and its subsidiaries (hereinafter collectively referred to as the "Company") conform to U.S. generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. 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. 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. Certain items included in the prior period financial statements were reclassified to conform to the current presentation. There was no effect on net income or total shareholders' equity based on these reclassifications.

NOTE 2 – Per Share Data

The computations of Basic Earnings per Share and Diluted Earnings per Share are as follows:

	Three Months Ended   March 31,
	2017		2016
Basic Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Basic Earnings per Share	$	0.42	$	0.25
Diluted Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Potentially Dilutive Shares, Net	—		6,115
Diluted Weighted Average Shares Outstanding (1)	22,908,648		20,893,399
Diluted Earnings per Share	$	0.42	$	0.25

⁽¹⁾ Share and per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

For the three months ended March 31, 2017 and 2016, there were no anti-dilutive shares.

8

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 3 – Securities 

The amortized cost, unrealized gross gains and losses recognized in accumulated other comprehensive income (loss), and fair value of Securities Available-for-Sale at March 31, 2017 and December 31, 2016, were as follows:

Securities Available-for-Sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2017
Obligations of State and Political Subdivisions	$	254,587	$	5,169	$	(2,413	)	$	257,343
MBS/CMO - Residential	475,002		1,095		(7,441		)	468,656
Equity Securities	353		—		—			353
Total	$	729,942	$	6,264	$	(9,854	)	$	726,352
December 31, 2016
Obligations of State and Political Subdivisions	$	247,350	$	3,847	$	(3,678	)	$	247,519
MBS/CMO - Residential	471,852		480		(10,418		)	461,914
Equity Securities	353		—		—			353
Total	$	719,555	$	4,327	$	(14,096	)	$	709,786

Equity securities that do not have readily determinable fair values are included in the above totals, are carried at historical cost and are evaluated for impairment on a periodic basis. All mortgage-backed securities in the above table are residential mortgage-backed securities and guaranteed by government sponsored entities.

The amortized cost and fair value of securities at March 31, 2017 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay certain obligations with or without call or prepayment penalties. Mortgage-backed and Equity Securities are not due at a single maturity date and are shown separately in the table below.

Securities Available-for-Sale:	Amortized Cost		Fair Value
Due in one year or less	$	3,443	$	3,481
Due after one year through five years	19,478		20,316
Due after five years through ten years	73,007		75,307
Due after ten years	158,659		158,239
MBS/CMO - Residential	475,002		468,656
Equity Securities	353		353
Total	$	729,942	$	726,352

Proceeds from the Sales of Securities are summarized below:

	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
Proceeds from Sales	$	—	$	62,975
Gross Gains on Sales	—		—
Income Taxes on Gross Gains	—		—

The carrying value of securities pledged to secure repurchase agreements, public and trust deposits, and for other purposes as required by law was $180,960 and $186,572 as of March 31, 2017 and December 31, 2016, respectively.

9

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 3 - Securities (continued)

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 More					Total
March 31, 2017	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	79,834	$	(2,413	)	$	—	$	—		$	79,834	$	(2,413	)
MBS/CMO - Residential	331,861		(5,992		)	45,218		(1,449		)	377,079		(7,441		)
Equity Securities	—		—			—		—			—		—
Total	$	411,695	$	(8,405	)	$	45,218	$	(1,449	)	$	456,913	$	(9,854	)

	Less than 12 Months					12 Months or More					Total
December 31, 2016	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	108,918	$	(3,678	)	$	—	$	—		$	108,918	$	(3,678	)
MBS/CMO - Residential	356,040		(8,782		)	47,271		(1,636		)	403,311		(10,418		)
Equity Securities	—		—			—		—			—		—
Total	$	464,958	$	(12,460	)	$	47,271	$	(1,636	)	$	512,229	$	(14,096	)

Securities are written down to fair value when a decline in fair value is not considered temporary. In estimating other-than-temporary losses, 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 Company 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 Company does not intend to sell or expect to be required to sell these securities, and the decline in fair value is largely due to changes in market interest rates. Therefore, the Company does not consider these securities to be other-than-temporarily impaired. All mortgage-backed securities and collateralized mortgage obligations (MBS/CMO - Residential) in the Company’s portfolio are guaranteed by government sponsored entities, are investment grade, and are performing as expected.

The Company's equity securities consist of one non-controlling investment in a single banking organization at March 31, 2017 and December 31, 2016. The original investment totaled $1,350 and other-than-temporary impairment was previously recorded totaling $997. When a decline in fair value below cost is deemed to be other-than-temporary, the unrealized loss must be recognized as a charge to earnings.

NOTE 4 – Derivatives

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. The notional amounts of these interest rate swaps and the offsetting counterparty derivative instruments were $83.0 million at March 31, 2017 and $67.9 million at December 31, 2016. These interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions with approved, reputable, independent counterparties with substantially matching terms. The agreements are considered stand alone derivatives and changes in the fair value of derivatives are reported in earnings as non-interest income.  

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Company’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 Company minimizes credit risk through credit approvals, limits, and monitoring procedures.

10

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of:

	March 31, 2017				December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Other Assets:
Interest Rate Swaps	$	83,047	$	1,548	$	67,902	$	1,291
Included in Other Liabilities:
Interest Rate Swaps	$	83,047	$	1,579	$	67,902	$	1,238

The following table presents the effect of derivative instruments on the Consolidated Statements of Income for the periods presented:

	Three Months Ended   March 31,
	2017		2016
Interest Rate Swaps:
Included in Other Operating Income	$	348	$	54

NOTE 5 – Loans

Loans were comprised of the following classifications at March 31, 2017 and December 31, 2016: 

	March 31, 2017			December 31, 2016
Commercial:
Commercial and Industrial Loans and Leases	$	450,501		$	457,372
Commercial Real Estate Loans	865,717			856,094
Agricultural Loans	292,615			303,128
Retail:
Home Equity Loans	135,352			133,575
Consumer Loans	58,938			59,945
Residential Mortgage Loans	183,806			183,290
Subtotal	1,986,929			1,993,404
Less: Unearned Income	(3,357		)	(3,449		)
Allowance for Loan Losses	(15,166		)	(14,808		)
Loans, Net	$	1,968,406		$	1,975,147

The following tables present the activity in the allowance for loan losses by portfolio class for the three months ended March 31, 2017 and 2016:

March 31, 2017	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans			Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	3,725		$	5,452		$	4,094	$	283		$	235		$	329		$	690		$	14,808
Provision for Loan Losses	(115		)	278			267		17			118			19			(84		)	500
Recoveries	2			5			—		—			60			27			—			94
Loans Charged-off	—			(39		)	—		(1		)	(169		)	(27		)	—			(236		)
Ending Balance	$	3,612		$	5,696		$	4,361	$	299		$	244		$	348		$	606		$	15,166

11

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

March 31, 2016	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	4,242		$	6,342	$	2,115	$	383		$	230		$	414		$	712		$	14,438
Provision for Loan Losses	105			120		414		31			27			155			(2		)	850
Recoveries	4			1		—		1			45			5			—			56
Loans Charged-off	(5		)	—		—		(63		)	(72		)	(43		)	—			(183		)
Ending Balance	$	4,346		$	6,463	$	2,529	$	352		$	230		$	531		$	710		$	15,161

In determining the adequacy of the allowance for loan loss, general allocations are made for pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on historical averages for loan losses for these portfolios, judgmentally adjusted for current economic factors and portfolio trends.

Loan impairment is reported when full repayment under the terms of the loan is not expected. This methodology is used for all loans, including loans acquired with deteriorated credit quality if such loans perform worse than what was expected at the time of acquisition. For purchased loans, the assessment is made at the time of acquisition as well as over the life of loan. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral if repayment is expected solely from the collateral. Commercial and industrial loans, commercial real estate loans, and agricultural loans are evaluated individually for impairment. Smaller balance homogeneous loans are evaluated for impairment in total. Such loans include real estate loans secured by one-to-four family residences and loans to individuals for household, family and other personal expenditures. Individually evaluated loans on non-accrual are generally considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Specific allocations on impaired loans are determined by comparing the loan balance to the present value of expected cash flows or expected collateral proceeds. Allocations are also applied to categories of loans not considered individually impaired but for which the rate of loss is expected to be greater than historical averages, including non-performing consumer or residential real estate loans. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values.

12

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	533	$	23	$	510	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,517		3,586		5,126		4,313		299		239		348		606
Acquired with Deteriorated Credit Quality	116		3		60		48		—		5		—		—
Total Ending Allowance Balance	$	15,166	$	3,612	$	5,696	$	4,361	$	299	$	244	$	348	$	606
Loans:
Loans Individually Evaluated for Impairment	$	2,924	$	85	$	2,182	$	657	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,981,754		450,341		858,027		295,235		135,828		59,035		183,288		n/m(2)
Loans Acquired with Deteriorated Credit Quality	10,348		1,251		7,426		688		—		53		930		n/m(2)
Total Ending Loans Balance(1)	$	1,995,026	$	451,677	$	867,635	$	296,580	$	135,828	$	59,088	$	184,218	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

⁽²⁾n/m = not meaningful

December 31, 2016	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	255	$	24	$	231	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,448		3,698		5,172		4,046		283		230		329		690
Acquired with Deteriorated Credit Quality	105		3		49		48		—		5		—		—
Total Ending Allowance Balance	$	14,808	$	3,725	$	5,452	$	4,094	$	283	$	235	$	329	$	690
Loans:
Loans Individually Evaluated for Impairment	$	1,239	$	113	$	832	$	294	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,989,128		456,769		849,510		305,946		134,032		60,046		182,825		n/m(2)
Loans Acquired with Deteriorated Credit Quality	11,048		1,656		7,688		706		—		53		945		n/m(2)
Total Ending Loans Balance(1)	$	2,001,415	$	458,538	$	858,030	$	306,946	$	134,032	$	60,099	$	183,770	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

⁽²⁾n/m = not meaningful

13

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	57	$	57	$	—
Commercial Real Estate Loans	921		808		—
Agricultural Loans	700		657		—
Subtotal	1,678		1,522		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	140		137		26
Commercial Real Estate Loans	2,487		2,314		570
Agricultural Loans	587		587		48
Subtotal	3,214		3,038		644
Total	$	4,892	$	4,560	$	644
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	599	$	584	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,053	$	1,052	$	111

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

December 31, 2016	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	85	$	29	$	—
Commercial Real Estate Loans	1,278		784		—
Agricultural Loans	356		294		—
Subtotal	1,719		1,107		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	148		107		27
Commercial Real Estate Loans	839		827		280
Agricultural Loans	588		497		48
Subtotal	1,575		1,431		355
Total	$	3,294	$	2,538	$	355
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	1,018	$	531	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	910	$	768	$	100

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

14

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

The following tables present loans individually evaluated for impairment by class of loans for the three month period ended March 31, 2017 and 2016:

March 31, 2017	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	16	$	—	$	—
Commercial Real Estate Loans	522		4		4
Agricultural Loans	719		5		—
Subtotal	1,257		9		4
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	103		1		1
Commercial Real Estate Loans	2,423		6		6
Agricultural Loans	497		—		—
Subtotal	3,023		7		7
Total	$	4,280	$	16	$	11
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	209	$	—	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,007	$	7	$	7

March 31, 2016	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	827	$	23	$	11
Commercial Real Estate Loans	1,213		18		3
Agricultural Loans	259		1		1
Subtotal	2,299		42		15
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	129		—		—
Commercial Real Estate Loans	2,235		1		—
Agricultural Loans	—		—		—
Subtotal	2,364		1		—
Total	$	4,663	$	43	$	15
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	782	$	8	$	1
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	—	$	—	$	—

All classes of loans, including loans acquired with deteriorated credit quality, are generally placed on non-accrual status when scheduled principal or interest payments are past due for 90 days or more or when the borrower’s ability to repay becomes doubtful. For purchased loans, the determination is made at the time of acquisition as well as over the life of the loan. Uncollected accrued interest for each class of loans is reversed against income at the time a loan is placed on non-accrual. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. All classes of loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments

15

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

are reasonably assured. Loans are typically charged-off at 180 days past due, or earlier if deemed uncollectible. Exceptions to the non-accrual and charge-off policies are made when the loan is well secured and in the process of collection.

The following tables present the recorded investment in non-accrual loans and loans past due 90 days or more still on accrual by class of loans as of March 31, 2017 and December 31, 2016:

	Non-Accrual Loans				Loans Past Due 90 Days or More & Still Accruing
	March 31,		December 31,		March 31,		December 31,
	2017		2016		2017		2016
Commercial and Industrial Loans and Leases	$	84	$	86	$	—	$	2
Commercial Real Estate Loans	2,496		1,408		—		—
Agricultural Loans	767		792		1,238		—
Home Equity Loans	88		73		—		—
Consumer Loans	322		85		—		—
Residential Mortgage Loans	753		1,349		—		—
Total	$	4,510	$	3,793	$	1,238	$	2
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,051	$	1,264	$	—	$	—

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	451,677	$	1,278	$	7	$	73	$	1,358	$	450,319
Commercial Real Estate Loans	867,635		838		55		221		1,114		866,521
Agricultural Loans	296,580		397		—		1,842		2,239		294,341
Home Equity Loans	135,828		309		52		88		449		135,379
Consumer Loans	59,088		281		80		322		683		58,405
Residential Mortgage Loans	184,218		4,331		131		369		4,831		179,387
Total(1)	$	1,995,026	$	7,434	$	325	$	2,915	$	10,674	$	1,984,352
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	10,348	$	129	$	—	$	577	$	706	$	9,642

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

December 31, 2016	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	458,538	$	20	$	4	$	77	$	101	$	458,437
Commercial Real Estate Loans	858,030		1,509		21		330		1,860		856,170
Agricultural Loans	306,946		84		50		610		744		306,202
Home Equity Loans	134,032		707		16		73		796		133,236
Consumer Loans	60,099		175		147		85		407		59,692
Residential Mortgage Loans	183,770		3,470		1,251		806		5,527		178,243
Total(1)	$	2,001,415	$	5,965	$	1,489	$	1,981	$	9,435	$	1,991,980
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	11,048	$	130	$	—	$	627	$	757	$	10,291
Loans Acquired in Current Year      (Included in the Total Above)	$	262,809	$	2,752	$	862	$	1,126	$	4,740	$	258,069

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

16

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

Troubled Debt Restructurings:

In certain instances, the Company may choose to restructure the contractual terms of loans. A troubled debt restructuring occurs when the Bank grants a concession to the borrower that it would not otherwise consider due to a borrower’s financial difficulty.   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 modification. This evaluation is performed under the Company’s internal underwriting policy. The Company uses the same methodology for loans acquired with deteriorated credit quality as for all other loans when determining whether the loan is a troubled debt restructuring.

During the three months ended March 31, 2017 there was one loan modified as troubled debt restructuring. During the three months ended March 31, 2016, there were no loans modified as troubled debt restructurings.

The following tables present the recorded investment of troubled debt restructurings by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	—	$	—	$	—
Commercial Real Estate Loans	28		28		—
Total	$	28	$	28	$	—

December 31, 2016	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	28	$	28	$	—
Commercial Real Estate Loans	—		—		—
Total	$	28	$	28	$	—

⁽¹⁾The non-accrual troubled debt restructurings are included in the Non-Accrual Loan table presented on a previous page.

The Company had not committed to lending any additional amounts as of March 31, 2017 and December 31, 2016 to customers with outstanding loans that are classified as troubled debt restructurings.

The following tables present loans by class modified as troubled debt restructurings that occurred during the three months ending March 31, 2017 and 2016:

March 31, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	1	28		28
Total	1	$	28	$	28

The troubled debt restructurings described above increased the allowance for loan losses by $2 and resulted in charge-offs of $0 during the three months ending March 31, 2017.

March 31, 2016	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	—	—		—
Total	—	$	—	$	—

The troubled debt restructurings described above increased the allowance for loan losses by $0 and resulted in charge-offs of $0 during the three months ending March 31, 2016.

17

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

Additionally, there were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modificaiton during the three months ending March 31, 2017 and 2016.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers 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 classifies loans as to credit risk by individually analyzing loans. This analysis includes commercial and industrial loans, commercial real estate loans, and agricultural loans with an outstanding balance greater than $250. This analysis is typically performed on at least an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

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 characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

March 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	432,133	$	9,119	$	10,425	$	—	$	451,677
Commercial Real Estate Loans	824,473		25,355		17,807		—		867,635
Agricultural Loans	270,373		22,868		3,339		—		296,580
Total	$	1,526,979	$	57,342	$	31,571	$	—	$	1,615,892
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,489	$	3,121	$	4,755	$	—	$	9,365

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	437,353	$	10,454	$	10,731	$	—	$	458,538
Commercial Real Estate Loans	814,033		26,549		17,448		—		858,030
Agricultural Loans	287,975		14,670		4,301		—		306,946
Total	$	1,539,361	$	51,673	$	32,480	$	—	$	1,623,514
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,897	$	3,121	$	5,032	$	—	$	10,050
Loans Acquired in Current Year      (Included in the Total Above)	$	175,915	$	11,638	$	8,145	$	—	$	195,698

18

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For home equity, consumer and residential mortgage loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.  The following table presents the recorded investment in home equity, consumer and residential mortgage loans based on payment activity as of March 31, 2017 and December 31, 2016:

March 31, 2017	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	135,740	$	58,766	$	183,465
Nonperforming	88		322		753
Total	$	135,828	$	59,088	$	184,218
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	930

December 31, 2016	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	133,959	$	60,014	$	182,421
Nonperforming	73		85		1,349
Total	$	134,032	$	60,099	$	183,770
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	945

The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The recorded investment of those loans is as follows: 

	March 31, 2017		December 31, 2016
Commercial and Industrial Loans	$	1,251	$	1,656
Commercial Real Estate Loans	7,426		7,688
Agricultural Loans	688		706
Consumer Loans	53		53
Residential Mortgage Loans	930		945
Total	$	10,348	$	11,048
Carrying Amount, Net of Allowance	$	10,232	$	10,943

Accretable yield, or income expected to be collected, is as follows:

	2017			2016
Balance at January 1	$	2,521		$	1,279
New Loans Purchased	—			1,395
Accretion of Income	(42		)	(61		)
Reclassifications from Non-accretable Difference	311			—
Charge-off of Accretable Yield	—			—
Balance at March 31	$	2,790		$	2,613

For those purchased loans disclosed above, the Company increased the allowance for loan losses by $11 and $0 during the three months ended March 31, 2017 and 2016. No allowance for loan losses were reversed during the same period.

19

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 5 - Loans (continued)

The carrying amount of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction totaled $168 as of March 31, 2017 and $202 as of December 31, 2016.

NOTE 6 – Repurchase Agreements Accounted for as Secured Borrowings

Repurchase agreements are short-term borrowings included in FHLB Advances and Other Borrowings and mature overnight and continuously. Repurchase agreements, which were secured by mortgage-backed securities, totaled $35,564 and $42,412 as of March 31, 2017 and December 31, 2016, respectively. Risk could arise when the collateral pledged to a repurchase agreement declines in fair value. The Company minimizes risk by consistently monitoring the value of the collateral pledged. At the point in time where the collateral has declined in fair value, the Company is required to provide additional collateral based on the value of the underlying securities.

NOTE 7 – Segment Information

The Company’s operations include three primary segments: core banking, trust and investment advisory services, and insurance operations. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets. The core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory, and brokerage services to customers. The insurance segment offers a full range of personal and corporate property and casualty insurance products, primarily in the Company’s banking subsidiary’s local markets.

The core banking segment is comprised by the Company’s banking subsidiary, German American Bancorp, which operated through 52 banking offices at March 31, 2017. Net interest income from loans and investments funded by deposits and borrowings is the primary revenue for the core-banking segment. The trust and investment advisory services segment’s revenues are comprised primarily of fees generated by the trust operations of the Company's banking subsidiary and by German American Investment Services, Inc. These fees are derived by providing trust, investment advisory, and brokerage services to its customers. The insurance segment primarily consists of German American Insurance, Inc., which provides a full line of personal and corporate insurance products. Commissions derived from the sale of insurance products are the primary source of revenue for the insurance segment.

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance. The accounting policies of the three segments are the same as those of the Company. The evaluation process for segments does not include holding company income and expense. Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

20

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 7 - Segment Information (continued)

	Core Banking		Trust and Investment Advisory Services		Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2017
Net Interest Income	$	24,909	$	1	$	2	$	(187	)	$	24,725
Net Gains on Sales of Loans	687		—		—		—			687
Net Gains on Securities	—		—		—		—			—
Trust and Investment Product Fees	1		1,244		—		(2		)	1,243
Insurance Revenues	2		5		2,633		—			2,640
Noncash Items:
Provision for Loan Losses	500		—		—		—			500
Depreciation and Amortization	1,041		3		19		64			1,127
Income Tax Expense (Benefit)	3,622		34		427		(262		)	3,821
Segment Profit (Loss)	8,965		44		673		(126		)	9,556
Segment Assets at March 31, 2017	2,934,056		1,865		9,532		(12,309		)	2,933,144

	Core Banking		Trust and Investment Advisory Services			Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2016
Net Interest Income	$	20,898	$	(1	)	$	2	$	(115	)	$	20,784
Net Gains on Sales of Loans	720		—			—		—			720
Net Gains on Securities	—		—			—		—			—
Trust and Investment Product Fees	1		1,020			—		—			1,021
Insurance Revenues	4		8			2,715		—			2,727
Noncash Items:
Provision for Loan Losses	850		—			—		—			850
Depreciation and Amortization	973		3			26		46			1,048
Income Tax Expense (Benefit)	1,681		14			510		(440		)	1,765
Segment Profit (Loss)	5,081		7			790		(732		)	5,146
Segment Assets at December 31, 2016	2,958,585		1,851			8,494		(12,936		)	2,955,994

NOTE 8 – Stock Repurchase Plan

On April 26, 2001, the Company announced that its Board of Directors approved a stock repurchase program for up to 911,631 of the outstanding shares of common stock of the Company (as adjusted for subsequent stock dividends and splits). Shares may be purchased from time to time in the open market and in large block privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time before the maximum number of shares specified by the program are purchased. The Board of Directors established no expiration date for this program. As of March 31, 2017, the Company had purchased 502,447 shares under the program (as adjusted for subsequent stock dividends and splits). No shares were purchased under the program during the three months ended March 31, 2017 and 2016.

21

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 9 – Equity Plans and Equity Based Compensation

The Company maintains three equity incentive plans under which stock options, restricted stock, and other equity incentive awards can be granted. At March 31, 2017, the Company has reserved 412,104 shares of common stock (as adjusted for subsequent stock dividends/splits and subject to further customary anti-dilution adjustments) for the purpose of issuance pursuant to outstanding and future grants of options, restricted stock, and other equity awards to officers, directors and other employees of the Company. 

For the three months ended March 31, 2017 and 2016, the Company granted no options.  The Company recorded no stock compensation expense applicable to options during the three months ended March 31, 2017 and 2016 because all outstanding options were fully vested prior to 2007. In addition, there was no unrecognized option expense. 

During the periods presented, awards of long-term incentives were granted in the form of restricted stock.  Awards that were granted to management under a management incentive plan were granted in tandem with cash credit entitlements (typically in the form of 60% restricted stock grants and 40% cash credit entitlements). The management and employee restricted stock grants and tandem cash credit entitlements awarded will vest in three equal installments of 33.3% with the first annual vesting on December 5th of the year of the grant and on December 5th of the next two succeeding years.  Awards that were granted to directors as additional retainer for their services do not include any cash credit entitlement. These director restricted stock grants are subject to forfeiture in the event that the recipient of the grant does not continue in service as a director of the Company through December 5th of the year after grant or does not satisfy certain meeting attendance requirements, at which time they generally vest 100 percent. For measuring compensation costs, restricted stock awards are valued based upon the market value of the common shares on the date of grant. During the three months ended March 31, 2017 and 2016, the Company granted awards of 37,890 and 48,375 shares of restricted stock (as adjusted for subsequent stock split), respectively. Total unvested restricted stock awards at March 31, 2017 and December 31, 2016 were 91,053 and 53,163, respectively (as adjusted for subsequent stock split).

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax information for the periods presented:

	Three Months Ended March 31,
	2017			2016
Restricted Stock Expense	$	306		$	588
Cash Entitlement Expense	158			142
Tax Effect	(182		)	(296		)
Net of Tax	$	282		$	434

Unrecognized expense associated with the restricted stock grants and cash entitlements totaled $3,201 and $2,820 as of March 31, 2017 and 2016, respectively.

The Company maintains an Employee Stock Purchase Plan whereby eligible employees have the option to purchase the Company’s common stock at a discount. The purchase price of the shares under this Plan has been set at 95% of the fair market value of the Company’s common stock as of the last day of the plan year. The plan provided for the purchase of up to 750,000 shares of common stock, which the Company may obtain by purchases on the open market or from private sources, or by issuing authorized but unissued common shares. At March 31, 2017, there were 577,426 shares available for future issuance under this plan. (Both of such numbers are as adjusted for subsequent stock split.)  Funding for the purchase of common stock is from employee and Company contributions. 

There was no expense recorded for the employee stock purchase plan during the three months ended March 31, 2017. There was no expense recorded for the employee stock purchase plan during the three months ended March 31, 2016. There was no unrecognized compensation expense as of March 31, 2017 and 2016 for the Employee Stock Purchase Plan.

22

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

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 Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Level 3 pricing is obtained from a third-party based upon similar trades that are not traded frequently without adjustment by the Company. At March 31, 2017, the Company held $6.8 million in Level 3 securities which consist of $6.4 million of non-rated Obligations of State and Political Subdivisions and $353 thousand of equity securities that are not actively traded. Absent the credit rating, significant assumptions must be made such that the credit risk input becomes an unobservable input and thus these securities are reported by the Company in a Level 3 classification.

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Impaired Loans: Fair values for impaired collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure. Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value in the cost to replace the current property. Value of market comparison approach evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and an investor's required return. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell. Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Company’s Risk Management Area reviews the assumptions and approaches utilized in the appraisal. In determining the value of impaired collateral dependent loans and other real estate owned, significant unobservable inputs may be used which include: physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

Other Real Estate: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate (ORE) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property utilizing similar techniques as discussed above for Impaired Loans, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, impairment loss is recognized.

Loan Servicing Rights: On a quarterly basis, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount resulting in a Level 2 classification. The valuation model utilizes interest rate, prepayment

23

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 - Fair Value (continued)

speed, and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data.

Loans Held-for-Sale: The fair values of loans held for sale are determined by using quoted prices for similar assets, adjusted for specific attributes of that loan resulting in a Level 2 classification.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value 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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	250,896	$	6,447	$	257,343
MBS/CMO - Residential	—		468,656		—		468,656
Equity Securities	—		—		353		353
Total Securities	$	—	$	719,552	$	6,800	$	726,352
Loans Held-for-Sale	$	—	$	6,856	$	—	$	6,856
Derivative Assets	$	—	$	1,548	$	—	$	1,548
Mortgage Servicing Rights	$	—	$	593	$	—	$	593
Derivative Liabilities	$	—	$	1,579	$	—	$	1,579

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	240,224	$	7,295	$	247,519
MBS/CMO - Residential	—		461,914		—		461,914
Equity Securities	—		—		353		353
Total Securities	$	—	$	702,138	$	7,648	$	709,786
Loans Held-for-Sale	$	—	$	15,273	$	—	$	15,273
Derivative Assets	$	—	$	1,291	$	—	$	1,291
Mortgage Servicing Rights	$	—	$	611	$	—	$	611
Derivative Liabilities	$	—	$	1,238	$	—	$	1,238

There were no transfers between Level 1 and Level 2 for the periods ended March 31, 2017 and December 31, 2016.

At March 31, 2017, the aggregate fair value of the Loans Held-for-Sale was $6,856. Aggregate contractual principal balance was $6,697 with a difference of $159. At December 31, 2016, the aggregate fair value of the Loans Held-for-Sale was $15,273. Aggregate contractual principal balance was $14,983 with a difference of $290.

24

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 - Fair Value (continued)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 and 2016:

	Obligations of State and Political Subdivisions						Equity Securities
	2017			2016			2017		2016
Balance of Recurring Level 3 Assets at January 1	$	7,295		$	9,020		$	353	$	353
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	17			121			—		—
Maturities / Calls	(865		)	(845		)	—		—
Purchases	—			—			—		—
Balance of Recurring Level 3 Assets at March 31	$	6,447		$	8,296		$	353	$	353

Of the total gain/loss included in earnings for the three months ended March 31, 2017, $17 was attributable to other changes in fair value. Of the total gain/loss included in earnings for the three months ended March 31, 2016, $121 was attributable to other changes in fair value. The three months ended March 31, 2017 and 2016 included no gain/loss attributable to interest income on securities.

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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	57	$	57
Commercial Real Estate Loans	—		—		1,395		1,395

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	60	$	60
Commercial Real Estate Loans	—		—		348		348

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $1,985 with a valuation allowance of $533, resulting in an increase to the provision for loan losses of $278 for the period ended March 31, 2017. For the three months ended March 31, 2016, impaired loans resulted in a reduction to the provision for loan losses of $5. Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $663 with a valuation allowance of $255, resulting in an increase to the provision for loan losses of $115 for the year ended December 31, 2016.

There was no Other Real Estate carried at fair value less costs to sell at March 31, 2017. No charge to earnings was included in the three months ended March 31, 2017 and 2016. There was no Other Real Estate carried at fair value less costs to sell at December 31, 2016. A charge to earnings through Other Operating Income of $75 was included in the year ended December 31, 2016.

25

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 - Fair Value (continued)

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:

March 31, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	57	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	1,395	Sales comparison approach	Adjustment for physical condition of comparable properties sold	30%-76% (64%)

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	60	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	348	Sales comparison approach	Adjustment for physical condition of comparable properties sold	33%-77% (56%)

The carrying amounts and estimated fair values of the Company’s financial instruments not previously presented are provided in the tables below for the periods ending March 31, 2017 and December 31, 2016. Not all of the Company’s assets and liabilities are considered financial instruments, and therefore are not included in the tables. Because no active market exists for a significant portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

				Fair Value Measurements at March 31, 2017 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	37,439		$	30,151		$	7,288		$	—		$	37,439
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,966,954			—			—			1,968,693			1,968,693
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,816			—			3,660			8,156			11,816
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637		)	(1,962,637		)	—			—			(1,962,637		)
Time Deposits	(363,835		)	—			(362,964		)	—			(362,964		)
Short-term Borrowings	(96,569		)	—			(96,569		)	—			(96,569		)
Long-term Debt	(144,789		)	—			(133,465		)	(10,859		)	(144,324		)
Accrued Interest Payable	(736		)	—			(722		)	(14		)	(736		)

26

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 - Fair Value (continued)

				Fair Value Measurements at December 31, 2016 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	64,816		$	48,467		$	16,349		$	—		$	64,816
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,974,074			—			—			1,980,523			1,980,523
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,413			—			3,289			8,124			11,413
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,971,370		)	(1,971,370		)	—			—			(1,971,370		)
Time Deposits	(378,181		)	—			(378,000		)	—			(378,000		)
Short-term Borrowings	(137,554		)	—			(137,554		)	—			(137,554		)
Long-term Debt	(120,560		)	—			(109,709		)	(10,793		)	(120,502		)
Accrued Interest Payable	(789		)	—			(775		)	(14		)	(789		)

Cash and Short-term Investments:

The carrying amount of cash and short-term investments approximate fair values and are classified as Level 1 or Level 2.

Securities Held-to-Maturity:

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

FHLB Stock and Other Restricted Stock:

It is not practical to determine the fair values of FHLB stock and other restricted stock due to restrictions placed on their transferability.

Loans:

Fair values of loans, excluding loans held for sale and collateral dependent impaired loans carried at fair value, 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 analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued as described previously. The methods utilized to estimate fair value of loans do not necessarily represent an exit price.

Accrued Interest Receivable:

The carrying amount of accrued interest approximates fair value resulting in a Level 2 or Level 3 classification consistent with the asset they are associated with.

Deposits:

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate time 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. 

Short-term Borrowings:

The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

27

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 10 - Fair Value (continued)

Long-term Debt:

The fair values of the Company’s long-term borrowings 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 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 3 classification. 

Accrued Interest Payable:

The carrying amount of accrued interest approximates fair value resulting in a Level 2 or Level 3 classification consistent with the liability they are associated with.

NOTE 11 – Other Comprehensive Income (Loss)

The tables below summarize the changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016, net of tax:

March 31, 2017	Unrealized Gains and Losses on Available-for-Sale Securities			Postretirement Benefit Items			Total
Beginning Balance at January 1, 2017	$	(6,312	)	$	(92	)	$	(6,404	)
Other Comprehensive Income (Loss) Before Reclassification	3,998			—			3,998
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—			—			—
Net Current Period Other Comprehensive Income (Loss)	3,998			—			3,998
Ending Balance at March 31, 2017	$	(2,314	)	$	(92	)	$	(2,406	)

March 31, 2016	Unrealized Gains and Losses on Available-for-Sale Securities		Postretirement Benefit Items			Total
Beginning Balance at January 1, 2016	$	3,890	$	(78	)	$	3,812
Other Comprehensive Income (Loss) Before Reclassification	4,029		—			4,029
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—		—			—
Net Current Period Other Comprehensive Income (Loss)	4,029		—			4,029
Ending Balance at March 31, 2016	$	7,919	$	(78	)	$	7,841

28

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 11 - Other Comprehensive Income (Loss) (continued)

The tables below summarize the classifications out of accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2017	$	—

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2016	$	—

NOTE 12 - Newly Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the "FASB") amended existing guidance (ASU 2014-09 Revenue From Contracts With Customers) related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for public business entities for fiscal periods beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this pronouncement to have a material impact on the Company's consolidated results of operations and financial condition as the Company's core revenue does not fall under this guidance.

In January 2016, the FASB amended existing guidance (ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities) that requires existing guidance that requires equity investments (except those accounted for under the equity method of account, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). It eliminates that requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company notes that the impact of adoption is to carry the equity security at fair value through the income statement or at cost, less impairment when fair value is not readily determinable, with observable price changes being recognized in earnings. The Company doesn't expect the impact to be material. For additional information on this equity security, see Note 3 - Securities.

29

GERMAN AMERICAN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited, dollars in thousands except share and per share data)

NOTE 12 - Newly Issued Accounting Pronouncements (continued)

In February 2016, the FASB amended existing guidance (ASU No. 2016-02, Leases (Topic 842)) that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. These amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Based on our leases outstanding as of March 31, 2017, the Company does not expect this new guidance to have a material impact on the consolidated results of operation. However as a result of this new guidance, the Company anticipates an estimated increase in its Consolidated Balance Sheet of approximately $6,000. This impact will vary based on the Company's future decisions to enter into new lease agreements or exit/renew current lease agreements prior to the date of implementation.

In June 2016, the FASB issued guidance (ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. These amendments are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company recognizes that there may be a cumulative adjustment at the time of adoption, but can not estimate the amount at this time.

In August 2016, the FASB issued this ASU (ASU No. 2016-15, Statement of Cash Flows (Topic 320): Classification of Certain Cash Receipts and Cash Payments) to address the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including the following:

• Debt Prepayment or Debt Extinguishment Costs;

• Settlement of Zero-Coupon Bonds or Debt with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate;

• Contingent Consideration payments Made Soon After a Business Combination;

• Proceeds From the Settlement of Insurance Claims;

• Proceeds From the Settlement of BOLI and COLI Policies;

• Distributions Received From Equity Method Investees;

• Beneficial Interests in Securitization Transactions; and

• Application of the Predominance Principle.

These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. This guidance currently has no material impact on the Company's Consolidated Statements of Cash Flows; however, the Company will continue to monitor it going forward.

In March 2017, the FASB issued this ASU (ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities) to align the accounting with the economics of a callable debt security and to align the amortization period with expectations that already are included in market pricing on the callable debt securities. This ASU will shorten the amortization period for premiums on purchased callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This guidance is effective for for public business entities for fiscal years beginning after December 15, 2018, including interim period within that reporting period. As a result of the Company's analysis, the Company doesn't expect this pronouncement to have a material impact on its consolidated results of operations and financial condition.

NOTE 13 - Subsequent Events

On March 27, 2017, the Company declared a 3-for-2 stock split on the Company's authorized and outstanding common shares. The stock split was distributed on April 21, 2017, to shareholders of record as of April 6, 2017. All share and per share data in this Quarterly Report on Form 10-Q have been adjusted to retroactively reflect the stock split.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

GERMAN AMERICAN BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

German American Bancorp, Inc., is a NASDAQ-traded (symbol: GABC) financial services holding company based in Jasper, Indiana. German American Bancorp, Inc., through its banking subsidiary German American Bancorp, operates 52 banking offices in 19 contiguous southern Indiana counties and one northern Kentucky county. The Company also owns an investment brokerage subsidiary (German American Investment Services, Inc.) and a full line property and casualty insurance agency (German American Insurance, Inc.).

Throughout this Management’s Discussion and Analysis, as elsewhere in this Report, when we use the term “Company,” we will usually be referring to the business and affairs (financial and otherwise) of German American Bancorp, Inc. and its subsidiaries and affiliates as a whole. Occasionally, we will refer to the term “parent company” or “holding company” when we mean to refer to only German American Bancorp, Inc.

This section presents an analysis of the consolidated financial condition of the Company as of March 31, 2017 and December 31, 2016 and the consolidated results of operations for the three months ended March 31, 2017 and 2016. This discussion should be read in conjunction with the consolidated financial statements and other financial data presented elsewhere herein and with the financial statements and other financial data, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

MANAGEMENT OVERVIEW

This updated discussion should be read in conjunction with the Management Overview that was included in our Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

On March 1, 2016, the Company completed its acquisition of River Valley Bancorp ("River Valley") and its subsidiaries, including River Valley Financial Bank. This acquisition was consistent with the Company's strategy to build a regional presence in Southern Indiana. The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region.

Net income for the quarter ended March 31, 2017 totaled $9,556,000, or $0.42 per share, which represented an increase of approximately 68% on a per share basis compared with the first quarter 2016 net income of $5,146,000, or $0.25 per share. The first quarter of 2016 results of operations included one month's operations of River Valley Bancorp and were impacted by merger related charges associated with the closing of the River Valley transaction which was effective March 1, 2016. These merger related charges totaled approximately $3,884,000, or $2,448,000 on an after tax basis, which represented approximately $0.12 per share during the first quarter of 2016.

On March 27, 2017, the Company declared a 3-for-2 stock split on the Company’s authorized and outstanding common shares. The stock split was distributed on April 21, 2017 to shareholders of record as of April 6, 2017. All share and per share data in this Quarterly Report on Form 10-Q have been adjusted and are reflective of the stock split.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The financial condition and results of operations for the Company presented in the Consolidated Financial Statements, accompanying Notes to the Consolidated Financial Statements, and selected financial data appearing elsewhere within this Report, are, to a large degree, dependent upon the Company’s accounting policies. The selection of and application of these policies involve estimates, judgments, and uncertainties that are subject to change. The critical accounting policies and estimates that the Company has determined to be the most susceptible to change in the near term relate to the determination of the allowance for loan losses, the valuation of securities available for sale, income tax expense, and the valuation of goodwill and other intangible assets.

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Allowance for Loan Losses

The Company maintains an allowance for loan losses to cover probable incurred credit losses at the balance sheet date. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. A provision for loan losses is charged to operations based on management’s periodic evaluation of the necessary allowance balance. Evaluations are conducted at least quarterly and more often if deemed necessary. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The Company has an established process to determine the adequacy of the allowance for loan losses. The determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on other classified loans and pools of homogeneous loans, and consideration of past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors, all of which may be susceptible to significant change. The allowance consists of two components of allocations, specific and general. These two components represent the total allowance for loan losses deemed adequate to cover losses inherent in the loan portfolio.

Commercial and agricultural loans are subject to a standardized grading process administered by an internal loan review function. The need for specific reserves is considered for credits identified as impaired when: (a) the customer’s cash flow or net worth appears insufficient to repay the loan; (b) the loan has been criticized in a regulatory examination; (c) the loan is on non-accrual; or (d) other reasons where the ultimate collectability of the loan is in question, or the loan characteristics require special monitoring. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that we believe indicates the loan is impaired.

Specific allocations on impaired loans are determined by comparing the loan balance to the present value of expected cash flows or expected collateral proceeds. Allocations are also applied to categories of loans not considered individually impaired but for which the rate of loss is expected to be greater than historical averages, including non-performing consumer or residential real estate loans. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values.

General allocations are made for commercial and agricultural loans that are graded as substandard based on migration analysis techniques to determine historical average losses for similar types of loans. General allocations are also made for other pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on historical averages for loan losses for these portfolios, judgmentally adjusted for economic, external and internal factors and portfolio trends. Economic factors include evaluating changes in international, national, regional and local economic and business conditions that affect the collectability of the loan portfolio. Internal factors include evaluating changes in lending policies and procedures; changes in the nature and volume of the loan portfolio; and changes in experience, ability and depth of lending management and staff. In setting our external and internal factors we also consider the overall level of the allowance for loan losses to total loans; our allowance coverage as compared to similar size bank holding companies; and regulatory requirements.

Due to the imprecise nature of estimating the allowance for loan losses, the Company’s allowance for loan losses includes a minor unallocated component. The unallocated component of the allowance for loan losses incorporates the Company’s judgmental determination of inherent losses that may not be fully reflected in other allocations, including factors such as economic uncertainties, lending staff quality, industry trends impacting specific portfolio segments, and broad portfolio quality trends.  Therefore, the ratio of allocated to unallocated components within the total allowance may fluctuate from period to period.

Securities Valuation

Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported separately in accumulated other comprehensive income (loss), net of tax. The Company obtains market values from a third party on a monthly basis in order to adjust the securities to fair value. Equity securities that do not have readily determinable fair values are carried at cost. Additionally, when securities are deemed to be other than temporarily impaired, a charge will be recorded through earnings; therefore, future changes in the fair value of securities could have a significant impact on the Company’s operating results. In determining whether a market value decline is other than temporary, management considers the reason for the decline, the extent of the decline, the duration of the decline and whether the Company intends to sell or believes it will be required to sell the securities prior to recovery.  As of March 31, 2017, gross unrealized gains on the securities available-for-sale portfolio totaled approximately $6,264,000 and gross unrealized losses totaled approximately $9,854,000.  

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Income Tax Expense

Income tax expense involves estimates related to the valuation allowance on deferred tax assets and loss contingencies related to exposure from tax examinations presumed to occur.

A valuation allowance reduces deferred tax assets to the amount management believes is more likely than not to be realized. In evaluating the realization of deferred tax assets, management considers the likelihood that sufficient taxable income of appropriate character will be generated within carry-back and carry-forward periods, including consideration of available tax planning strategies. Tax-related loss contingencies, including assessments arising from tax examinations and tax strategies, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. In considering the likelihood of loss, management considers the nature of the contingency, the progress of any examination or related protest or appeal, the views of legal counsel and other advisors, experience of the Company or other enterprises in similar matters, if any, and management’s intended response to any assessment.

Goodwill and Other Intangible Assets

Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on the Company’s balance sheet.

Other intangible assets consist of core deposit and acquired customer relationship intangible assets. They are initially measured at fair value and then are amortized over their estimated useful lives, which range from 6 to 10 years.

RESULTS OF OPERATIONS

Net Income:

Net income for the quarter ended March 31, 2017 totaled $9,556,000, or $0.42 per share, which represented a decline of approximately 5% on a per share basis compared with the fourth quarter 2016 net income of $10,065,000, or $0.44 per share, and represented an increase of approximately 68% on a per share basis compared with the first quarter 2016 net income $5,146,000, or $0.25 per share. The first quarter of 2016 results of operations included one month's operations of River Valley Bancorp and were impacted by merger related charges associated with the closing of the River Valley transaction which was effective March 1, 2016. These merger related charges totaled approximately $3,884,000, or $2,448,000 on an after tax basis, which represented approximately $0.12 per share during the first quarter of 2016.

Net Interest Income:

Net interest income is the Company’s single largest source of earnings, and represents the difference between interest and fees realized on earning assets, less interest paid on deposits and borrowed funds. Several factors contribute to the determination of net interest income and net interest margin, including the volume and mix of earning assets, interest rates, and income taxes. Many factors affecting net interest income are subject to control by management policies and actions. Factors beyond the control of management include the general level of credit and deposit demand, Federal Reserve Board monetary policy, and changes in tax laws.

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The following table summarizes net interest income (on a tax-equivalent basis). For tax-equivalent adjustments, an effective tax rate of 35% was used for all periods presented⁽¹⁾.

	Average Balance Sheet (Tax-equivalent basis / dollars in thousands)
	Three Months Ended March 31, 2017							Three Months Ended March 31, 2016
	Principal Balance			Income / Expense		Yield / Rate		Principal Balance			Income / Expense		Yield / Rate
ASSETS
Federal Funds Sold and Other Short-term Investments	$	12,554		$	27	0.88	%	$	20,377		$	17	0.34	%
Securities:
Taxable	479,875			2,719		2.27	%	479,428			2,277		1.90	%
Non-taxable	251,996			3,115		4.94	%	216,747			2,649		4.89	%
Total Loans and Leases(2)	1,974,846			22,440		4.60	%	1,694,643			18,755		4.45	%
TOTAL INTEREST EARNING ASSETS	2,719,271			28,301		4.20	%	2,411,195			23,698		3.95	%
Other Assets	221,829							159,798
Less: Allowance for Loan Losses	(15,005		)					(14,562		)
TOTAL ASSETS	$	2,926,095						$	2,556,431
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing Demand, Savings and Money Market Deposits	$	1,385,347		$	738	0.22	%	$	1,143,434		$	464	0.16	%
Time Deposits	401,155			705		0.71	%	400,353			691		0.69	%
FHLB Advances and Other Borrowings	226,786			865		1.55	%	243,030			741		1.23	%
TOTAL INTEREST-BEARING LIABILITIES	2,013,288			2,308		0.47	%	1,786,817			1,896		0.43	%
Demand Deposit Accounts	557,912							467,516
Other Liabilities	19,309							23,615
TOTAL LIABILITIES	2,590,509							2,277,948
Shareholders’ Equity	335,586							278,483
TOTAL LIBABILITIES AND SHAREHOLDERS' EQUITY	$	2,926,095						$	2,556,431
COST OF FUNDS						0.34	%						0.32	%
NET INTEREST INCOME				$	25,993						$	21,802
NET INTEREST MARGIN						3.86	%						3.63	%

⁽¹⁾  Effective tax rates were determined as though interest earned on the Company’s investments in municipal bonds and loans was fully taxable.

⁽²⁾  Loans held-for-sale and non-accruing loans have been included in average loans.

Net interest income increased $3,491,000, or 19% (an increase of $4,191,000 or 19% on a tax-equivalent basis), for the quarter ended March 31, 2017 compared with the same quarter of 2016. The increased level of net interest income during the first quarter of 2017 compared with the first quarter of 2016 was primarily driven by a higher level of average earning assets resulting from the acquisition of River Valley and from an improved net interest margin.

The net interest margin represents tax-equivalent net interest income expressed as a percentage of average earning assets. The tax equivalent net interest margin was 3.86% for the first quarter of 2017 compared to 3.63% during the first quarter of 2016. The tax equivalent yield on earning assets totaled 4.20% during the quarter ended March 31, 2017 compared to 3.95% in the same period of 2016, while the cost of funds (expressed as a percentage of average earning assets) totaled 0.34% during the quarter ended March 31, 2017 compared to 0.32% in the same period of 2016.

The increase in the net interest margin during the first quarter of 2017 was attributable to an increase in the amount of accretion of loan discounts on acquired loans, an increased loan yield stemming partially from the addition of the River Valley loan portfolio and a general increase in market interest rates, and an improved yield on the securities portfolio related to generally higher market interest rates and a securities portfolio mix shift to a higher percentage of total securities in non-taxable securities rather than in taxable securities, partially offset by a higher cost of funds. Accretion of loan discounts on acquired loans contributed approximately 17 basis points to the net interest margin on an annualized basis in the first quarter of 2017 and 6 basis points in the first quarter of 2016. The increase in accretion in the first quarter of 2017 was attributable to the loans acquired in the River Valley transaction as well as transactions closed in prior years.

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Provision for Loan Losses:

The Company provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. During the quarter ended March 31, 2017, the Company recorded a provision for loan loss of $500,000 compared with a provision of $850,000 in the first quarter of 2016. The level of provision during the first quarter of 2017 was impacted by the down-grade of a single commercial real estate relationship to non-accrual status and two agricultural relationships down-graded during the first quarter of 2017 from pass graded credits to special mention credits. The higher level of provision during the first quarter of 2016 was largely related to a single agricultural relationship that was down-graded during the first quarter of 2016 from a pass rated credit to a special mention credit. The provision during all periods was done in accordance with the Company's standard methodology for determining the adequacy of its allowance for loan loss.

The Company recorded net charge-offs of $142,000, or 3 basis points on an annualized basis of average loans outstanding, during the three months ended March 31, 2017, compared with net charge-offs of $128,000, or 3 basis points of average loans, during the same period of 2016. The provision for loan losses recorded during the quarter ended March 31, 2017 represented 10 basis points on an annualized basis of average loans outstanding compared with 20 basis points on an annualized basis of average loans outstanding during the first quarter of 2016.

The provision for loan losses made during the three months ended March 31, 2017 was made at a level deemed necessary by management to absorb changes in estimated, probable incurred losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for loan losses is completed quarterly by management, the results of which are used to determine provision for loan losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

Non-interest Income:

During the quarter ended March 31, 2017, non-interest income totaled $8,188,000, an increase of $971,000, or 13%, compared with the first quarter of 2016. The increase during the first quarter of 2017 was largely impacted by the the acquisition of River Valley. The first quarter of 2017 included a full quarter of River Valley operations while first quarter of 2016 included one month of operations of River Valley.

Non-interest Income (dollars in thousands)	Three Months Ended March 31,				Change From Prior Period
					Amount			Percent
	2017		2016		Change			Change
Trust and Investment Product Fees	$	1,243	$	1,021	$	222		22	%
Service Charges on Deposit Accounts	1,484		1,233		251			20
Insurance Revenues	2,640		2,727		(87		)	(3	)
Company Owned Life Insurance	254		215		39			18
Interchange Fee Income	1,023		788		235			30
Other Operating Income	857		513		344			67
Subtotal	7,501		6,497		1,004			15
Net Gains on Sales of Loans	687		720		(33		)	(5	)
Net Gains on Securities	—		—		—			n/m (1)
Total Non-interest Income	$	8,188	$	7,217	$	971		13

⁽¹⁾n/m = not meaningful

Trust and investment product fees increased $222,000, or 22%, during the first quarter of 2017 compared with the first quarter of 2016. The increase was primarily attributable to fees generated from increased assets under management generated both from the Company's existing market areas prior to the River Valley transaction and from increased fees generated related to a full quarter of operations from River Valley included in 2017.

Service charges on deposit accounts increased $251,000, or 20%, during the first quarter of 2017 compared with the first quarter of 2016. The increase was primarily attributable to a full quarter of operations from River Valley included in 2017.

Insurance revenues declined $87,000, or 3%, during the quarter ended March 31, 2017, compared with the first quarter of 2016. The decline during the first quarter of 2017 compared with the first quarter of 2016 was due to decreased contingency revenue. Contingency revenue during the first quarter of 2017 totaled $992,000 compared with $1,113,000 during the first quarter of 2016.

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The fluctuation in contingency revenue is a normal course of business variance and is reflective of claims and loss experience with insurance carriers that the Company represents through its property and casualty insurance agency. Typically, the majority of contingency revenue is recognized during the first quarter of the year.

Interchange fee income increased $235,000, or 30%, during the first quarter of 2017 compared with the first quarter of 2016. The increase was attributable to a full quarter of operations from River Valley included in 2017 and increased card utilization by customers.

Other operating income increased $344,000, or 67%, during the first quarter of 2017 compared with the first quarter of 2016. The increase in the first quarter of 2017 compared with the first quarter of 2016 was largely attributable to increased fees associated with swap transactions with loan customers and was also attributable to the River Valley transaction.

Non-interest Expense:

During the quarter ended March 31, 2017, non-interest expense totaled $19,036,000, a decrease of $1,204,000, or 6%, compared with the first quarter of 2016. During the first quarter of 2016, the Company recorded costs related to the River Valley merger transaction that totaled $3,884,000.

Non-interest Expense (dollars in thousands)	Three Months Ended March 31,				Change From Prior Period
					Amount			Percent
	2017		2016		Change			Change
Salaries and Employee Benefits	$	11,444	$	11,601	$	(157	)	(1	)%
Occupancy, Furniture and Equipment Expense	2,182		1,887		295			16
FDIC Premiums	239		328		(89		)	(27	)
Data Processing Fees	1,011		2,165		(1,154		)	(53	)
Professional Fees	803		1,318		(515		)	(39	)
Advertising and Promotion	778		544		234			43
Intangible Amortization	253		208		45			22
Other Operating Expenses	2,326		2,189		137			6
Total Non-interest Expense	$	19,036	$	20,240	$	(1,204	)	(6	)

Salaries and benefits declined $157,000, or 1%, during the quarter ended March 31, 2017 compared with the first quarter of 2016. The decline in the first quarter of 2017 compared with the first quarter of 2016 was primarily attributable to the settlement of various employment and benefit arrangements which totaled $1,934,000 related to the River Valley merger in the first quarter of 2016, partially offset by having River Valley's operations included for a full quarter in 2017 as compared to one month in 2016.

Occupancy, furniture and equipment expense increased $295,000, or 16%, during the three months ended March 31, 2017 compared with the same period of 2016. This increase was related to the operation of River Valley's 15 branch network during all of the first quarter of 2017 compared with one month in the first quarter of 2016.

Data processing fees declined $1,154,000, or 53%, in the first quarter of 2017 compared with the first quarter of 2016. The decline during the first quarter of 2017 compared with first quarter of 2016 was primarily related to expenses totaling $1,198,000 associated with the acquisition of River Valley that were incurred during the first quarter of 2016.

Professional fees declined $515,000, or 39%, during the first quarter of 2017 compared with the first quarter of 2016. The decline during 2017 compared with 2016 was primarily related to expenses totaling $599,000 associated with the acquisition of River Valley that were incurred during the first quarter of 2016.

Advertising and promotion increased $234,000, or 43%, during the quarter ended March 31, 2017 compared with the first quarter of 2016. The increase in advertising and promotion was largely related to charitable contribution activity in the first quarter of 2017.

Income Taxes:

The Company’s effective income tax rate was 28.6% and 25.5%, respectively, during the three months ended March 31, 2017 and 2016. The effective tax rate in both periods presented was lower than the blended statutory rate resulting primarily from the Company’s tax-exempt investment income on securities, loans and company-owned life insurance, income tax credits generated from affordable housing projects, and income generated by subsidiaries domiciled in a state with no state or local income tax.

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FINANCIAL CONDITION

Total assets for the Company decreased to $2.933 billion at March 31, 2017, representing a decline of $22.9 million, or 3% on an annualized basis, compared with December 31, 2016.

March 31, 2017 total loans declined $6.5 million, or 1% on an annualized basis, compared with December 31, 2016. The modest decline during the first quarter of 2017 was largely related to a seasonal decline in agricultural loans of approximately $10.5 million, or 14% on annualized basis.

End of Period Loan Balances: (dollars in thousands)	March 31, 2017		December 31, 2016		Current Period Change
Commercial & Industrial Loans and Leases	$	450,501	$	457,372	$	(6,871	)
Commercial Real Estate Loans	865,717		856,094		9,623
Agricultural Loans	292,615		303,128		(10,513		)
Home Equity & Consumer Loans	194,290		193,520		770
Residential Mortgage Loans	183,806		183,290		516
Total Loans	$	1,986,929	$	1,993,404	$	(6,475	)

The following table indicates the breakdown of the allowance for loan losses for the periods indicated (dollars in thousands):

	March 31, 2017		December 31, 2016
Commercial and Industrial Loans and Leases	$	3,612	$	3,725
Commercial Real Estate Loans	5,696		5,452
Agricultural Loans	4,361		4,094
Home Equity and Consumer Loans	543		518
Residential Mortgage Loans	348		329
Unallocated	606		690
Total Allowance for Loan Loss	$	15,166	$	14,808

The Company’s allowance for loan losses totaled $15.2 million at March 31, 2017 compared to $14.8 million at December 31, 2016 representing an increase of $358,000, or 10% on an annualized basis. The increase in the allowance for loan loss during the first quarter of 2017 was primarily related to the down-grade of a single commercial real estate relationship to non-accrual status and two agricultural relationships down-graded during the first quarter of 2017 from pass graded credits to special mention credits. The allowance for loan losses represented 0.76% of period-end loans at March 31, 2017 compared with 0.74% of period-end loans at December 31, 2016. Under acquisition accounting treatment, loans acquired are recorded at fair value which includes a credit risk component, and therefore the allowance on loans acquired is not carried over from the seller. The Company held a discount on acquired loans of $9.2 million as of March 31, 2017, $10.0 million at December 31, 2016.

The following is an analysis of the Company’s non-performing assets at March 31, 2017 and December 31, 2016:

Non-performing Assets: (dollars in thousands)	March 31, 2017			December 31, 2016
Non-accrual Loans	$	4,510		$	3,793
Past Due Loans (90 days or more)	1,183			2
Total Non-performing Loans	5,693			3,795
Other Real Estate	208			242
Total Non-performing Assets	$	5,901		$	4,037
Restructured Loans	$	28		$	28
Non-performing Loans to Total Loans	0.29		%	0.19		%
Allowance for Loan Loss to Non-performing Loans	266.40		%	390.20		%

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The following tables present non-accrual loans and loans past due 90 days or more still on accrual by class of loans:

	Non-Accrual Loans				Loans Past Due 90 Days or More & Still Accruing
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Commercial and Industrial Loans and Leases	$	84	$	86	$	—	$	2
Commercial Real Estate Loans	2,496		1,408		—		—
Agricultural Loans	767		792		1,183		—
Home Equity Loans	88		73		—		—
Consumer Loans	322		85		—		—
Residential Mortgage Loans	753		1,349		—		—
Total	$	4,510	$	3,793	$	1,183	$	2

Non-performing assets totaled $5.9 million at March 31, 2017 compared to $4.0 million of non-performing assets at December 31, 2016. Non-performing assets represented 0.20% of total assets at March 31, 2017 compared to 0.14% of total assets at December 31, 2016. Non-performing loans totaled $5.7 million at March 31, 2017 compared to $3.8 million at December 31, 2016. Non-performing loans represented 0.29% of total loans at March 31, 2017 compared to 0.19% at December 31, 2016. The increase in non-performing assets and non-performing loans during the first quarter of 2017 compared with December 31, 2016 levels was attributable to a single commercial real estate credit relationship that was placed on non-accrual status and a single agricultural relationship that was more than 90 days past due at quarter-end.

Loan impairment is reported when repayment under the terms of the loan is not expected.  If a loan is impaired, a portion of the allowance is specifically allocated so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral if repayment is expected solely from the collateral. Commercial and industrial loans, commercial real estate loans, and agricultural loans are evaluated individually for impairment. Smaller balance homogeneous loans are evaluated for impairment in total. Such loans include real estate loans secured by one-to-four family residences and loans to individuals for household, family and other personal expenditures. Individually evaluated loans on non-accrual are generally considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Total deposits declined $23.1 million, or 4% on an annualized basis, as of March 31, 2017 compared with December 31, 2016.

End of Period Deposit Balances: (dollars in thousands)	March 31, 2017		December 31, 2016		Current Period Change
Non-interest-bearing Demand Deposits	$	572,874	$	571,989	$	885
Interest-bearing Demand, Savings, & Money Market Accounts	1,389,763		1,399,381		(9,618		)
Time Deposits < $100,000	206,171		207,824		(1,653		)
Time Deposits of $100,000 or more	157,664		170,357		(12,693		)
Total Deposits	$	2,326,472	$	2,349,551	$	(23,079	)

Capital Resources:

As of March 31, 2017, shareholders’ equity increased by $10.9 million to $341.2 million compared with $330.3 million at year-end 2016. The increase in shareholders' equity was primarily attributable to an increase of $6.7 million in retained earnings and an increase of $4.0 million in accumulated other comprehensive income primarily related to the increase in value of the Company's available-for-sale securities portfolio. Shareholders’ equity represented 11.6% of total assets at March 31, 2017 and 11.2% of total assets at December 31, 2016. Shareholders’ equity included $56.8 million of goodwill and other intangible assets at March 31, 2017 compared to $56.9 million of goodwill and other intangible assets at December 31, 2016.

Federal banking regulations provide guidelines for determining the capital adequacy of bank holding companies and banks. These guidelines provide for a more narrow definition of core capital and assign a measure of risk to the various categories of assets. The Company is required to maintain minimum levels of capital in proportion to total risk-weighted assets and off-balance sheet exposures.

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As of January 1, 2015, the Company and its subsidiary bank adopted the new Basel III regulatory capital framework. The adoption of this new framework modified the regulatory capital calculations, minimum capital levels and well-capitalized thresholds and added the new Common Equity Tier 1 capital ratio. Additionally, under the new rules, in order to avoid limitations on capital distributions, including dividend payments, the Company is 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. For March 31, 2017, the capital conservation buffer was 1.25% and for December 31, 2016, the capital conservation buffer was 0.625%. At March 31, 2017, the capital levels for the Company and its subsidiary bank remained well in excess of of the minimum amounts needed for capital adequacy purposes and the bank's capital levels met the necessary requirements to be considered well-capitalized.

The table below presents the Company’s consolidated and the subsidiary bank's capital ratios under regulatory guidelines:

	3/31/2017 Ratio		12/31/2016 Ratio		Minimum for Capital Adequacy Purposes		Well-Capitalized Guidelines
Total Capital (to Risk Weighted Assets)
Consolidated	13.54	%	13.30	%	8.00	%	N/A
Bank	12.42	%	12.48	%	8.00	%	10.00	%
Tier 1 (Core) Capital (to Risk Weighted Assets)
Consolidated	12.89	%	12.66	%	6.00	%	N/A
Bank	11.77	%	11.84	%	6.00	%	8.00	%
Common Tier 1, (CET 1) Capital Ratio (to Risk Weighted Assets)
Consolidated	12.42	%	12.19	%	4.50	%	N/A
Bank	11.77	%	11.84	%	4.50	%	6.50	%
Tier 1 Capital (to Average Assets)
Consolidated	10.40	%	10.09	%	4.00	%	N/A
Bank	9.51	%	9.46	%	4.00	%	5.00	%

Under the the final rules provided for by Basel III, accumulated other comprehensive income ("AOCI") was to be included in a banking organization's Common Equity Tier 1 capital. The final rules allowed community banks to make a one-time election not to include the additional components of AOCI in regulatory capital and instead use the existing treatment under the general risk-based capital rules that excludes most AOCI components from regulatory capital. The Company elected, in its March 31, 2015 regulatory filings (Call Report and FR Y-9), to opt-out and continue the existing treatment of AOCI for regulatory capital purposes.

Liquidity:

The Consolidated Statement of Cash Flows details the elements of changes in the Company’s consolidated cash and cash equivalents. Total cash and cash equivalents decreased $27.4 million during the three months ended March 31, 2017 ending at $37.4 million.  During three months ended March 31, 2017, operating activities resulted in net cash inflows of $22.6 million. Investing activities resulted in net cash outflows of $7.3 million during the three months ended March 31, 2017.  Financing activities resulted in net cash outflows for the three months ended March 31, 2017 of $42.7 million.

The parent company is a corporation separate and distinct from its bank and other subsidiaries. The Company uses funds at the parent-company level to pay dividends to its shareholders, to acquire or make other investments in other businesses or their securities or assets, to repurchase its stock from time to time, and for other general corporate purposes including debt service. The parent company does not have access at the parent-company level to the deposits and certain other sources of funds that are available to its bank subsidiary to support its operations. Instead, the parent company has historically derived most of its revenues from dividends paid to the parent company by its bank subsidiary. The Company’s banking subsidiary is subject to statutory restrictions on its ability to pay dividends to the parent company. The parent company has in recent years supplemented the dividends received from its subsidiaries with borrowings. As of March 31, 2017, the parent company had approximately $18.1 million of cash and cash equivalents available to meet its cash flow needs.

39

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

The Company from time to time in its oral and written communications makes statements relating to its expectations regarding the future. These types of statements are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may include forward-looking statements in filings with the Securities and Exchange Commission (“SEC”), such as this Form 10-Q, in other written materials, and in oral statements made by senior management to analysts, investors, representatives of the media, and others. Such forward looking statements can include statements about the Company’s net interest income or net interest margin; its adequacy of allowance for loan losses, levels of provisions for loan losses, and the quality of the Company’s loans, investment securities and other assets; simulations of changes in interest rates; expected results from mergers with or acquisitions of other businesses; litigation results; tax estimates and recognition; dividend policy; parent company cash resources and cash requirements, and parent company capital resources; estimated cost savings, plans and objectives for future operations; and expectations about the Company’s financial and business performance and other business matters as well as economic and market conditions and trends. They often can be identified by the use of words like “expect,” “may,” “will,” “would,” “could,” “should,” “intend,” “project,” “estimate,” “believe” or “anticipate,” or similar expressions.

Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the forward-looking statement is made.

Readers are cautioned that, by their nature, all forward-looking statements are based on assumptions and are subject to risks, uncertainties, and other factors. Actual results may differ materially and adversely from the expectations of the Company that are expressed or implied by any forward-looking statement. The discussions in this Item 2 list some of the factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statements. Other risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates; changes in competitive conditions; the introduction, withdrawal, success and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies; changes in customer borrowing, repayment, investment and deposit practices; changes in fiscal, monetary and tax policies; changes in financial and capital markets; deterioration in general economic conditions, either nationally or locally, resulting in, among other things, credit quality deterioration; capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities; risks of expansion through acquisitions and mergers, such as unexpected credit quality problems of the acquired loans or other assets, unexpected attrition of the customer base of the acquired institution or branches, and difficulties in integration of the acquired operations; factors driving impairment charges on investments; the impact, extent and timing of technological changes; potential cyber-attacks, information security breaches and other criminal activities; litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; actions of the Federal Reserve Board; changes in accounting principles and interpretations; potential increases of federal deposit insurance premium expense, and possible future special assessments of FDIC premiums, either industry wide or specific to the Company’s banking subsidiary; actions of the regulatory authorities under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms; and the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends. Such statements reflect our views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements.

Investors should consider these risks, uncertainties, and other factors, in addition to those mentioned by the Company in its Annual Report on Form 10-K for its fiscal year ended December 31, 2016, and other SEC filings from time to time, when considering any forward-looking statement.

40

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk is reviewed on a regular basis by the Asset/Liability Committee and Boards of Directors of the parent company and its subsidiary bank. Primary market risks which impact the Company’s operations are liquidity risk and interest rate risk.

The liquidity of the parent company is dependent upon the receipt of dividends from its subsidiary bank, which is subject to certain regulatory limitations. The Bank’s source of funding is predominately core deposits, maturities of securities, repayments of loan principal and interest, federal funds purchased, securities sold under agreements to repurchase and borrowings from the Federal Home Loan Bank.

The Company monitors interest rate risk by the use of computer simulation modeling to estimate the potential impact on its net interest income under various interest rate scenarios, and by estimating its static interest rate sensitivity position. Another method by which the Company’s interest rate risk position can be estimated is by computing estimated changes in its net portfolio value (“NPV”). This method estimates interest rate risk exposure from movements in interest rates by using interest rate sensitivity analysis to determine the change in the NPV of discounted cash flows from assets and liabilities. NPV represents the market value of portfolio equity and is equal to the estimated market value of assets minus the estimated market value of liabilities.

Computations for measuring both net interest income and NPV are based on a number of assumptions, including the relative levels of market interest rates and prepayments in mortgage loans and certain types of investments. These computations do not contemplate any actions management may undertake in response to changes in interest rates, and should not be relied upon as indicative of actual results. In addition, certain shortcomings are inherent in the method of computing both net interest income and NPV. Should interest rates remain or decrease below current levels, the proportion of adjustable rate loans could decrease in future periods due to refinancing activity. In the event of an interest rate change, prepayment levels would likely be different from those assumed in the modeling. Lastly, the ability of many borrowers to repay their adjustable rate debt may decline during a rising interest rate environment.

The Company from time to time utilizes derivatives to manage interest rate risk. Management continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Company’s risk management strategy.

The table below provides an assessment of the risk to net interest income over the next 12 months in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).

Interest Rate Sensitivity as of March 31, 2017 - Net Interest Income

	Net Interest Income
Changes in Rates	Amount		% Change
+2%	$	95,444	(3.55	)%
+1%	97,117		(1.86	)%
Base	98,956		—
-1%	94,384		(4.62	)%
-2%	91,425		(7.61	)%

The above table is a measurement of the Company’s net interest income at risk, assuming a static balance sheet as of March 31, 2017 and instantaneous parallel changes in interest rates. The Company also monitors interest rate risk under other scenarios including a more gradual movement in market interest rates. This type of scenario can at times produce different modeling results in measuring interest rate risk sensitivity.

41

The table below provides an assessment of the risk to NPV in the event of a sudden and sustained 1% and 2% increase and decrease in prevailing interest rates (dollars in thousands).

Interest Rate Sensitivity as of March 31, 2017 - Net Portfolio Value

	Net Portfolio Value				Net Portfolio Value as a % of Present Value of Assets
Changes in Rates	Amount		% Change		NPV Ratio		Change
+2%	$	370,426	(9.43	)%	13.56	%	(65) b.p.
+1%	390,861		(4.44	)%	13.94	%	(27) b.p.
Base	409,004		—		14.21	%	—
-1%	389,481		(4.77	)%	13.25	%	(96) b.p.
-2%	327,081		(20.03	)%	11.03	%	(318) b.p.

This Item 3 includes forward-looking statements. See “Forward-looking Statements and Associated Risks” included in Part I, Item 2 of this Report for a discussion of certain factors that could cause the Company’s actual exposure to market risk to vary materially from that expressed or implied above. These factors include possible changes in economic conditions; interest rate fluctuations, competitive product and pricing pressures within the Company’s markets; and equity and fixed income market fluctuations. Actual experience may also vary materially to the extent that the Company’s assumptions described above prove to be inaccurate.

Item 4.  Controls and Procedures

As of March 31, 2017, the Company carried out an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were, as of that date, effective in timely alerting them to material information required to be included in the Company’s periodic reports filed with the Securities and Exchange Commission. There are inherent limitations to the effectiveness of systems of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective systems of disclosure controls and procedures can provide only reasonable assurances of achieving their control objectives.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s first fiscal quarter of 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.   Legal Proceedings.

There are no pending legal proceedings, other than litigation incidental to the ordinary business of the Company, of a material nature to which the Company is a party or of which any of its properties are subject.

Item 1A.  Risk Factors

There have been no material changes to the risk factors previously disclosed in German American Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information regarding the Company’s purchases of its common shares during each of the three months ended March 31, 2017.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid Per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs (1)
January 2017	—	—	—	409,184
February 2017	—	—	—	409,184
March 2017	—	—	—	409,184

⁽¹⁾ On April 26, 2001, the Company announced that its Board of Directors had approved a stock repurchase program for up to 911,631 of its outstanding common shares, of which the Company had purchased 502,447 common shares through March 31, 2017 (both such numbers adjusted for subsequent stock dividends and splits). The Board of Directors established no expiration date for this program. The Company purchased no shares under this program during the three months ended March 31, 2017.

Item 3.   Defaults Upon Senior Securities

None.

Item 4.   Mine Safety Disclosures

Not applicable.

Item 5.   Other Information

None.

Item 6.      Exhibits

The exhibits described by the Exhibit Index immediately following the Signature Page of this Report are incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	GERMAN AMERICAN BANCORP, INC.
Date: May 9, 2017	By/s/Mark A. Schroeder
	Mark A. Schroeder
	Chairman and Chief Executive Officer
	(Principal Executive Officer)
Date: May 9, 2017	By/s/Bradley M. Rust
	Bradley M. Rust
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

44

INDEX OF EXHIBITS

Exhibit No.	Description
3.1*	Restatement of the Articles of Incorporation of German American Bancorp, Inc., as amended.
3.2	Restated Bylaws of German American Bancorp, Inc., as amended and restated July 27, 2009, is incorporated by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K filed March 9, 2015 (SEC File No. 001-15877).
4.1	No long-term debt instrument issued by the Registrant exceeds 10% of consolidated total assets or is registered. In accordance with paragraph 4 (iii) of Item 601(b) of Regulation S-K, the Registrant will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request.
4.2	Terms of Common Shares and Preferred Shares of the Registrant (included in Restatement of Articles of Incorporation) are incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed July 1, 2011 (SEC File No. 001-15877).
4.3	Specimen stock certificate for Common Shares of the Registrant is incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed October 21, 2010 (SEC File No. 001-15877).
4.4	Description of Assumed Junior Deferrable Interest Subordinated Debentures of River Valley Bancorp and Agreement to Furnish Copies of Related Instruments and Documents are incorporated by reference to Exhibit 4.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 10, 2016 (SEC File No. 001-15877).
31.1*	Sarbanes-Oxley Act of 2002, Section 302 Certification for Chairman of the Board and Chief Executive Officer.
31.2*	Sarbanes-Oxley Act of 2002, Section 302 Certification for Executive Vice President and Chief Financial Officer.
32.1*	Sarbanes-Oxley Act of 2002, Section 906 Certification for Chairman of the Board and Chief Executive Officer.
32.2*	Sarbanes-Oxley Act of 2002, Section 906 Certification for Executive Vice President and Chief Financial Officer.
101+	The following materials from German American Bancorp, Inc.’s Form 10-Q Report for the quarterly period ended March 31, 2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii)  the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.

*Exhibits that are filed with this Report (other than through incorporation by reference to other disclosures or exhibits) are indicated by an asterisk.

+Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

45

EX-3.1

Exhibit 3.1

ARTICLES OF INCORPORATION

OF

GERMAN AMERICAN BANCORP, INC.

ARTICLE I

NAME

The name of the Corporation is German American Bancorp, Inc.

ARTICLE II

PURPOSES AND POWERS

Section 2.01    Purposes of the Corporation. The purposes for which the Corporation is formed are to transact any or all lawful business permitted by applicable law and for which corporations may now or hereafter be incorporated under the Corporation Law.

Section 2.02    Powers of the Corporation. The Corporation shall have (a) all powers now or hereafter authorized by or vested in corporations pursuant to the provisions of the Corporation Law, (b) all powers now or hereafter vested in corporations by common law or any other statute or act, and (c) all powers authorized by or vested in the Corporation by the provisions of these Articles of Incorporation or by the provisions of its Bylaws as from time to time in effect.

ARTICLE III

TERM OF EXISTENCE

The period during which the Corporation shall continue is perpetual.

ARTICLE IV

REGISTERED OFFICE

The street address of the Corporation’s registered office is 711 Main Street, P.O. Box 810, Jasper, Indiana 47546.

ARTICLE V

SHARES

The total number of shares of capital stock the Corporation has authority to issue shall be 45,750,000 shares consisting of 45,000,000 common shares (the “Common Shares”) and 750,000 preferred shares (the “Preferred Shares”).  The Corporation’s shares shall have no par value.  Solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of the Corporation, however, all of the shares shall be deemed to have a stated value of $1.00 per share.

ARTICLE VI

TERMS OF SHARES

Section 6.01.    General Terms of All Shares. The Corporation shall have the power to acquire (by purchase, redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel, or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana.  The power to purchase, redeem, or otherwise acquire the Corporation’s own shares, directly or indirectly, may be exercised without pro rata treatment of the owners or holders of any class or series of shares.  The Corporation may not purchase, redeem or otherwise acquire the Corporation’s own shares if, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation’s total assets would be less than its total liabilities (without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the purchase, redemption, or other acquisition, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of the shares of the Corporation being purchased, redeemed, or otherwise acquired, unless otherwise expressly provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series).  Shares of the Corporation purchased, redeemed, or otherwise acquired by it shall constitute authorized but unissued shares, unless the Board of Directors shall at any time adopt a resolution providing that such shares constitute authorized and issued but not outstanding shares.

The Board of Directors of the Corporation may dispose of, issue, and sell shares in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or approval by any shareholders of the Corporation.  Shares may be disposed of, issued, and sold to such persons, firms, or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation of any class or kind to acquire such shares by reason of their ownership of such other shares.

The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject to the limitation that a dividend or other distribution may not be made if, after giving it effect, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation’s total assets would be less than its total liabilities (without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the dividend or other distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of shares receiving the dividend or other distribution, unless otherwise expressly provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series).  The Corporation shall have the power to issue shares of one class or series as a share dividend or other distribution in respect of that class or series or one or more other classes or series, except as may be otherwise provided with respect to a series of Preferred Shares in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of this Article VI describing the terms of such series.

Section 6.02.    Terms of Common Shares.  The Common Shares shall be equal in every respect insofar as their relationship to the Corporation is concerned, but such equality of rights shall not imply equality of treatment as to redemption or other acquisition of shares by the Corporation.  Subject to the rights of the holders of any issued and outstanding Preferred Shares under this Article VI, the holders of Common Shares shall be entitled to share ratably in such dividends or other distributions (other than purchases, redemptions, or other acquisitions of Common Shares of the Corporation), if any, as are declared and paid from time to time on the Common Shares at the discretion of the Board of Directors.  In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, after payment shall have been made to the holders of the Preferred Shares of the full amount to which they shall be entitled under this Article VI, the holders of Common Shares shall be entitled, to the exclusion of the

holders of the Preferred Shares of any and all series, to share, ratably according to the number of Common Shares held by them, in all remaining assets of the Corporation available for distribution to its shareholders.

Section 6.03. Terms of Preferred Shares.

(a)    Preferred Shares may be issued from time to time in one or more series, each such series to have such distinctive designation and such preferences, limitations, and relative voting and other rights as shall be set forth in these Articles of Incorporation. Subject to the requirements of the Corporation Law and subject to all other provisions of these Articles of Incorporation, the Board of Directors of the Corporation may create one or more series of Preferred Shares and may determine the preferences, limitations, and relative voting and other rights of one or more series of Preferred Shares before the issuance of any shares of that series by the adoption of an amendment to these Articles of Incorporation that specifies the terms of that series of Preferred Shares.  All shares of a series of Preferred Shares must have preferences, limitations, and relative voting and other rights identical to those of other shares of the same series. No series of Preferred Shares need have preferences, limitations, or relative voting or other rights identical with those of any other series of Preferred Shares.  Before issuing any shares of a series of Preferred Shares, the Board of Directors shall adopt an amendment to these Articles of Incorporation, which shall be effective without any shareholder approval or other action, that fixes and sets forth the distinctive designation of such series; the number of shares that shall constitute such series, which number may be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; and the preferences, limitations, and relative voting and other rights of the series.  Authority is hereby expressly vested in the Board of Directors, by such amendment, to fix all of the preferences or rights, and any qualifications, limitations, or restrictions of such preferences or rights, of such series to the full extent permitted by the Corporation Law; provided, however, that no such preferences, rights, qualifications, limitations, or restrictions shall be in conflict with these Articles of Incorporation or any amendment hereof.

(b)    Preferred Shares of any series that have been redeemed (whether through the operation of a sinking fund or otherwise) or purchased by the Corporation, or that, if convertible, have been converted into shares of the Corporation of any other class or series, may be reissued as a part of such series or of any other series of Preferred Shares, subject to such limitations (if any) as may be fixed by the Board of Directors with respect to such series of Preferred Shares in accordance with Section 6.03(a) of this Article VI.

ARTICLE VII

VOTING RIGHTS

Section 7.01.    Common Shares. Except as otherwise provided by the Corporation Law or by the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the Preferred Shares or a series thereof, and subject to such shareholder disclosure and recognition procedures (which may include sanctions for noncompliance therewith to the fullest extent permitted by the Corporation Law) as the Corporation may by action of the Board of Directors establish, the Common Shares have unlimited voting rights. At every meeting of the shareholders of the Corporation every holder of Common Shares shall be entitled to one vote in person or by proxy for each Common Share standing in such holder’s name on the share transfer records of the Corporation.

Section 7.02.    Preferred Shares. Except as required by the Corporation Law or by the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of Preferred Shares or a series thereof, the holders of Preferred Shares shall have no voting rights or powers.  Preferred Shares shall, when validly issued by the Corporation, entitle the record holder thereof to vote on such matters, but only on such matters, as the holders thereof are entitled to vote under the Corporation Law or under these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of Preferred Shares or a series thereof (which provisions may provide for special, conditional, limited, or unlimited voting rights, including multiple or fractional votes per share, or for no right to vote, except to the extent required by the Corporation Law) and subject to such shareholder disclosure and recognition procedures (which may include

sanctions for noncompliance therewith to the fullest extent permitted by the Corporation Law) as the Corporation may by action of the Board of Directors establish.

ARTICLE VIII

DIRECTORS

Section 8.01.    Number. The number of Directors shall be fixed by, or fixed in accordance with, the Bylaws. Whenever there are nine or more Directors, the Bylaws may also provide for staggering the terms of the members of the Board of Directors by dividing the total number of Directors into two or three groups (with each group containing one-half or one-third of the total, as near as may be) whose terms of office expire at different times.

Section 8.02.    Election of Directors by Holders of Preferred Shares.  The holders of one or more series of Preferred Shares may be entitled to elect all or a specified number of Directors, but only to the extent and subject to limitations as may be set forth in the provisions of these Articles of Incorporation adopted by the Board of Directors pursuant to Section 6.03(a) of Article VI hereof describing the terms of the series of Preferred Shares.

Section 8.03.    Vacancies. Vacancies occurring in the Board of Directors shall be filled in the manner provided in the Bylaws or, if the Bylaws do not provide for the filling of vacancies, in the manner provided by the Corporation Law.

Section 8.04.    Removal of Directors. Any or all of the members of the Board of Directors may be removed, with or without cause, at a meeting of the shareholders called expressly for that purpose, by the affirmative vote of the holders of at least 80 percent of the outstanding shares then entitled to vote at an election of Directors.  However, a Director elected by the holders of a series of Preferred Shares as authorized by Section 8.02 of this Article VIII may be removed only by the affirmative vote of the holders of at least 80 percent of the outstanding shares of that series then entitled to vote at an election of Directors.  Directors may not be removed by the Board of Directors.

Section 8.05.    Liability of Directors. A Director’s responsibility to the Corporation shall be limited to discharging his duties as a Director, including his duties as a member of any committee of the Board of Directors upon which he may serve, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Director reasonably believes to be in the best interests of the Corporation, all based on the facts then known to the Director.

In discharging his duties, a Director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by:

(a)    one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented

(b)    Legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within such person’s professional or expert competence; or

(c)    A committee of the Board of which the Director is not a member if the Director reasonably believes the committee merits confidence; but a Director is not acting in good faith if the Director has knowledge concerning the matter in question that makes reliance otherwise permitted by this Section 8.05 unwarranted.  A Director may, in considering the best interests of the Corporation, consider the effects of any action on shareholders, employees, suppliers, and customers of the Corporation, and communities in which offices or other facilities of the Corporation are located, and any other factors the Director considers pertinent.

Directors shall be immune from personal liability for any action taken as a Director, or any failure to take any action, to the fullest extent permitted by the applicable provisions of the Corporation Law from time to time in effect and by general principles of corporate law.

ARTICLE IX

PROVISIONS FOR REGULATION OF BUSINESS

AND CONDUCT OF AFFAIRS OF CORPORATION

Section 9.01.    Bylaws. The Board of Directors shall have the exclusive power to make, alter, amend, or repeal, or to waive provisions of, the Bylaws of the Corporation by the affirmative vote of a majority of the number of Directors then in office, except as provided by the Corporation Law. All provisions for the regulation of the business and management of the affairs of the Corporation not stated in these Articles of Incorporation shall be stated in the Bylaws.  The Board of Directors may also adopt Emergency Bylaws of the Corporation and shall have the exclusive power (except as may otherwise be provided therein) to make, alter, amend, or repeal, or to waive provisions of, the Emergency Bylaws by the affirmative vote of a majority of the entire number of Directors at the time.

Section 9.02.    Amendment or Repeal.

(a)    Any amendment, change or repeal of Section 8.04 of Article VIII, Sections 9.02 or 9.03 of Article IX, or Article X of these Articles of Incorporation, or any other amendment of these Articles of Incorporation which would have the effect of modifying or permitting circumvention of those provisions, shall require the affirmative vote, at a meeting of shareholders of the Corporation, by the holders of a least 80 percent of the outstanding shares of all classes of Voting Shares of the Corporation (considered for purposes of this Section 9.02(a) as a single class and as defined in Article X) and, if the amendment, change or repeal shall be proposed by or on behalf of a Related Person (as that term is defined in Article X), by an Independent Majority of Shareholders (as defined in Article X); provided, however, that this Section 9.02(a) shall not apply to, and such vote shall not be required for, any such amendment, change or repeal recommended to shareholders by the favorable vote of not less than two-thirds of the Board of Directors and, if the amendment, change or repeal shall be proposed by or on behalf of a Related Person, by the favorable vote of not less than two-thirds of the Continuing Directors (as defined in Article X and computed with reference to the Related Person who shall propose such amendment, change or repeal), and any such amendment, change or repeal so recommended shall require only the shareholder vote required under the applicable provisions of the Corporation Law.

(b)    Except as otherwise expressly provided in Section 9.02(a) above, the Corporation shall be deemed, for all purposes, to have reserved the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation to the extent and in the manner now or hereafter permitted or prescribed by statute, and all rights herein conferred upon shareholders are granted subject to such reservation.

Section 9.03.    Removal of Chairman of the Board and President.  The Chairman of the Board and the President, and each of them, may be removed from office at any time, with or without cause, at a meeting of the Board of Directors called expressly for that purpose, but only by the affirmative vote of two-thirds of all other members of the entire Board of Directors.  Any vacancy created by the removal of the chairman or the President may be filled only by the affirmative vote of two-thirds of all remaining members of the Board.

ARTICLE X

APPROVAL OF BUSINESS COMBINATIONS

Section 10.01.    Supermajority Vote. Except as provided in Sections 10.02 and 10.03 of this Article X, neither the Corporation nor any of its Subsidiaries shall become party to any Business Combination with a Related Person without the prior affirmative vote at a meeting of the Corporation’s shareholders:

(a)    By the holders of not less than 80 percent of the outstanding shares of all classes of Voting Shares of the Corporation considered for purposes of this Article X as a single class, and

(b)    By an Independent Majority of Shareholders. Such favorable votes shall be in addition to any shareholder vote that would be required without reference to this Section 10.01 and shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified by law or in other Articles of these Articles of Incorporation or the Bylaws of the Corporation or otherwise.

Section 10.02.    Reduced Supermajority Vote for Fair Pricing. The provisions of Section 10.01 shall apply to a Business Combination, except that the percentage vote required by Section 10.01(a) shall be reduced from not less than 80 percent to not less than two-thirds, if all of the conditions set forth in subsections (a) through (d) of this Section 10.02 are satisfied.

(a)    The fair market value of the property, securities or other consideration to be received per share by holders of each class or series of capital shares of the Corporation in the Business Combination is not less, as of the date of the consummation of the Business Combination (the “Consummation Date”), than the higher of the following:

(i)    the highest per share price (with appropriate adjustments for recapitalizations and for share splits, share dividends and like distributions) including brokerage commissions and solicitation fees paid by the Related Person in acquiring any of its holdings of such class or series of capital shares within the two-year period immediately prior to the first public announcement of the proposed Business Combination (“Announcement Date”) or in the transaction in which it became a Related Person, whichever is higher, plus interest compounded annually, from the later of the date that the Related Person became a Related Person (the “Determination Date”), or the date two years before the consummation Date, through the consummation Date, at the rate publicly announced as the “prime rate” of interest of Citibank, N.A. (or of such other major bank headquartered in New York as may be selected by a majority of the Continuing Directors) from time to time in effect, less the aggregate amount of any cash dividends paid and the fair market value of any dividends paid in other than cash on each such share from the date from which interest accrues under the preceding clause through the Consummation Date up to but not exceeding the amount of interest so payable per share; or

(ii)    if such class or series is then traded on an exchange or is the subject of regularly published quotations from three or more broker/dealers who make a market in such class or series for their own accounts, the fair market value per share of such class or series on the Announcement Date, as determined by the highest closing sales price on such exchange or the highest closing bid quotation with respect to such shares during the 30-day period immediately preceding the Announcement Date.  In the event of a Business Combination upon consummation of which the Corporation would be the surviving corporation or company or would continue to exist (unless it is provided, contemplated or intended that as part of such Business Combination or within one year after consummation thereof a plan of liquidation or dissolution of the Corporation will be effected), the term “other consideration to be received” shall include (without limitation) Common Shares and/or the shares of any other class of shares retained by shareholders of the Corporation other than Related Persons who are parties to such Business Combination;

(b)    The consideration to be received in such Business Combination by holders of each class or series of capital shares other than the Related Person involved shall, except to the extent that a shareholder agrees otherwise as to all or part of the shares which he or she owns, be in the same form and of the same kind as the consideration paid by the Related Person in acquiring the majority of the capital shares of such class or Series already Beneficially owned by it within the two-year period ending on the Determination Date;

(c)    After such Related Person became a Related Person and prior to the consummation of such Business Combination: (i) such Related Person shall have taken steps to insure that the Board of Directors of the Corporation included at all times representation by Continuing Directors proportionate to the ratio that the number of Voting Shares of the Corporation from time to time not Beneficially Owned by the Related Person bears to all Voting Shares of the Corporation outstanding at the time in question (with a Continuing Director to occupy any resulting fractional position among the Directors); (ii) such Related Person shall not have acquired from the Corporation, directly or indirectly, any shares of the Corporation (except upon conversion of convertible securities acquired by it prior to becoming a Related Person or as a result of a pro rata share dividend, share split or division of shares or in a transaction that satisfied all applicable requirements of this Article X); (iii) such Related Person shall not have acquired any additional Voting

Shares of the Corporation or securities convertible into or exchangeable for Voting Shares except as a part of the transaction which resulted in such Related Person’s becoming a Related Person; and (iv) such Related Person shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation or any Subsidiary, or made any major change in the Corporation’s business or equity capital structure or entered into any contract, arrangement or understanding with the Corporation except any such change, contract, arrangement or understanding as may have been approved by the favorable vote of not less than a majority of the continuing Directors of the Corporation; and

(d)    A proxy statement complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission thereunder, as then in force for corporations subject to the requirements of Section 14 of such Act (even if the Corporation is not otherwise subject to Section 14 of such Act), shall have been mailed to all holders of Voting Shares for the purpose of soliciting shareholder approval of such Business Combination.  Such proxy statement shall contain on the face page thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the Business Combination which the Continuing Directors, or any of them, may have furnished in writing and, if deemed advisable by a majority of the Continuing Directors, a fair summary of an opinion of a reputable investment banking firm addressed to the Corporation as to the fairness (or lack of fairness of the terms of such Business Combination from the point of view of the holders of Voting Shares other than any Related Person (such investment banking firm to be selected by a majority of the Continuing Directors, to be furnished with all information it reasonably requests, and to be paid a reasonable fee for its services upon receipt by the Corporation of such opinion).

Section 10.03.    Director Approval Exception. The provisions of Sections 10.01 and 10.02 of this Article X shall not apply to, and such votes shall not be required, if:

(a)    The Continuing Directors of the Corporation by a two-thirds vote (i) have expressly approved a memorandum of understanding with the Related Person with respect to the Business Combination prior to the time the Related Person became a Related Person, or (ii) have otherwise approved the Business Combination (this provision is incapable of satisfaction unless there is at least one Continuing Director); or

(b)    The Business Combination is solely between the Corporation and another corporation, 100 percent of the Voting Shares of which are owned directly or indirectly by the Corporation.

Section 10.04.    Definitions. For the purpose of this Article X: (a) A “Business Combination” means:

(i)    the sale, exchange, lease, transfer or other disposition to or with a Related Person or any Affiliate or Associate of such Related Person by the Corporation or any of its Subsidiaries (in a single transaction or a series of Related Transactions) of all or substantially all, or any substantial Part, of its or their assets or businesses (including, without limitation, any securities issued by a Subsidiary);

(ii)    The purchase, exchange, lease or other acquisition by the Corporation or any of its Subsidiaries (in a single transaction or a series of Related Transactions) of all or substantially all, or any Substantial Part, of the assets or business of a Related Person or any Affiliate or Associate of such Related Person;

(iii)    Any merger or consolidation of the Corporation or any Subsidiary thereof into or with a Related Person or any Affiliate or Associate of such Related Person or into or with another Person which, after such merger or consolidation, would be an Affiliate or an Associate of a Related Person, in each case irrespective of which Person is the surviving entity in such merger or consolidation;

(iv)    Any reclassification of securities, recapitalization or other transaction (other than a redemption in accordance with the terms of the security redeemed) which has the effect, directly or indirectly, of increasing the proportionate amount of Voting Shares of the Corporation or any Subsidiary thereof which are Beneficially Owned by a Related Person, or any partial or complete liquidation, spin-off, split-off or split-up of the Corporation or any

Subsidiary thereof; provided, however, that this Section 10.04(a)(iv) shall not relate to any transaction of the types specified in this Article X that has been approved by a majority of the Continuing Directors; or

(v)    The acquisition upon the issuance thereof of Beneficial Ownership by a Related Person of Voting Shares or securities convertible into Voting Shares or any voting securities or securities convertible into voting securities of any Subsidiary of the Corporation, or the acquisition upon the issuance thereof of Beneficial Ownership by a Related Person of any rights, warrants or options to acquire any of the foregoing or any combination of the foregoing Voting Shares or voting securities of the Subsidiary.

(b)    A “Series of Related Transactions” shall be deemed to include not only a series of transactions with the same Related Person but also a series of separate transactions with a Related Person or any Affiliate or Associate of such Related Person.

(c)    A “Person” shall mean any individual, firm, corporation or other entity and any partnership, syndicate or other group.

(d)    “Related Person” shall mean any Person (other than the Corporation or any of the Corporation’s Subsidiaries) who or that:

(i)    is the Beneficial Owner, directly or indirectly, of more than ten percent of the voting power of the outstanding Voting Shares;

(ii)    is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the Beneficial Owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of Voting Shares; or

(iii)    is an assignee of or has otherwise succeeded to any Voting Shares which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Related Person, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.

A Related Person shall be deemed to have acquired a share of the Corporation at the time when such Related Person became the Beneficial Owner thereof.  For the purposes of determining whether a Person is the Beneficial Owner of ten percent or more of the voting power of the then outstanding Voting Shares, the outstanding Voting Shares shall be deemed to include any Voting Shares that may be issuable to such Person pursuant to a right to acquire such Voting Shares and that is therefore deemed to be Beneficially Owned by such Person pursuant to Section 10.04(e)(ii)(a).  A Person who is a Related Person at (i) the time any definitive agreement relating to a Business Combination is entered into, (ii) the record date for the determination of shareholders entitled to notice of and to vote on a Business Combination, or (iii) the time immediately prior to the consummation of a Business Combination, shall be deemed a Related Person.

(e)    A Person shall be a “Beneficial Owner” of any Voting Shares:

(i)    which such Person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or

(ii)    which such Person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or

(iii)    which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Voting Shares.

(f)    An “Affiliate” of, or a person Affiliated with, a specific Person, means a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified.

(g)    The term “Associate” used to indicate a relationship with any Person, means (i) any corporation or organization (other than this Corporation or a majority-owned Subsidiary of this Corporation) of which such Person is an officer or partner or is, directly or indirectly, the Beneficial Owner of five percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person, or (iv) any investment company registered under the Investment Company Act of 1940, for which such Person or any Affiliate of such Person serves as investment advisor.

(h)    “Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Related Person set forth in paragraph (d) of this Section 10.04, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.

(i)    “Continuing Director” means any member of the Board of Directors of the Corporation (the “Board”), other than the Related Person who proposes the Business Combination in question and his Affiliates and Associates, who (i) is a member of the Board at the time this Article X first became effective or (ii) was a member of the Board prior to the time that the Related Person who proposes the Business Combination in question became a Related Person or (iii) is a successor of a Continuing Director who was recommended to succeed the Continuing Director by a majority of Continuing Directors then on the Board.

(j)    “Independent Majority of Shareholders” shall mean the holders of a majority of the outstanding Voting Shares that are not Beneficially Owned or controlled, directly or indirectly, by the Related Person who proposes the Business Combination in question.

(k)    “Voting Shares” shall mean all outstanding capital shares of the Corporation or another corporation entitled to vote generally in the election of Directors, and each reference to a proportion of shares of Voting Shares shall refer to such proportion of the votes entitled to be cast by such shares.

(l)    “Substantial Part” means properties and assets involved in any single transaction or a series of Related Transactions having an aggregate fair market value of more than ten percent of the total consolidated assets of the Person in question as determined immediately prior to such transaction or series of Related Transactions.

Section 10.05.    Director Determinations.  A majority of the Continuing Directors shall have the power to determine for the purposes of this Article X, on the bases of information known to them: (i) the number of Voting Shares of which any Person is the Beneficial Owner, (ii) whether a Person is an Affiliate or Associate of another, (iii) whether a Person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of “Beneficial Owner,” (iv) whether the assets subject to any Business Combination constitute a Substantial Part, (v) whether two or more transactions constitute a series of Related Transactions, and (vi) such other matters with respect to which a determination is required under this Article X.

In connection with the exercise of its judgment in determining what is in the best interests of the Corporation and its shareholders when evaluating a business combination or a proposal by another Person or Persons to make a business combination or a tender or exchange offer (regardless of whether such proposal is otherwise subject to this Article X), the Board of Directors of the Corporation shall, in addition to considering the adequacy of the consideration to be paid in connection with any such transaction, consider all of the following factors and any other factors that it deems relevant:  (i) the social and economic effects of the transaction on the Corporation and its Subsidiaries, employees, depositors, loan and other customers, creditors and other elements of the communities in which the Corporation and its Subsidiaries operate or are located; (ii) the business and financial condition and earnings prospects

of the acquiring Person or Persons, including, but not limited to, debt service and other existing or likely financial obligations of the acquiring Person or Persons and their Affiliates and Associates, and the possible effect of such conditions upon the Corporation and its Subsidiaries and the other elements of the communities in which the Corporation and its Subsidiaries operate or are located; and (iii) the competence, experience, and integrity of the acquiring Person or Persons and its or their management and Affiliates and Associates.

Section 10.06.    Fiduciary Obligations Unaffected. Nothing in this Article X shall be construed to relieve any Related Person from any fiduciary duty imposed by law.

EX-31.1

Exhibit 31.1

Sarbanes-Oxley Act of 2002, Section 302 Certification for Chairman and Chief Executive Officer

I, Mark A. Schroeder, Chairman and Chief Executive Officer of German American Bancorp, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of German American Bancorp, Inc. (the “registrant”):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 9, 2017

Date

/s/ Mark A. Schroeder

Mark A. Schroeder

Chairman and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

Sarbanes-Oxley Act of 2002, Section 302 Certification for Executive Vice President and Chief Financial Officer

I, Bradley M. Rust, Executive Vice President and Chief Financial Officer of German American Bancorp, Inc. certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of German American Bancorp, Inc. (the “registrant”):

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 9, 2017

Date

/s/ Bradley M. Rust

Bradley M. Rust

Executive Vice President and Chief Financial Officer

(principal accounting officer and principal financial officer)

EX-32.1

Exhibit 32.1

Sarbanes-Oxley Act of 2002, Section 906 Certification for Chairman and Chief Executive Officer

I, Mark A. Schroeder, Chairman and Chief Executive Officer of German American Bancorp, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that:

1. The Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (the “Periodic Report”), which this statement accompanies, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. Information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of German American Bancorp, Inc.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Periodic Report.

May 9, 2017

Date

/s/ Mark A. Schroeder

Mark A. Schroeder

Chairman and Chief Executive Officer

(principal executive officer)

EX-32.2

Exhibit 32.2

Sarbanes-Oxley Act of 2002, Section 906 Certification for Executive Vice President and Chief Financial Officer

I, Bradley M. Rust, Executive Vice President and Chief Financial Officer of German American Bancorp, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that:

1. The Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (the “Periodic Report”), which this statement accompanies, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. Information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of German American Bancorp, Inc.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Periodic Report.

May 9, 2017

Date

/s/ Bradley M. Rust

Bradley M. Rust

Executive Vice President and Chief Financial Officer

(principal accounting officer and principal financial officer)

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	GABC
Entity Common Stock, Shares Outstanding		22,929,417
Entity Registrant Name	GERMAN AMERICAN BANCORP, INC.
Entity Central Index Key	0000714395
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer

XML

CONSOLIDATED BALANCE SHEETS $ in Thousands		Mar. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares
ASSETS
Cash and Due from Banks		$ 30,151	$ 48,467
Federal Funds Sold and Other Short-term Investments		7,288	16,349
Cash and Cash Equivalents		37,439	64,816
Securities Available-for-Sale, at Fair Value		726,352	709,786
Loans Held-for-Sale, at Fair Value		6,856	15,273
Loans		1,986,929	1,993,404
Less: Unearned Income		(3,357)	(3,449)
Allowance for Loan Losses		(15,166)	(14,808)
Loans, Net		1,968,406	1,975,147
Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost		13,048	13,048
Premises, Furniture and Equipment, Net		49,718	48,230
Other Real Estate		208	242
Goodwill		54,058	54,058
Intangible Assets		2,791	2,835
Company Owned Life Insurance		46,903	46,642
Accrued Interest Receivable and Other Assets		27,365	25,917
TOTAL ASSETS		2,933,144	2,955,994
LIABILITIES
Non-interest-bearing Demand Deposits		572,874	571,989
Interest-bearing Demand, Savings, and Money Market Accounts		1,389,763	1,399,381
Time Deposits		363,835	378,181
Total Deposits		2,326,472	2,349,551
FHLB Advances and Other Borrowings		241,358	258,114
Accrued Interest Payable and Other Liabilities		24,098	18,062
TOTAL LIABILITIES		2,591,928	2,625,727
SHAREHOLDERS’ EQUITY
Preferred Stock, no par value; 500,000 shares authorized, no shares issued		0	0
Common Stock, no par value, $1 stated value; 45,000,000 shares authorized (1)	[1]	15,287	15,261
Additional Paid-in Capital		172,013	171,744
Retained Earnings		156,322	149,666
Accumulated Other Comprehensive Loss		(2,406)	(6,404)
TOTAL SHAREHOLDERS’ EQUITY		341,216	330,267
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$ 2,933,144	$ 2,955,994
End of period shares issued (shares) | shares	[1]	22,929,417	22,904,157
End of period shares outstanding (shares) | shares	[1]	22,929,417	22,904,157

[1] Share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares		Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred Stock, shares authorized (shares)		500,000	500,000
Preferred Stock, shares issued (shares)		0	0
Common Stock, stated value (USD per share)		$ 1	$ 1
Common Stock, shares authorized (shares)	[1]	45,000,000	45,000,000

[1] Share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

XML

CONSOLIDATED STATEMENTS OF INCOME $ in Thousands		3 Months Ended
		Mar. 31, 2017 USD ($) $ / shares	Mar. 31, 2016 USD ($) $ / shares
INTEREST INCOME
Interest and Fees on Loans		$ 22,262	$ 18,664
Interest on Federal Funds Sold and Other Short-term Investments		27	17
Interest and Dividends on Securities:
Taxable		2,719	2,277
Non-taxable		2,025	1,722
TOTAL INTEREST INCOME		27,033	22,680
INTEREST EXPENSE
Interest on Deposits		1,443	1,155
Interest on FHLB Advances and Other Borrowings		865	741
TOTAL INTEREST EXPENSE		2,308	1,896
NET INTEREST INCOME		24,725	20,784
Provision for Loan Losses		500	850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		24,225	19,934
NON-INTEREST INCOME
Trust and Investment Product Fees		1,243	1,021
Service Charges on Deposit Accounts		1,484	1,233
Insurance Revenues		2,640	2,727
Company Owned Life Insurance		254	215
Interchange Fee Income		1,023	788
Other Operating Income		857	513
Net Gains on Sales of Loans		687	720
Net Gains on Securities		0	0
TOTAL NON-INTEREST INCOME		8,188	7,217
NON-INTEREST EXPENSE
Salaries and Employee Benefits		11,444	11,601
Occupancy Expense		1,549	1,379
Furniture and Equipment Expense		633	508
FDIC Premiums		239	328
Data Processing Fees		1,011	2,165
Professional Fees		803	1,318
Advertising and Promotion		778	544
Intangible Amortization		253	208
Other Operating Expenses		2,326	2,189
TOTAL NON-INTEREST EXPENSE		19,036	20,240
Income before Income Taxes		13,377	6,911
Income Tax Expense		3,821	1,765
NET INCOME		$ 9,556	$ 5,146
Basic Earnings Per Share (USD per share) | $ / shares	[1]	$ 0.42	$ 0.25
Diluted Earnings Per Share (USD per share) | $ / shares	[1]	0.42	0.25
Dividends Per Share (USD per share) | $ / shares	[1]	$ 0.13	$ 0.12

[1] Per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 9,556	$ 5,146
Unrealized Gains on Securities
Unrealized Holding Gain Arising During the Period	6,179	6,209
Reclassification Adjustment for Losses (Gains) Included in Net Income	0	0
Tax Effect	(2,181)	(2,180)
Net of Tax	3,998	4,029
Total Other Comprehensive Income	3,998	4,029
COMPREHENSIVE INCOME	$ 13,554	$ 9,175

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME	$ 9,556	$ 5,146
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Net Amortization on Securities	808	823
Depreciation and Amortization	1,127	1,048
Loans Originated for Sale	(24,566)	(22,256)
Proceeds from Sales of Loans Held-for-Sale	33,615	25,225
Provision for Loan Losses	500	850
Gain on Sale of Loans, net	(687)	(720)
Loss on Disposition and Donation of Premises and Equipment	0	2
Increase in Cash Surrender Value of Company Owned Life Insurance	(261)	(235)
Equity Based Compensation	295	261
Change in Assets and Liabilities:
Interest Receivable and Other Assets	(1,602)	1,462
Interest Payable and Other Liabilities	3,857	(407)
Net Cash from Operating Activities	22,642	11,199
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturity of Other Short-term Investments	0	(1,000)
Proceeds from Maturities, Calls, Redemptions of Securities Available-for-Sale	21,154	20,743
Proceeds from Sales of Securities Available-for-Sale	0	62,975
Purchase of Securities Available-for-Sale	(32,351)	(23,706)
Proceeds from Maturities of Securities Held-to-Maturity	0	95
Purchase of Federal Home Loan Bank Stock	0	(1,350)
Purchase of Loans	(59)	(4,263)
Loans Made to Customers, net of Payments Received	6,182	(29,023)
Proceeds from Sales of Other Real Estate	152	717
Property and Equipment Expenditures	(2,433)	(459)
Acquisition of River Valley Bank	0	(793)
Net Cash from Investing Activities	(7,355)	23,936
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits	(23,003)	8,826
Change in Short-term Borrowings	(40,985)	(29,463)
Advances in Long-term Debt	25,000	0
Repayments of Long-term Debt	(776)	(15,070)
Dividends Paid	(2,900)	(2,391)
Net Cash from Financing Activities	(42,664)	(38,098)
Net Change in Cash and Cash Equivalents	(27,377)	(2,963)
Cash and Cash Equivalents at Beginning of Year	64,816	52,009
Cash and Cash Equivalents at End of Period	37,439	49,046
Cash Paid During the Period for
Interest	2,361	1,736
Income Taxes	0	1,503
Supplemental Non Cash Disclosures
Loans Transferred to Other Real Estate	$ 118	$ 9

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Basis of Presentation

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

German American Bancorp, Inc. operates primarily in the banking industry. The accounting and reporting policies of German American Bancorp, Inc. and its subsidiaries (hereinafter collectively referred to as the "Company") conform to U.S. generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. 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. 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. Certain items included in the prior period financial statements were reclassified to conform to the current presentation. There was no effect on net income or total shareholders' equity based on these reclassifications.

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Per Share Data

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Per Share Data

Per Share Data

The computations of Basic Earnings per Share and Diluted Earnings per Share are as follows:

	Three Months Ended   March 31,
	2017		2016
Basic Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Basic Earnings per Share	$	0.42	$	0.25
Diluted Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Potentially Dilutive Shares, Net	—		6,115
Diluted Weighted Average Shares Outstanding (1)	22,908,648		20,893,399
Diluted Earnings per Share	$	0.42	$	0.25

⁽¹⁾ Share and per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

For the three months ended March 31, 2017 and 2016, there were no anti-dilutive shares.

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Securities

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Securities

Securities 

The amortized cost, unrealized gross gains and losses recognized in accumulated other comprehensive income (loss), and fair value of Securities Available-for-Sale at March 31, 2017 and December 31, 2016, were as follows:

Securities Available-for-Sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2017
Obligations of State and Political Subdivisions	$	254,587	$	5,169	$	(2,413	)	$	257,343
MBS/CMO - Residential	475,002		1,095		(7,441		)	468,656
Equity Securities	353		—		—			353
Total	$	729,942	$	6,264	$	(9,854	)	$	726,352
December 31, 2016
Obligations of State and Political Subdivisions	$	247,350	$	3,847	$	(3,678	)	$	247,519
MBS/CMO - Residential	471,852		480		(10,418		)	461,914
Equity Securities	353		—		—			353
Total	$	719,555	$	4,327	$	(14,096	)	$	709,786

Equity securities that do not have readily determinable fair values are included in the above totals, are carried at historical cost and are evaluated for impairment on a periodic basis. All mortgage-backed securities in the above table are residential mortgage-backed securities and guaranteed by government sponsored entities.

The amortized cost and fair value of securities at March 31, 2017 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay certain obligations with or without call or prepayment penalties. Mortgage-backed and Equity Securities are not due at a single maturity date and are shown separately in the table below.

Securities Available-for-Sale:	Amortized Cost		Fair Value
Due in one year or less	$	3,443	$	3,481
Due after one year through five years	19,478		20,316
Due after five years through ten years	73,007		75,307
Due after ten years	158,659		158,239
MBS/CMO - Residential	475,002		468,656
Equity Securities	353		353
Total	$	729,942	$	726,352

Proceeds from the Sales of Securities are summarized below:

	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
Proceeds from Sales	$	—	$	62,975
Gross Gains on Sales	—		—
Income Taxes on Gross Gains	—		—

The carrying value of securities pledged to secure repurchase agreements, public and trust deposits, and for other purposes as required by law was $180,960 and $186,572 as of March 31, 2017 and December 31, 2016, respectively.

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 More					Total
March 31, 2017	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	79,834	$	(2,413	)	$	—	$	—		$	79,834	$	(2,413	)
MBS/CMO - Residential	331,861		(5,992		)	45,218		(1,449		)	377,079		(7,441		)
Equity Securities	—		—			—		—			—		—
Total	$	411,695	$	(8,405	)	$	45,218	$	(1,449	)	$	456,913	$	(9,854	)

	Less than 12 Months					12 Months or More					Total
December 31, 2016	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	108,918	$	(3,678	)	$	—	$	—		$	108,918	$	(3,678	)
MBS/CMO - Residential	356,040		(8,782		)	47,271		(1,636		)	403,311		(10,418		)
Equity Securities	—		—			—		—			—		—
Total	$	464,958	$	(12,460	)	$	47,271	$	(1,636	)	$	512,229	$	(14,096	)

Securities are written down to fair value when a decline in fair value is not considered temporary. In estimating other-than-temporary losses, 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 Company 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 Company does not intend to sell or expect to be required to sell these securities, and the decline in fair value is largely due to changes in market interest rates. Therefore, the Company does not consider these securities to be other-than-temporarily impaired. All mortgage-backed securities and collateralized mortgage obligations (MBS/CMO - Residential) in the Company’s portfolio are guaranteed by government sponsored entities, are investment grade, and are performing as expected.

The Company's equity securities consist of one non-controlling investment in a single banking organization at March 31, 2017 and December 31, 2016. The original investment totaled $1,350 and other-than-temporary impairment was previously recorded totaling $997. When a decline in fair value below cost is deemed to be other-than-temporary, the unrealized loss must be recognized as a charge to earnings.

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Derivatives

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. The notional amounts of these interest rate swaps and the offsetting counterparty derivative instruments were $83.0 million at March 31, 2017 and $67.9 million at December 31, 2016. These interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions with approved, reputable, independent counterparties with substantially matching terms. The agreements are considered stand alone derivatives and changes in the fair value of derivatives are reported in earnings as non-interest income.  

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Company’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 Company minimizes credit risk through credit approvals, limits, and monitoring procedures.

The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of:

	March 31, 2017				December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Other Assets:
Interest Rate Swaps	$	83,047	$	1,548	$	67,902	$	1,291
Included in Other Liabilities:
Interest Rate Swaps	$	83,047	$	1,579	$	67,902	$	1,238

The following table presents the effect of derivative instruments on the Consolidated Statements of Income for the periods presented:

	Three Months Ended   March 31,
	2017		2016
Interest Rate Swaps:
Included in Other Operating Income	$	348	$	54

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Loans

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Loans

Loans

Loans were comprised of the following classifications at March 31, 2017 and December 31, 2016: 

	March 31, 2017			December 31, 2016
Commercial:
Commercial and Industrial Loans and Leases	$	450,501		$	457,372
Commercial Real Estate Loans	865,717			856,094
Agricultural Loans	292,615			303,128
Retail:
Home Equity Loans	135,352			133,575
Consumer Loans	58,938			59,945
Residential Mortgage Loans	183,806			183,290
Subtotal	1,986,929			1,993,404
Less: Unearned Income	(3,357		)	(3,449		)
Allowance for Loan Losses	(15,166		)	(14,808		)
Loans, Net	$	1,968,406		$	1,975,147

The following tables present the activity in the allowance for loan losses by portfolio class for the three months ended March 31, 2017 and 2016:

March 31, 2017	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans			Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	3,725		$	5,452		$	4,094	$	283		$	235		$	329		$	690		$	14,808
Provision for Loan Losses	(115		)	278			267		17			118			19			(84		)	500
Recoveries	2			5			—		—			60			27			—			94
Loans Charged-off	—			(39		)	—		(1		)	(169		)	(27		)	—			(236		)
Ending Balance	$	3,612		$	5,696		$	4,361	$	299		$	244		$	348		$	606		$	15,166

March 31, 2016	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	4,242		$	6,342	$	2,115	$	383		$	230		$	414		$	712		$	14,438
Provision for Loan Losses	105			120		414		31			27			155			(2		)	850
Recoveries	4			1		—		1			45			5			—			56
Loans Charged-off	(5		)	—		—		(63		)	(72		)	(43		)	—			(183		)
Ending Balance	$	4,346		$	6,463	$	2,529	$	352		$	230		$	531		$	710		$	15,161

In determining the adequacy of the allowance for loan loss, general allocations are made for pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on historical averages for loan losses for these portfolios, judgmentally adjusted for current economic factors and portfolio trends.

Loan impairment is reported when full repayment under the terms of the loan is not expected. This methodology is used for all loans, including loans acquired with deteriorated credit quality if such loans perform worse than what was expected at the time of acquisition. For purchased loans, the assessment is made at the time of acquisition as well as over the life of loan. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral if repayment is expected solely from the collateral. Commercial and industrial loans, commercial real estate loans, and agricultural loans are evaluated individually for impairment. Smaller balance homogeneous loans are evaluated for impairment in total. Such loans include real estate loans secured by one-to-four family residences and loans to individuals for household, family and other personal expenditures. Individually evaluated loans on non-accrual are generally considered impaired. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Specific allocations on impaired loans are determined by comparing the loan balance to the present value of expected cash flows or expected collateral proceeds. Allocations are also applied to categories of loans not considered individually impaired but for which the rate of loss is expected to be greater than historical averages, including non-performing consumer or residential real estate loans. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	533	$	23	$	510	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,517		3,586		5,126		4,313		299		239		348		606
Acquired with Deteriorated Credit Quality	116		3		60		48		—		5		—		—
Total Ending Allowance Balance	$	15,166	$	3,612	$	5,696	$	4,361	$	299	$	244	$	348	$	606
Loans:
Loans Individually Evaluated for Impairment	$	2,924	$	85	$	2,182	$	657	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,981,754		450,341		858,027		295,235		135,828		59,035		183,288		n/m(2)
Loans Acquired with Deteriorated Credit Quality	10,348		1,251		7,426		688		—		53		930		n/m(2)
Total Ending Loans Balance(1)	$	1,995,026	$	451,677	$	867,635	$	296,580	$	135,828	$	59,088	$	184,218	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

⁽²⁾n/m = not meaningful

December 31, 2016	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	255	$	24	$	231	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,448		3,698		5,172		4,046		283		230		329		690
Acquired with Deteriorated Credit Quality	105		3		49		48		—		5		—		—
Total Ending Allowance Balance	$	14,808	$	3,725	$	5,452	$	4,094	$	283	$	235	$	329	$	690
Loans:
Loans Individually Evaluated for Impairment	$	1,239	$	113	$	832	$	294	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,989,128		456,769		849,510		305,946		134,032		60,046		182,825		n/m(2)
Loans Acquired with Deteriorated Credit Quality	11,048		1,656		7,688		706		—		53		945		n/m(2)
Total Ending Loans Balance(1)	$	2,001,415	$	458,538	$	858,030	$	306,946	$	134,032	$	60,099	$	183,770	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

⁽²⁾n/m = not meaningful

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	57	$	57	$	—
Commercial Real Estate Loans	921		808		—
Agricultural Loans	700		657		—
Subtotal	1,678		1,522		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	140		137		26
Commercial Real Estate Loans	2,487		2,314		570
Agricultural Loans	587		587		48
Subtotal	3,214		3,038		644
Total	$	4,892	$	4,560	$	644
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	599	$	584	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,053	$	1,052	$	111

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

December 31, 2016	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	85	$	29	$	—
Commercial Real Estate Loans	1,278		784		—
Agricultural Loans	356		294		—
Subtotal	1,719		1,107		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	148		107		27
Commercial Real Estate Loans	839		827		280
Agricultural Loans	588		497		48
Subtotal	1,575		1,431		355
Total	$	3,294	$	2,538	$	355
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	1,018	$	531	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	910	$	768	$	100

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

The following tables present loans individually evaluated for impairment by class of loans for the three month period ended March 31, 2017 and 2016:

March 31, 2017	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	16	$	—	$	—
Commercial Real Estate Loans	522		4		4
Agricultural Loans	719		5		—
Subtotal	1,257		9		4
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	103		1		1
Commercial Real Estate Loans	2,423		6		6
Agricultural Loans	497		—		—
Subtotal	3,023		7		7
Total	$	4,280	$	16	$	11
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	209	$	—	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,007	$	7	$	7

March 31, 2016	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	827	$	23	$	11
Commercial Real Estate Loans	1,213		18		3
Agricultural Loans	259		1		1
Subtotal	2,299		42		15
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	129		—		—
Commercial Real Estate Loans	2,235		1		—
Agricultural Loans	—		—		—
Subtotal	2,364		1		—
Total	$	4,663	$	43	$	15
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	782	$	8	$	1
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	—	$	—	$	—

All classes of loans, including loans acquired with deteriorated credit quality, are generally placed on non-accrual status when scheduled principal or interest payments are past due for 90 days or more or when the borrower’s ability to repay becomes doubtful. For purchased loans, the determination is made at the time of acquisition as well as over the life of the loan. Uncollected accrued interest for each class of loans is reversed against income at the time a loan is placed on non-accrual. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. All classes of loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans are typically charged-off at 180 days past due, or earlier if deemed uncollectible. Exceptions to the non-accrual and charge-off policies are made when the loan is well secured and in the process of collection.

The following tables present the recorded investment in non-accrual loans and loans past due 90 days or more still on accrual by class of loans as of March 31, 2017 and December 31, 2016:

	Non-Accrual Loans				Loans Past Due 90 Days or More & Still Accruing
	March 31,		December 31,		March 31,		December 31,
	2017		2016		2017		2016
Commercial and Industrial Loans and Leases	$	84	$	86	$	—	$	2
Commercial Real Estate Loans	2,496		1,408		—		—
Agricultural Loans	767		792		1,238		—
Home Equity Loans	88		73		—		—
Consumer Loans	322		85		—		—
Residential Mortgage Loans	753		1,349		—		—
Total	$	4,510	$	3,793	$	1,238	$	2
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,051	$	1,264	$	—	$	—

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	451,677	$	1,278	$	7	$	73	$	1,358	$	450,319
Commercial Real Estate Loans	867,635		838		55		221		1,114		866,521
Agricultural Loans	296,580		397		—		1,842		2,239		294,341
Home Equity Loans	135,828		309		52		88		449		135,379
Consumer Loans	59,088		281		80		322		683		58,405
Residential Mortgage Loans	184,218		4,331		131		369		4,831		179,387
Total(1)	$	1,995,026	$	7,434	$	325	$	2,915	$	10,674	$	1,984,352
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	10,348	$	129	$	—	$	577	$	706	$	9,642

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

December 31, 2016	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	458,538	$	20	$	4	$	77	$	101	$	458,437
Commercial Real Estate Loans	858,030		1,509		21		330		1,860		856,170
Agricultural Loans	306,946		84		50		610		744		306,202
Home Equity Loans	134,032		707		16		73		796		133,236
Consumer Loans	60,099		175		147		85		407		59,692
Residential Mortgage Loans	183,770		3,470		1,251		806		5,527		178,243
Total(1)	$	2,001,415	$	5,965	$	1,489	$	1,981	$	9,435	$	1,991,980
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	11,048	$	130	$	—	$	627	$	757	$	10,291
Loans Acquired in Current Year      (Included in the Total Above)	$	262,809	$	2,752	$	862	$	1,126	$	4,740	$	258,069

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

Troubled Debt Restructurings:

In certain instances, the Company may choose to restructure the contractual terms of loans. A troubled debt restructuring occurs when the Bank grants a concession to the borrower that it would not otherwise consider due to a borrower’s financial difficulty.   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 modification. This evaluation is performed under the Company’s internal underwriting policy. The Company uses the same methodology for loans acquired with deteriorated credit quality as for all other loans when determining whether the loan is a troubled debt restructuring.

During the three months ended March 31, 2017 there was one loan modified as troubled debt restructuring. During the three months ended March 31, 2016, there were no loans modified as troubled debt restructurings.

The following tables present the recorded investment of troubled debt restructurings by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	—	$	—	$	—
Commercial Real Estate Loans	28		28		—
Total	$	28	$	28	$	—

December 31, 2016	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	28	$	28	$	—
Commercial Real Estate Loans	—		—		—
Total	$	28	$	28	$	—

⁽¹⁾The non-accrual troubled debt restructurings are included in the Non-Accrual Loan table presented on a previous page.

The Company had not committed to lending any additional amounts as of March 31, 2017 and December 31, 2016 to customers with outstanding loans that are classified as troubled debt restructurings.

The following tables present loans by class modified as troubled debt restructurings that occurred during the three months ending March 31, 2017 and 2016:

March 31, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	1	28		28
Total	1	$	28	$	28

The troubled debt restructurings described above increased the allowance for loan losses by $2 and resulted in charge-offs of $0 during the three months ending March 31, 2017.

March 31, 2016	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	—	—		—
Total	—	$	—	$	—

The troubled debt restructurings described above increased the allowance for loan losses by $0 and resulted in charge-offs of $0 during the three months ending March 31, 2016.

Additionally, there were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modificaiton during the three months ending March 31, 2017 and 2016.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers 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 classifies loans as to credit risk by individually analyzing loans. This analysis includes commercial and industrial loans, commercial real estate loans, and agricultural loans with an outstanding balance greater than $250. This analysis is typically performed on at least an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

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 characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

March 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	432,133	$	9,119	$	10,425	$	—	$	451,677
Commercial Real Estate Loans	824,473		25,355		17,807		—		867,635
Agricultural Loans	270,373		22,868		3,339		—		296,580
Total	$	1,526,979	$	57,342	$	31,571	$	—	$	1,615,892
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,489	$	3,121	$	4,755	$	—	$	9,365

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	437,353	$	10,454	$	10,731	$	—	$	458,538
Commercial Real Estate Loans	814,033		26,549		17,448		—		858,030
Agricultural Loans	287,975		14,670		4,301		—		306,946
Total	$	1,539,361	$	51,673	$	32,480	$	—	$	1,623,514
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,897	$	3,121	$	5,032	$	—	$	10,050
Loans Acquired in Current Year      (Included in the Total Above)	$	175,915	$	11,638	$	8,145	$	—	$	195,698

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For home equity, consumer and residential mortgage loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.  The following table presents the recorded investment in home equity, consumer and residential mortgage loans based on payment activity as of March 31, 2017 and December 31, 2016:

March 31, 2017	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	135,740	$	58,766	$	183,465
Nonperforming	88		322		753
Total	$	135,828	$	59,088	$	184,218
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	930

December 31, 2016	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	133,959	$	60,014	$	182,421
Nonperforming	73		85		1,349
Total	$	134,032	$	60,099	$	183,770
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	945

The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The recorded investment of those loans is as follows: 

	March 31, 2017		December 31, 2016
Commercial and Industrial Loans	$	1,251	$	1,656
Commercial Real Estate Loans	7,426		7,688
Agricultural Loans	688		706
Consumer Loans	53		53
Residential Mortgage Loans	930		945
Total	$	10,348	$	11,048
Carrying Amount, Net of Allowance	$	10,232	$	10,943

Accretable yield, or income expected to be collected, is as follows:

	2017			2016
Balance at January 1	$	2,521		$	1,279
New Loans Purchased	—			1,395
Accretion of Income	(42		)	(61		)
Reclassifications from Non-accretable Difference	311			—
Charge-off of Accretable Yield	—			—
Balance at March 31	$	2,790		$	2,613

For those purchased loans disclosed above, the Company increased the allowance for loan losses by $11 and $0 during the three months ended March 31, 2017 and 2016. No allowance for loan losses were reversed during the same period.

The carrying amount of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction totaled $168 as of March 31, 2017 and $202 as of December 31, 2016.

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Repurchase Agreements Accounted for as Secured Borrowings

3 Months Ended

Mar. 31, 2017

Transfers and Servicing [Abstract]

Repurchase Agreements Accounted for as Secured Borrowings

Repurchase Agreements Accounted for as Secured Borrowings

Repurchase agreements are short-term borrowings included in FHLB Advances and Other Borrowings and mature overnight and continuously. Repurchase agreements, which were secured by mortgage-backed securities, totaled $35,564 and $42,412 as of March 31, 2017 and December 31, 2016, respectively. Risk could arise when the collateral pledged to a repurchase agreement declines in fair value. The Company minimizes risk by consistently monitoring the value of the collateral pledged. At the point in time where the collateral has declined in fair value, the Company is required to provide additional collateral based on the value of the underlying securities.

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Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s operations include three primary segments: core banking, trust and investment advisory services, and insurance operations. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets. The core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory, and brokerage services to customers. The insurance segment offers a full range of personal and corporate property and casualty insurance products, primarily in the Company’s banking subsidiary’s local markets.

The core banking segment is comprised by the Company’s banking subsidiary, German American Bancorp, which operated through 52 banking offices at March 31, 2017. Net interest income from loans and investments funded by deposits and borrowings is the primary revenue for the core-banking segment. The trust and investment advisory services segment’s revenues are comprised primarily of fees generated by the trust operations of the Company's banking subsidiary and by German American Investment Services, Inc. These fees are derived by providing trust, investment advisory, and brokerage services to its customers. The insurance segment primarily consists of German American Insurance, Inc., which provides a full line of personal and corporate insurance products. Commissions derived from the sale of insurance products are the primary source of revenue for the insurance segment.

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance. The accounting policies of the three segments are the same as those of the Company. The evaluation process for segments does not include holding company income and expense. Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

	Core Banking		Trust and Investment Advisory Services		Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2017
Net Interest Income	$	24,909	$	1	$	2	$	(187	)	$	24,725
Net Gains on Sales of Loans	687		—		—		—			687
Net Gains on Securities	—		—		—		—			—
Trust and Investment Product Fees	1		1,244		—		(2		)	1,243
Insurance Revenues	2		5		2,633		—			2,640
Noncash Items:
Provision for Loan Losses	500		—		—		—			500
Depreciation and Amortization	1,041		3		19		64			1,127
Income Tax Expense (Benefit)	3,622		34		427		(262		)	3,821
Segment Profit (Loss)	8,965		44		673		(126		)	9,556
Segment Assets at March 31, 2017	2,934,056		1,865		9,532		(12,309		)	2,933,144

	Core Banking		Trust and Investment Advisory Services			Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2016
Net Interest Income	$	20,898	$	(1	)	$	2	$	(115	)	$	20,784
Net Gains on Sales of Loans	720		—			—		—			720
Net Gains on Securities	—		—			—		—			—
Trust and Investment Product Fees	1		1,020			—		—			1,021
Insurance Revenues	4		8			2,715		—			2,727
Noncash Items:
Provision for Loan Losses	850		—			—		—			850
Depreciation and Amortization	973		3			26		46			1,048
Income Tax Expense (Benefit)	1,681		14			510		(440		)	1,765
Segment Profit (Loss)	5,081		7			790		(732		)	5,146
Segment Assets at December 31, 2016	2,958,585		1,851			8,494		(12,936		)	2,955,994

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Stock Repurchase Plan

3 Months Ended

Mar. 31, 2017

Stockholders' Equity Note [Abstract]

Stock Repurchase Plan

Stock Repurchase Plan

On April 26, 2001, the Company announced that its Board of Directors approved a stock repurchase program for up to 911,631 of the outstanding shares of common stock of the Company (as adjusted for subsequent stock dividends and splits). Shares may be purchased from time to time in the open market and in large block privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time before the maximum number of shares specified by the program are purchased. The Board of Directors established no expiration date for this program. As of March 31, 2017, the Company had purchased 502,447 shares under the program (as adjusted for subsequent stock dividends and splits). No shares were purchased under the program during the three months ended March 31, 2017 and 2016.

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Equity Plans and Equity Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Plans and Equity Based Compensation

Equity Plans and Equity Based Compensation

The Company maintains three equity incentive plans under which stock options, restricted stock, and other equity incentive awards can be granted. At March 31, 2017, the Company has reserved 412,104 shares of common stock (as adjusted for subsequent stock dividends/splits and subject to further customary anti-dilution adjustments) for the purpose of issuance pursuant to outstanding and future grants of options, restricted stock, and other equity awards to officers, directors and other employees of the Company. 

For the three months ended March 31, 2017 and 2016, the Company granted no options.  The Company recorded no stock compensation expense applicable to options during the three months ended March 31, 2017 and 2016 because all outstanding options were fully vested prior to 2007. In addition, there was no unrecognized option expense. 

During the periods presented, awards of long-term incentives were granted in the form of restricted stock.  Awards that were granted to management under a management incentive plan were granted in tandem with cash credit entitlements (typically in the form of 60% restricted stock grants and 40% cash credit entitlements). The management and employee restricted stock grants and tandem cash credit entitlements awarded will vest in three equal installments of 33.3% with the first annual vesting on December 5th of the year of the grant and on December 5th of the next two succeeding years.  Awards that were granted to directors as additional retainer for their services do not include any cash credit entitlement. These director restricted stock grants are subject to forfeiture in the event that the recipient of the grant does not continue in service as a director of the Company through December 5th of the year after grant or does not satisfy certain meeting attendance requirements, at which time they generally vest 100 percent. For measuring compensation costs, restricted stock awards are valued based upon the market value of the common shares on the date of grant. During the three months ended March 31, 2017 and 2016, the Company granted awards of 37,890 and 48,375 shares of restricted stock (as adjusted for subsequent stock split), respectively. Total unvested restricted stock awards at March 31, 2017 and December 31, 2016 were 91,053 and 53,163, respectively (as adjusted for subsequent stock split).

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax information for the periods presented:

	Three Months Ended March 31,
	2017			2016
Restricted Stock Expense	$	306		$	588
Cash Entitlement Expense	158			142
Tax Effect	(182		)	(296		)
Net of Tax	$	282		$	434

Unrecognized expense associated with the restricted stock grants and cash entitlements totaled $3,201 and $2,820 as of March 31, 2017 and 2016, respectively.

The Company maintains an Employee Stock Purchase Plan whereby eligible employees have the option to purchase the Company’s common stock at a discount. The purchase price of the shares under this Plan has been set at 95% of the fair market value of the Company’s common stock as of the last day of the plan year. The plan provided for the purchase of up to 750,000 shares of common stock, which the Company may obtain by purchases on the open market or from private sources, or by issuing authorized but unissued common shares. At March 31, 2017, there were 577,426 shares available for future issuance under this plan. (Both of such numbers are as adjusted for subsequent stock split.)  Funding for the purchase of common stock is from employee and Company contributions. 

There was no expense recorded for the employee stock purchase plan during the three months ended March 31, 2017. There was no expense recorded for the employee stock purchase plan during the three months ended March 31, 2016. There was no unrecognized compensation expense as of March 31, 2017 and 2016 for the Employee Stock Purchase Plan.

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Fair Value

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

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 Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Level 3 pricing is obtained from a third-party based upon similar trades that are not traded frequently without adjustment by the Company. At March 31, 2017, the Company held $6.8 million in Level 3 securities which consist of $6.4 million of non-rated Obligations of State and Political Subdivisions and $353 thousand of equity securities that are not actively traded. Absent the credit rating, significant assumptions must be made such that the credit risk input becomes an unobservable input and thus these securities are reported by the Company in a Level 3 classification.

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Impaired Loans: Fair values for impaired collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure. Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value in the cost to replace the current property. Value of market comparison approach evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and an investor's required return. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell. Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Company’s Risk Management Area reviews the assumptions and approaches utilized in the appraisal. In determining the value of impaired collateral dependent loans and other real estate owned, significant unobservable inputs may be used which include: physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

Other Real Estate: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate (ORE) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property utilizing similar techniques as discussed above for Impaired Loans, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, impairment loss is recognized.

Loan Servicing Rights: On a quarterly basis, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount resulting in a Level 2 classification. The valuation model utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data.

Loans Held-for-Sale: The fair values of loans held for sale are determined by using quoted prices for similar assets, adjusted for specific attributes of that loan resulting in a Level 2 classification.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value 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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	250,896	$	6,447	$	257,343
MBS/CMO - Residential	—		468,656		—		468,656
Equity Securities	—		—		353		353
Total Securities	$	—	$	719,552	$	6,800	$	726,352
Loans Held-for-Sale	$	—	$	6,856	$	—	$	6,856
Derivative Assets	$	—	$	1,548	$	—	$	1,548
Mortgage Servicing Rights	$	—	$	593	$	—	$	593
Derivative Liabilities	$	—	$	1,579	$	—	$	1,579

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	240,224	$	7,295	$	247,519
MBS/CMO - Residential	—		461,914		—		461,914
Equity Securities	—		—		353		353
Total Securities	$	—	$	702,138	$	7,648	$	709,786
Loans Held-for-Sale	$	—	$	15,273	$	—	$	15,273
Derivative Assets	$	—	$	1,291	$	—	$	1,291
Mortgage Servicing Rights	$	—	$	611	$	—	$	611
Derivative Liabilities	$	—	$	1,238	$	—	$	1,238

There were no transfers between Level 1 and Level 2 for the periods ended March 31, 2017 and December 31, 2016.

At March 31, 2017, the aggregate fair value of the Loans Held-for-Sale was $6,856. Aggregate contractual principal balance was $6,697 with a difference of $159. At December 31, 2016, the aggregate fair value of the Loans Held-for-Sale was $15,273. Aggregate contractual principal balance was $14,983 with a difference of $290.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 and 2016:

	Obligations of State and Political Subdivisions						Equity Securities
	2017			2016			2017		2016
Balance of Recurring Level 3 Assets at January 1	$	7,295		$	9,020		$	353	$	353
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	17			121			—		—
Maturities / Calls	(865		)	(845		)	—		—
Purchases	—			—			—		—
Balance of Recurring Level 3 Assets at March 31	$	6,447		$	8,296		$	353	$	353

Of the total gain/loss included in earnings for the three months ended March 31, 2017, $17 was attributable to other changes in fair value. Of the total gain/loss included in earnings for the three months ended March 31, 2016, $121 was attributable to other changes in fair value. The three months ended March 31, 2017 and 2016 included no gain/loss attributable to interest income on securities.

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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	57	$	57
Commercial Real Estate Loans	—		—		1,395		1,395

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	60	$	60
Commercial Real Estate Loans	—		—		348		348

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $1,985 with a valuation allowance of $533, resulting in an increase to the provision for loan losses of $278 for the period ended March 31, 2017. For the three months ended March 31, 2016, impaired loans resulted in a reduction to the provision for loan losses of $5. Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $663 with a valuation allowance of $255, resulting in an increase to the provision for loan losses of $115 for the year ended December 31, 2016.

There was no Other Real Estate carried at fair value less costs to sell at March 31, 2017. No charge to earnings was included in the three months ended March 31, 2017 and 2016. There was no Other Real Estate carried at fair value less costs to sell at December 31, 2016. A charge to earnings through Other Operating Income of $75 was included in the year ended December 31, 2016.

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:

March 31, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	57	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	1,395	Sales comparison approach	Adjustment for physical condition of comparable properties sold	30%-76% (64%)

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	60	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	348	Sales comparison approach	Adjustment for physical condition of comparable properties sold	33%-77% (56%)

The carrying amounts and estimated fair values of the Company’s financial instruments not previously presented are provided in the tables below for the periods ending March 31, 2017 and December 31, 2016. Not all of the Company’s assets and liabilities are considered financial instruments, and therefore are not included in the tables. Because no active market exists for a significant portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

				Fair Value Measurements at March 31, 2017 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	37,439		$	30,151		$	7,288		$	—		$	37,439
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,966,954			—			—			1,968,693			1,968,693
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,816			—			3,660			8,156			11,816
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637		)	(1,962,637		)	—			—			(1,962,637		)
Time Deposits	(363,835		)	—			(362,964		)	—			(362,964		)
Short-term Borrowings	(96,569		)	—			(96,569		)	—			(96,569		)
Long-term Debt	(144,789		)	—			(133,465		)	(10,859		)	(144,324		)
Accrued Interest Payable	(736		)	—			(722		)	(14		)	(736		)

				Fair Value Measurements at December 31, 2016 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	64,816		$	48,467		$	16,349		$	—		$	64,816
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,974,074			—			—			1,980,523			1,980,523
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,413			—			3,289			8,124			11,413
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,971,370		)	(1,971,370		)	—			—			(1,971,370		)
Time Deposits	(378,181		)	—			(378,000		)	—			(378,000		)
Short-term Borrowings	(137,554		)	—			(137,554		)	—			(137,554		)
Long-term Debt	(120,560		)	—			(109,709		)	(10,793		)	(120,502		)
Accrued Interest Payable	(789		)	—			(775		)	(14		)	(789		)

Cash and Short-term Investments:

The carrying amount of cash and short-term investments approximate fair values and are classified as Level 1 or Level 2.

Securities Held-to-Maturity:

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

FHLB Stock and Other Restricted Stock:

It is not practical to determine the fair values of FHLB stock and other restricted stock due to restrictions placed on their transferability.

Loans:

Fair values of loans, excluding loans held for sale and collateral dependent impaired loans carried at fair value, 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 analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued as described previously. The methods utilized to estimate fair value of loans do not necessarily represent an exit price.

Accrued Interest Receivable:

The carrying amount of accrued interest approximates fair value resulting in a Level 2 or Level 3 classification consistent with the asset they are associated with.

Deposits:

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate time 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. 

Short-term Borrowings:

The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

Long-term Debt:

The fair values of the Company’s long-term borrowings 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 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 3 classification. 

Accrued Interest Payable:

The carrying amount of accrued interest approximates fair value resulting in a Level 2 or Level 3 classification consistent with the liability they are associated with.

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Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

The tables below summarize the changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016, net of tax:

March 31, 2017	Unrealized Gains and Losses on Available-for-Sale Securities			Postretirement Benefit Items			Total
Beginning Balance at January 1, 2017	$	(6,312	)	$	(92	)	$	(6,404	)
Other Comprehensive Income (Loss) Before Reclassification	3,998			—			3,998
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—			—			—
Net Current Period Other Comprehensive Income (Loss)	3,998			—			3,998
Ending Balance at March 31, 2017	$	(2,314	)	$	(92	)	$	(2,406	)

March 31, 2016	Unrealized Gains and Losses on Available-for-Sale Securities		Postretirement Benefit Items			Total
Beginning Balance at January 1, 2016	$	3,890	$	(78	)	$	3,812
Other Comprehensive Income (Loss) Before Reclassification	4,029		—			4,029
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—		—			—
Net Current Period Other Comprehensive Income (Loss)	4,029		—			4,029
Ending Balance at March 31, 2016	$	7,919	$	(78	)	$	7,841

The tables below summarize the classifications out of accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2017	$	—

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2016	$	—

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Newly Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2017

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Newly Issued Accounting Pronouncements

Newly Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the "FASB") amended existing guidance (ASU 2014-09 Revenue From Contracts With Customers) related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for public business entities for fiscal periods beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this pronouncement to have a material impact on the Company's consolidated results of operations and financial condition as the Company's core revenue does not fall under this guidance.

In January 2016, the FASB amended existing guidance (ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities) that requires existing guidance that requires equity investments (except those accounted for under the equity method of account, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). It eliminates that requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company notes that the impact of adoption is to carry the equity security at fair value through the income statement or at cost, less impairment when fair value is not readily determinable, with observable price changes being recognized in earnings. The Company doesn't expect the impact to be material. For additional information on this equity security, see Note 3 - Securities.

In February 2016, the FASB amended existing guidance (ASU No. 2016-02, Leases (Topic 842)) that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. These amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Based on our leases outstanding as of March 31, 2017, the Company does not expect this new guidance to have a material impact on the consolidated results of operation. However as a result of this new guidance, the Company anticipates an estimated increase in its Consolidated Balance Sheet of approximately $6,000. This impact will vary based on the Company's future decisions to enter into new lease agreements or exit/renew current lease agreements prior to the date of implementation.

In June 2016, the FASB issued guidance (ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. These amendments are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company recognizes that there may be a cumulative adjustment at the time of adoption, but can not estimate the amount at this time.

In August 2016, the FASB issued this ASU (ASU No. 2016-15, Statement of Cash Flows (Topic 320): Classification of Certain Cash Receipts and Cash Payments) to address the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including the following:

• Debt Prepayment or Debt Extinguishment Costs;

• Settlement of Zero-Coupon Bonds or Debt with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate;

• Contingent Consideration payments Made Soon After a Business Combination;

• Proceeds From the Settlement of Insurance Claims;

• Proceeds From the Settlement of BOLI and COLI Policies;

• Distributions Received From Equity Method Investees;

• Beneficial Interests in Securitization Transactions; and

• Application of the Predominance Principle.

These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. This guidance currently has no material impact on the Company's Consolidated Statements of Cash Flows; however, the Company will continue to monitor it going forward.

In March 2017, the FASB issued this ASU (ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities) to align the accounting with the economics of a callable debt security and to align the amortization period with expectations that already are included in market pricing on the callable debt securities. This ASU will shorten the amortization period for premiums on purchased callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This guidance is effective for for public business entities for fiscal years beginning after December 15, 2018, including interim period within that reporting period. As a result of the Company's analysis, the Company doesn't expect this pronouncement to have a material impact on its consolidated results of operations and financial condition.

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Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On March 27, 2017, the Company declared a 3-for-2 stock split on the Company's authorized and outstanding common shares. The stock split was distributed on April 21, 2017, to shareholders of record as of April 6, 2017. All share and per share data in this Quarterly Report on Form 10-Q have been adjusted to retroactively reflect the stock split.

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Newly Issued Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2017

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Newly Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the "FASB") amended existing guidance (ASU 2014-09 Revenue From Contracts With Customers) related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for public business entities for fiscal periods beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this pronouncement to have a material impact on the Company's consolidated results of operations and financial condition as the Company's core revenue does not fall under this guidance.

In January 2016, the FASB amended existing guidance (ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities) that requires existing guidance that requires equity investments (except those accounted for under the equity method of account, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). It eliminates that requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company notes that the impact of adoption is to carry the equity security at fair value through the income statement or at cost, less impairment when fair value is not readily determinable, with observable price changes being recognized in earnings. The Company doesn't expect the impact to be material. For additional information on this equity security, see Note 3 - Securities.

In February 2016, the FASB amended existing guidance (ASU No. 2016-02, Leases (Topic 842)) that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. These amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. Based on our leases outstanding as of March 31, 2017, the Company does not expect this new guidance to have a material impact on the consolidated results of operation. However as a result of this new guidance, the Company anticipates an estimated increase in its Consolidated Balance Sheet of approximately $6,000. This impact will vary based on the Company's future decisions to enter into new lease agreements or exit/renew current lease agreements prior to the date of implementation.

In June 2016, the FASB issued guidance (ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. These amendments are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company recognizes that there may be a cumulative adjustment at the time of adoption, but can not estimate the amount at this time.

In August 2016, the FASB issued this ASU (ASU No. 2016-15, Statement of Cash Flows (Topic 320): Classification of Certain Cash Receipts and Cash Payments) to address the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including the following:

• Debt Prepayment or Debt Extinguishment Costs;

• Settlement of Zero-Coupon Bonds or Debt with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate;

• Contingent Consideration payments Made Soon After a Business Combination;

• Proceeds From the Settlement of Insurance Claims;

• Proceeds From the Settlement of BOLI and COLI Policies;

• Distributions Received From Equity Method Investees;

• Beneficial Interests in Securitization Transactions; and

• Application of the Predominance Principle.

These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. This guidance currently has no material impact on the Company's Consolidated Statements of Cash Flows; however, the Company will continue to monitor it going forward.

In March 2017, the FASB issued this ASU (ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities) to align the accounting with the economics of a callable debt security and to align the amortization period with expectations that already are included in market pricing on the callable debt securities. This ASU will shorten the amortization period for premiums on purchased callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This guidance is effective for for public business entities for fiscal years beginning after December 15, 2018, including interim period within that reporting period. As a result of the Company's analysis, the Company doesn't expect this pronouncement to have a material impact on its consolidated results of operations and financial condition.

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Per Share Data (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Computations of Basic Earnings Per Share and Diluted Earnings Per Share

The computations of Basic Earnings per Share and Diluted Earnings per Share are as follows:

	Three Months Ended   March 31,
	2017		2016
Basic Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Basic Earnings per Share	$	0.42	$	0.25
Diluted Earnings per Share:
Net Income	$	9,556	$	5,146
Weighted Average Shares Outstanding (1)	22,908,648		20,887,284
Potentially Dilutive Shares, Net	—		6,115
Diluted Weighted Average Shares Outstanding (1)	22,908,648		20,893,399
Diluted Earnings per Share	$	0.42	$	0.25

⁽¹⁾

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Securities (Tables)

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of Securities Available-for-Sale

The amortized cost, unrealized gross gains and losses recognized in accumulated other comprehensive income (loss), and fair value of Securities Available-for-Sale at March 31, 2017 and December 31, 2016, were as follows:

Securities Available-for-Sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2017
Obligations of State and Political Subdivisions	$	254,587	$	5,169	$	(2,413	)	$	257,343
MBS/CMO - Residential	475,002		1,095		(7,441		)	468,656
Equity Securities	353		—		—			353
Total	$	729,942	$	6,264	$	(9,854	)	$	726,352
December 31, 2016
Obligations of State and Political Subdivisions	$	247,350	$	3,847	$	(3,678	)	$	247,519
MBS/CMO - Residential	471,852		480		(10,418		)	461,914
Equity Securities	353		—		—			353
Total	$	719,555	$	4,327	$	(14,096	)	$	709,786

Schedule of Securities by Contractual Maturity

The amortized cost and fair value of securities at March 31, 2017 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay certain obligations with or without call or prepayment penalties. Mortgage-backed and Equity Securities are not due at a single maturity date and are shown separately in the table below.

Securities Available-for-Sale:	Amortized Cost		Fair Value
Due in one year or less	$	3,443	$	3,481
Due after one year through five years	19,478		20,316
Due after five years through ten years	73,007		75,307
Due after ten years	158,659		158,239
MBS/CMO - Residential	475,002		468,656
Equity Securities	353		353
Total	$	729,942	$	726,352

Schedule of Proceeds from the Sales of Securities

Proceeds from the Sales of Securities are summarized below:

	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
Proceeds from Sales	$	—	$	62,975
Gross Gains on Sales	—		—
Income Taxes on Gross Gains	—		—

Schedule of Securities with Unrealized Losses

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 More					Total
March 31, 2017	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	79,834	$	(2,413	)	$	—	$	—		$	79,834	$	(2,413	)
MBS/CMO - Residential	331,861		(5,992		)	45,218		(1,449		)	377,079		(7,441		)
Equity Securities	—		—			—		—			—		—
Total	$	411,695	$	(8,405	)	$	45,218	$	(1,449	)	$	456,913	$	(9,854	)

	Less than 12 Months					12 Months or More					Total
December 31, 2016	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Obligations of State and Political Subdivisions	$	108,918	$	(3,678	)	$	—	$	—		$	108,918	$	(3,678	)
MBS/CMO - Residential	356,040		(8,782		)	47,271		(1,636		)	403,311		(10,418		)
Equity Securities	—		—			—		—			—		—
Total	$	464,958	$	(12,460	)	$	47,271	$	(1,636	)	$	512,229	$	(14,096	)

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Derivatives (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Activities

The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of:

	March 31, 2017				December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Other Assets:
Interest Rate Swaps	$	83,047	$	1,548	$	67,902	$	1,291
Included in Other Liabilities:
Interest Rate Swaps	$	83,047	$	1,579	$	67,902	$	1,238

Derivative Instruments Consolidated Statements of Income

The following table presents the effect of derivative instruments on the Consolidated Statements of Income for the periods presented:

	Three Months Ended   March 31,
	2017		2016
Interest Rate Swaps:
Included in Other Operating Income	$	348	$	54

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Loans (Tables)

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Components of Loans

Loans were comprised of the following classifications at March 31, 2017 and December 31, 2016: 

	March 31, 2017			December 31, 2016
Commercial:
Commercial and Industrial Loans and Leases	$	450,501		$	457,372
Commercial Real Estate Loans	865,717			856,094
Agricultural Loans	292,615			303,128
Retail:
Home Equity Loans	135,352			133,575
Consumer Loans	58,938			59,945
Residential Mortgage Loans	183,806			183,290
Subtotal	1,986,929			1,993,404
Less: Unearned Income	(3,357		)	(3,449		)
Allowance for Loan Losses	(15,166		)	(14,808		)
Loans, Net	$	1,968,406		$	1,975,147

Schedule of Allowance for Loan Losses

The following tables present the activity in the allowance for loan losses by portfolio class for the three months ended March 31, 2017 and 2016:

March 31, 2017	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans			Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	3,725		$	5,452		$	4,094	$	283		$	235		$	329		$	690		$	14,808
Provision for Loan Losses	(115		)	278			267		17			118			19			(84		)	500
Recoveries	2			5			—		—			60			27			—			94
Loans Charged-off	—			(39		)	—		(1		)	(169		)	(27		)	—			(236		)
Ending Balance	$	3,612		$	5,696		$	4,361	$	299		$	244		$	348		$	606		$	15,166

March 31, 2016	Commercial and Industrial Loans and Leases			Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans			Consumer Loans			Residential Mortgage Loans			Unallocated			Total
Beginning Balance	$	4,242		$	6,342	$	2,115	$	383		$	230		$	414		$	712		$	14,438
Provision for Loan Losses	105			120		414		31			27			155			(2		)	850
Recoveries	4			1		—		1			45			5			—			56
Loans Charged-off	(5		)	—		—		(63		)	(72		)	(43		)	—			(183		)
Ending Balance	$	4,346		$	6,463	$	2,529	$	352		$	230		$	531		$	710		$	15,161

Schedule of Allowance for Loan Losses and Recorded Investment in Loans

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	533	$	23	$	510	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,517		3,586		5,126		4,313		299		239		348		606
Acquired with Deteriorated Credit Quality	116		3		60		48		—		5		—		—
Total Ending Allowance Balance	$	15,166	$	3,612	$	5,696	$	4,361	$	299	$	244	$	348	$	606
Loans:
Loans Individually Evaluated for Impairment	$	2,924	$	85	$	2,182	$	657	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,981,754		450,341		858,027		295,235		135,828		59,035		183,288		n/m(2)
Loans Acquired with Deteriorated Credit Quality	10,348		1,251		7,426		688		—		53		930		n/m(2)
Total Ending Loans Balance(1)	$	1,995,026	$	451,677	$	867,635	$	296,580	$	135,828	$	59,088	$	184,218	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

⁽²⁾n/m = not meaningful

December 31, 2016	Total		Commercial and Industrial Loans and Leases		Commercial Real Estate Loans		Agricultural Loans		Home Equity Loans		Consumer Loans		Residential Mortgage Loans		Unallocated
Allowance for Loan Losses:
Ending Allowance Balance Attributable to Loans:
Individually Evaluated for Impairment	$	255	$	24	$	231	$	—	$	—	$	—	$	—	$	—
Collectively Evaluated for Impairment	14,448		3,698		5,172		4,046		283		230		329		690
Acquired with Deteriorated Credit Quality	105		3		49		48		—		5		—		—
Total Ending Allowance Balance	$	14,808	$	3,725	$	5,452	$	4,094	$	283	$	235	$	329	$	690
Loans:
Loans Individually Evaluated for Impairment	$	1,239	$	113	$	832	$	294	$	—	$	—	$	—	n/m(2)
Loans Collectively Evaluated for Impairment	1,989,128		456,769		849,510		305,946		134,032		60,046		182,825		n/m(2)
Loans Acquired with Deteriorated Credit Quality	11,048		1,656		7,688		706		—		53		945		n/m(2)
Total Ending Loans Balance(1)	$	2,001,415	$	458,538	$	858,030	$	306,946	$	134,032	$	60,099	$	183,770	n/m(2)

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

⁽²⁾n/m = not meaningful

Schedule for Loans Individually Evaluated for Impairment

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	57	$	57	$	—
Commercial Real Estate Loans	921		808		—
Agricultural Loans	700		657		—
Subtotal	1,678		1,522		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	140		137		26
Commercial Real Estate Loans	2,487		2,314		570
Agricultural Loans	587		587		48
Subtotal	3,214		3,038		644
Total	$	4,892	$	4,560	$	644
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	599	$	584	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,053	$	1,052	$	111

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

December 31, 2016	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	85	$	29	$	—
Commercial Real Estate Loans	1,278		784		—
Agricultural Loans	356		294		—
Subtotal	1,719		1,107		—
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	148		107		27
Commercial Real Estate Loans	839		827		280
Agricultural Loans	588		497		48
Subtotal	1,575		1,431		355
Total	$	3,294	$	2,538	$	355
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	1,018	$	531	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	910	$	768	$	100

⁽¹⁾ Unpaid Principal Balance is the remaining contractual payments gross of partial charge-offs and discounts.

The following tables present loans individually evaluated for impairment by class of loans for the three month period ended March 31, 2017 and 2016:

March 31, 2017	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	16	$	—	$	—
Commercial Real Estate Loans	522		4		4
Agricultural Loans	719		5		—
Subtotal	1,257		9		4
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	103		1		1
Commercial Real Estate Loans	2,423		6		6
Agricultural Loans	497		—		—
Subtotal	3,023		7		7
Total	$	4,280	$	16	$	11
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	209	$	—	$	—
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	1,007	$	7	$	7

March 31, 2016	Average Recorded Investment		Interest Income Recognized		Cash Basis Recognized
With No Related Allowance Recorded:
Commercial and Industrial Loans and Leases	$	827	$	23	$	11
Commercial Real Estate Loans	1,213		18		3
Agricultural Loans	259		1		1
Subtotal	2,299		42		15
With An Allowance Recorded:
Commercial and Industrial Loans and Leases	129		—		—
Commercial Real Estate Loans	2,235		1		—
Agricultural Loans	—		—		—
Subtotal	2,364		1		—
Total	$	4,663	$	43	$	15
Loans Acquired With Deteriorated Credit Quality With No Related Allowance Recorded (Included in the Total Above)	$	782	$	8	$	1
Loans Acquired With Deteriorated Credit Quality With An Additional Allowance Recorded (Included in the Total Above)	$	—	$	—	$	—

Schedule of Recorded Investment in Nonaccrual Loans

The following tables present the recorded investment in non-accrual loans and loans past due 90 days or more still on accrual by class of loans as of March 31, 2017 and December 31, 2016:

	Non-Accrual Loans				Loans Past Due 90 Days or More & Still Accruing
	March 31,		December 31,		March 31,		December 31,
	2017		2016		2017		2016
Commercial and Industrial Loans and Leases	$	84	$	86	$	—	$	2
Commercial Real Estate Loans	2,496		1,408		—		—
Agricultural Loans	767		792		1,238		—
Home Equity Loans	88		73		—		—
Consumer Loans	322		85		—		—
Residential Mortgage Loans	753		1,349		—		—
Total	$	4,510	$	3,793	$	1,238	$	2
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,051	$	1,264	$	—	$	—

Schedule of Aging of Recorded Investment in Past Due Loans

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	451,677	$	1,278	$	7	$	73	$	1,358	$	450,319
Commercial Real Estate Loans	867,635		838		55		221		1,114		866,521
Agricultural Loans	296,580		397		—		1,842		2,239		294,341
Home Equity Loans	135,828		309		52		88		449		135,379
Consumer Loans	59,088		281		80		322		683		58,405
Residential Mortgage Loans	184,218		4,331		131		369		4,831		179,387
Total(1)	$	1,995,026	$	7,434	$	325	$	2,915	$	10,674	$	1,984,352
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	10,348	$	129	$	—	$	577	$	706	$	9,642

⁽¹⁾Total recorded investment in loans includes $8,097 in accrued interest.

December 31, 2016	Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due
Commercial and Industrial Loans and Leases	$	458,538	$	20	$	4	$	77	$	101	$	458,437
Commercial Real Estate Loans	858,030		1,509		21		330		1,860		856,170
Agricultural Loans	306,946		84		50		610		744		306,202
Home Equity Loans	134,032		707		16		73		796		133,236
Consumer Loans	60,099		175		147		85		407		59,692
Residential Mortgage Loans	183,770		3,470		1,251		806		5,527		178,243
Total(1)	$	2,001,415	$	5,965	$	1,489	$	1,981	$	9,435	$	1,991,980
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	11,048	$	130	$	—	$	627	$	757	$	10,291
Loans Acquired in Current Year      (Included in the Total Above)	$	262,809	$	2,752	$	862	$	1,126	$	4,740	$	258,069

⁽¹⁾Total recorded investment in loans includes $8,011 in accrued interest.

Schedule of Recorded Investment of Troubled Debt Restructurings

The following tables present the recorded investment of troubled debt restructurings by class of loans as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	—	$	—	$	—
Commercial Real Estate Loans	28		28		—
Total	$	28	$	28	$	—

December 31, 2016	Total		Performing		Non-Accrual(1)
Commercial and Industrial Loans and Leases	$	28	$	28	$	—
Commercial Real Estate Loans	—		—		—
Total	$	28	$	28	$	—

⁽¹⁾The non-accrual troubled debt restructurings are included in the Non-Accrual Loan table presented on a previous page.

Schedule of Modified Troubled Debt Restructuring

The following tables present loans by class modified as troubled debt restructurings that occurred during the three months ending March 31, 2017 and 2016:

March 31, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	1	28		28
Total	1	$	28	$	28

March 31, 2016	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial Loans and Leases	—	$	—	$	—
Commercial Real Estate Loans	—	—		—
Total	—	$	—	$	—

Schedule of Risk Category of Loans

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

March 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	432,133	$	9,119	$	10,425	$	—	$	451,677
Commercial Real Estate Loans	824,473		25,355		17,807		—		867,635
Agricultural Loans	270,373		22,868		3,339		—		296,580
Total	$	1,526,979	$	57,342	$	31,571	$	—	$	1,615,892
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,489	$	3,121	$	4,755	$	—	$	9,365

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Industrial Loans and Leases	$	437,353	$	10,454	$	10,731	$	—	$	458,538
Commercial Real Estate Loans	814,033		26,549		17,448		—		858,030
Agricultural Loans	287,975		14,670		4,301		—		306,946
Total	$	1,539,361	$	51,673	$	32,480	$	—	$	1,623,514
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	1,897	$	3,121	$	5,032	$	—	$	10,050
Loans Acquired in Current Year      (Included in the Total Above)	$	175,915	$	11,638	$	8,145	$	—	$	195,698

Schedule of Recorded Investment in Home Equity, Consumer and Residential Mortgage Loans

The following table presents the recorded investment in home equity, consumer and residential mortgage loans based on payment activity as of March 31, 2017 and December 31, 2016:

March 31, 2017	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	135,740	$	58,766	$	183,465
Nonperforming	88		322		753
Total	$	135,828	$	59,088	$	184,218
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	930

December 31, 2016	Home Equity Loans		Consumer Loans		Residential Mortgage Loans
Performing	$	133,959	$	60,014	$	182,421
Nonperforming	73		85		1,349
Total	$	134,032	$	60,099	$	183,770
Loans Acquired With Deteriorated Credit Quality (Included in the Total Above)	$	—	$	53	$	945

Schedule of Carrying Amount of Loans with Deterioration of Credit Quality

The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The recorded investment of those loans is as follows: 

	March 31, 2017		December 31, 2016
Commercial and Industrial Loans	$	1,251	$	1,656
Commercial Real Estate Loans	7,426		7,688
Agricultural Loans	688		706
Consumer Loans	53		53
Residential Mortgage Loans	930		945
Total	$	10,348	$	11,048
Carrying Amount, Net of Allowance	$	10,232	$	10,943

Schedule of Accretable Yield, or Income Expected to be Collected

Accretable yield, or income expected to be collected, is as follows:

	2017			2016
Balance at January 1	$	2,521		$	1,279
New Loans Purchased	—			1,395
Accretion of Income	(42		)	(61		)
Reclassifications from Non-accretable Difference	311			—
Charge-off of Accretable Yield	—			—
Balance at March 31	$	2,790		$	2,613

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Financial Information

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance. The accounting policies of the three segments are the same as those of the Company. The evaluation process for segments does not include holding company income and expense. Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

	Core Banking		Trust and Investment Advisory Services		Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2017
Net Interest Income	$	24,909	$	1	$	2	$	(187	)	$	24,725
Net Gains on Sales of Loans	687		—		—		—			687
Net Gains on Securities	—		—		—		—			—
Trust and Investment Product Fees	1		1,244		—		(2		)	1,243
Insurance Revenues	2		5		2,633		—			2,640
Noncash Items:
Provision for Loan Losses	500		—		—		—			500
Depreciation and Amortization	1,041		3		19		64			1,127
Income Tax Expense (Benefit)	3,622		34		427		(262		)	3,821
Segment Profit (Loss)	8,965		44		673		(126		)	9,556
Segment Assets at March 31, 2017	2,934,056		1,865		9,532		(12,309		)	2,933,144

	Core Banking		Trust and Investment Advisory Services			Insurance		Other			Consolidated Totals
Three Months Ended
March 31, 2016
Net Interest Income	$	20,898	$	(1	)	$	2	$	(115	)	$	20,784
Net Gains on Sales of Loans	720		—			—		—			720
Net Gains on Securities	—		—			—		—			—
Trust and Investment Product Fees	1		1,020			—		—			1,021
Insurance Revenues	4		8			2,715		—			2,727
Noncash Items:
Provision for Loan Losses	850		—			—		—			850
Depreciation and Amortization	973		3			26		46			1,048
Income Tax Expense (Benefit)	1,681		14			510		(440		)	1,765
Segment Profit (Loss)	5,081		7			790		(732		)	5,146
Segment Assets at December 31, 2016	2,958,585		1,851			8,494		(12,936		)	2,955,994

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Equity Plans and Equity Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Expense Recorded For Restricted Stock And Cash Entitlements

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax information for the periods presented:

	Three Months Ended March 31,
	2017			2016
Restricted Stock Expense	$	306		$	588
Cash Entitlement Expense	158			142
Tax Effect	(182		)	(296		)
Net of Tax	$	282		$	434

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value 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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	250,896	$	6,447	$	257,343
MBS/CMO - Residential	—		468,656		—		468,656
Equity Securities	—		—		353		353
Total Securities	$	—	$	719,552	$	6,800	$	726,352
Loans Held-for-Sale	$	—	$	6,856	$	—	$	6,856
Derivative Assets	$	—	$	1,548	$	—	$	1,548
Mortgage Servicing Rights	$	—	$	593	$	—	$	593
Derivative Liabilities	$	—	$	1,579	$	—	$	1,579

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Obligations of State and Political Subdivisions	$	—	$	240,224	$	7,295	$	247,519
MBS/CMO - Residential	—		461,914		—		461,914
Equity Securities	—		—		353		353
Total Securities	$	—	$	702,138	$	7,648	$	709,786
Loans Held-for-Sale	$	—	$	15,273	$	—	$	15,273
Derivative Assets	$	—	$	1,291	$	—	$	1,291
Mortgage Servicing Rights	$	—	$	611	$	—	$	611
Derivative Liabilities	$	—	$	1,238	$	—	$	1,238

Reconciliation of all Assets Measured at Fair Value on Recurring Basis, Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 and 2016:

	Obligations of State and Political Subdivisions						Equity Securities
	2017			2016			2017		2016
Balance of Recurring Level 3 Assets at January 1	$	7,295		$	9,020		$	353	$	353
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	17			121			—		—
Maturities / Calls	(865		)	(845		)	—		—
Purchases	—			—			—		—
Balance of Recurring Level 3 Assets at March 31	$	6,447		$	8,296		$	353	$	353

Assets and Liabilities Measured at Fair Value on 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 Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	57	$	57
Commercial Real Estate Loans	—		—		1,395		1,395

	Fair Value Measurements at December 31, 2016 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)		Total
Assets:
Impaired Loans
Commercial and Industrial Loans	$	—	$	—	$	60	$	60
Commercial Real Estate Loans	—		—		348		348

Fair Value Assets and Liabilities Measured on Nonrecurring Basis Valuation Techniques

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:

March 31, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	57	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	1,395	Sales comparison approach	Adjustment for physical condition of comparable properties sold	30%-76% (64%)

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired Loans - Commercial and Industrial Loans	$	60	Sales comparison approach	Adjustment for physical condition of comparable properties sold	0%-100% (89%)
Impaired Loans - Commercial Real Estate Loans	$	348	Sales comparison approach	Adjustment for physical condition of comparable properties sold	33%-77% (56%)

Carrying Amounts and Estimated Fair Values of Company's Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments not previously presented are provided in the tables below for the periods ending March 31, 2017 and December 31, 2016. Not all of the Company’s assets and liabilities are considered financial instruments, and therefore are not included in the tables. Because no active market exists for a significant portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

				Fair Value Measurements at March 31, 2017 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	37,439		$	30,151		$	7,288		$	—		$	37,439
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,966,954			—			—			1,968,693			1,968,693
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,816			—			3,660			8,156			11,816
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637		)	(1,962,637		)	—			—			(1,962,637		)
Time Deposits	(363,835		)	—			(362,964		)	—			(362,964		)
Short-term Borrowings	(96,569		)	—			(96,569		)	—			(96,569		)
Long-term Debt	(144,789		)	—			(133,465		)	(10,859		)	(144,324		)
Accrued Interest Payable	(736		)	—			(722		)	(14		)	(736		)

				Fair Value Measurements at December 31, 2016 Using
	Carrying Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and Short-term Investments	$	64,816		$	48,467		$	16,349		$	—		$	64,816
Securities Held-to-Maturity	—			—			—			—			—
Loans, Net	1,974,074			—			—			1,980,523			1,980,523
FHLB Stock and Other Restricted Stock	13,048			N/A			N/A			N/A			N/A
Accrued Interest Receivable	11,413			—			3,289			8,124			11,413
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,971,370		)	(1,971,370		)	—			—			(1,971,370		)
Time Deposits	(378,181		)	—			(378,000		)	—			(378,000		)
Short-term Borrowings	(137,554		)	—			(137,554		)	—			(137,554		)
Long-term Debt	(120,560		)	—			(109,709		)	(10,793		)	(120,502		)
Accrued Interest Payable	(789		)	—			(775		)	(14		)	(789		)

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Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The tables below summarize the changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016, net of tax:

March 31, 2017	Unrealized Gains and Losses on Available-for-Sale Securities			Postretirement Benefit Items			Total
Beginning Balance at January 1, 2017	$	(6,312	)	$	(92	)	$	(6,404	)
Other Comprehensive Income (Loss) Before Reclassification	3,998			—			3,998
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—			—			—
Net Current Period Other Comprehensive Income (Loss)	3,998			—			3,998
Ending Balance at March 31, 2017	$	(2,314	)	$	(92	)	$	(2,406	)

March 31, 2016	Unrealized Gains and Losses on Available-for-Sale Securities		Postretirement Benefit Items			Total
Beginning Balance at January 1, 2016	$	3,890	$	(78	)	$	3,812
Other Comprehensive Income (Loss) Before Reclassification	4,029		—			4,029
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—		—			—
Net Current Period Other Comprehensive Income (Loss)	4,029		—			4,029
Ending Balance at March 31, 2016	$	7,919	$	(78	)	$	7,841

Classifications Out of Accumulated Other Comprehensive Income (Loss)

The tables below summarize the classifications out of accumulated other comprehensive income (loss) by component for the three months ended March 31, 2017 and 2016:

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2017	$	—

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)		Affected Line Item in the Statement Where Net Income is Presented
Unrealized Gains and Losses on Available-for-Sale Securities	$	—	Net Gains on Securities
	—		Income Tax Expense
	—		Net of Tax
Total Reclassifications for the Three Months Ended March 31, 2016	$	—

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Per Share Data (Computations of Basic Earnings Per Share and Diluted Earnings Per Share) (Details) $ / shares in Units, $ in Thousands			3 Months Ended
		Apr. 21, 2017	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($) $ / shares shares
Basic Earnings per Share:
NET INCOME | $			$ 9,556	$ 5,146
Weighted Average Shares Outstanding (in shares)	[1]		22,908,648	20,887,284
Basic Earnings per Share (USD per share) | $ / shares	[2]		$ 0.42	$ 0.25
Diluted Earnings per Share:
NET INCOME | $			$ 9,556	$ 5,146
Weighted Average Shares Outstanding (in shares)	[1]		22,908,648	20,887,284
Potentially Dilutive Shares, Net (in shares)			0	6,115
Diluted Weighted Average Shares Outstanding (in shares)	[1]		22,908,648	20,893,399
Diluted Earnings per Share (USD per share) | $ / shares	[2]		$ 0.42	$ 0.25
Anti-dilutive securities excluded from computation of earnings per share (in shares)			0	0
Subsequent Event
Diluted Earnings per Share:
Stock split, conversion ratio		0.6667

[1] Share and per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

[2] Per share data has been adjusted to reflect a 3-for-2 stock split on April 21, 2017.

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Securities (Schedule of Securities Available-for-Sale) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 729,942	$ 719,555
Gross Unrealized Gains	6,264	4,327
Gross Unrealized Losses	(9,854)	(14,096)
Total Fair Value	726,352	709,786
Obligations of State and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	254,587	247,350
Gross Unrealized Gains	5,169	3,847
Gross Unrealized Losses	(2,413)	(3,678)
Total Fair Value	257,343	247,519
MBS/CMO - Residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	475,002	471,852
Gross Unrealized Gains	1,095	480
Gross Unrealized Losses	(7,441)	(10,418)
Total Fair Value	468,656	461,914
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	353	353
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Total Fair Value	$ 353	$ 353

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Securities (Schedule of Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Securities Available-for-Sale: Amortized cost
Due in one year or less	$ 3,443
Due after one year through five years	19,478
Due after five years through ten years	73,007
Due after ten years	158,659
Amortized Cost	729,942	$ 719,555
Securities Available-for-Sale, Fair Value
Due in one year or less	3,481
Due after one year through five years	20,316
Due after five years through ten years	75,307
Due after ten years	158,239
Total Fair Value	726,352	709,786
MBS/CMO - Residential
Securities Available-for-Sale: Amortized cost
Amortized cost	475,002
Amortized Cost	475,002	471,852
Securities Available-for-Sale, Fair Value
Fair value	468,656
Total Fair Value	468,656	461,914
Equity Securities
Securities Available-for-Sale: Amortized cost
Amortized cost	353
Amortized Cost	353	353
Securities Available-for-Sale, Fair Value
Fair value	353
Total Fair Value	$ 353	$ 353

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Securities (Schedule of Proceeds from Sales of Securities) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Schedule of Investments [Line Items]
Proceeds from Sales	$ 0	$ 62,975
Gross Gains on Sales	0	0
Sale of Securities
Schedule of Investments [Line Items]
Proceeds from Sales	0	62,975
Gross Gains on Sales	0	0
Income Taxes on Gross Gains	$ 0	$ 0

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Securities (Additional Information) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) investment	Dec. 31, 2016 USD ($) investment
Schedule of Available-for-sale Securities [Line Items]
Carrying value of securities pledged to secure repurchase agreements, public and trust deposits and other by law	$ 180,960	$ 186,572
Original amount in non-controlling investment security in a single banking organization	$ 1,350
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Number of non-controlling investments in a single banking organization. | investment	1	1
Other than temporary impairment loss, non-controlling investment in single banking organization	$ 997

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Securities (Schedule of Securities with Unrealized Losses) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Fair Value	$ 411,695	$ 464,958
Less than 12 Months Unrealized Loss	(8,405)	(12,460)
12 Months or More Fair Value	45,218	47,271
12 Months or More Unrealized Loss	(1,449)	(1,636)
Total Fair Value	456,913	512,229
Total Unrealized Loss	(9,854)	(14,096)
Obligations of State and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Fair Value	79,834	108,918
Less than 12 Months Unrealized Loss	(2,413)	(3,678)
12 Months or More Fair Value	0	0
12 Months or More Unrealized Loss	0	0
Total Fair Value	79,834	108,918
Total Unrealized Loss	(2,413)	(3,678)
MBS/CMO - Residential
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Fair Value	331,861	356,040
Less than 12 Months Unrealized Loss	(5,992)	(8,782)
12 Months or More Fair Value	45,218	47,271
12 Months or More Unrealized Loss	(1,449)	(1,636)
Total Fair Value	377,079	403,311
Total Unrealized Loss	(7,441)	(10,418)
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Fair Value	0	0
Less than 12 Months Unrealized Loss	0	0
12 Months or More Fair Value	0	0
12 Months or More Unrealized Loss	0	0
Total Fair Value	0	0
Total Unrealized Loss	$ 0	$ 0

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Derivatives (Additional Information) (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Interest Rate Swap
Derivatives, Fair Value [Line Items]
Notional amount	$ 83.0	$ 67.9

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Derivatives (Derivative Instruments And Hedging Activities) (Details) - Interest Rate Swap - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Derivatives, Fair Value [Line Items]
Other Assets, Notional Amount of Interest Rate Swaps	$ 83,047	$ 67,902
Other Assets, Fair Value of Interest Rate Swaps	1,548	1,291
Other Liabilities, Notional Amount of Interest Rate Swap	83,047	67,902
Other Liabilities, Fair Value of Interest Rate Swap	$ 1,579	$ 1,238

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Derivatives (Derivative Instruments Consolidated Statement) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest Rate Swap
Derivative [Line Items]
Included in Other Operating Income	$ 348	$ 54

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Loans (Components of Loans) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	$ 1,986,929	$ 1,993,404
Less: Unearned Income	(3,357)	(3,449)
Allowance for Loan Losses	(15,166)	(14,808)	$ (15,161)	$ (14,438)
Loans, Net	1,968,406	1,975,147
Commercial and Industrial Loans and Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(3,612)	(3,725)	(4,346)	(4,242)
Commercial Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(5,696)	(5,452)	(6,463)	(6,342)
Agricultural Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(4,361)	(4,094)	(2,529)	(2,115)
Home Equity Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(299)	(283)	(352)	(383)
Consumer Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(244)	(235)	(230)	(230)
Residential Mortgage Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Loan Losses	(348)	(329)	$ (531)	$ (414)
Commercial | Commercial and Industrial Loans and Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	450,501	457,372
Commercial | Commercial Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	865,717	856,094
Commercial | Agricultural Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	292,615	303,128
Retail | Home Equity Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	135,352	133,575
Retail | Consumer Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	58,938	59,945
Retail | Residential Mortgage Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Gross	$ 183,806	$ 183,290

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Loans (Schedule of Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	$ 14,808	$ 14,438
Provision for Loan Losses	500	850
Recoveries	94	56
Loans Charged-off	(236)	(183)
Ending Balance	15,166	15,161
Commercial and Industrial Loans and Leases
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	3,725	4,242
Provision for Loan Losses	(115)	105
Recoveries	2	4
Loans Charged-off	0	(5)
Ending Balance	3,612	4,346
Commercial Real Estate Loans
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	5,452	6,342
Provision for Loan Losses	278	120
Recoveries	5	1
Loans Charged-off	(39)	0
Ending Balance	5,696	6,463
Agricultural Loans
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	4,094	2,115
Provision for Loan Losses	267	414
Recoveries	0	0
Loans Charged-off	0	0
Ending Balance	4,361	2,529
Home Equity Loans
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	283	383
Provision for Loan Losses	17	31
Recoveries	0	1
Loans Charged-off	(1)	(63)
Ending Balance	299	352
Consumer Loans
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	235	230
Provision for Loan Losses	118	27
Recoveries	60	45
Loans Charged-off	(169)	(72)
Ending Balance	244	230
Residential Mortgage Loans
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	329	414
Provision for Loan Losses	19	155
Recoveries	27	5
Loans Charged-off	(27)	(43)
Ending Balance	348	531
Unallocated
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	690	712
Provision for Loan Losses	(84)	(2)
Recoveries	0	0
Loans Charged-off	0	0
Ending Balance	$ 606	$ 710

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Loans (Schedule of Allowance for Loan Losses and Recorded Investment in Loans) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Allowance for Loan Losses:
Individually Evaluated for Impairment		$ 533	$ 255
Collectively Evaluated for Impairment		14,517	14,448
Total Ending Allowance Balance		15,166	14,808	$ 15,161	$ 14,438
Loans:
Loans Individually Evaluated for Impairment		2,924	1,239
Loans Collectively Evaluated for Impairment		1,981,754	1,989,128
Loans Acquired with Deteriorated Credit Quality		1,968,406	1,975,147
Loans, net of deferred income	[1]	1,995,026	2,001,415
Accrued interest		8,097	8,011
Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		116	105
Loans:
Loans Acquired with Deteriorated Credit Quality		10,348	11,048
Loans, net of deferred income		10,348	11,048
Commercial and Industrial Loans and Leases
Allowance for Loan Losses:
Individually Evaluated for Impairment		23	24
Collectively Evaluated for Impairment		3,586	3,698
Total Ending Allowance Balance		3,612	3,725	4,346	4,242
Loans:
Loans Individually Evaluated for Impairment		85	113
Loans Collectively Evaluated for Impairment		450,341	456,769
Loans, net of deferred income	[1]	451,677	458,538
Commercial and Industrial Loans and Leases | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		3	3
Loans:
Loans Acquired with Deteriorated Credit Quality		1,251	1,656
Loans, net of deferred income		1,251	1,656
Commercial Real Estate Loans
Allowance for Loan Losses:
Individually Evaluated for Impairment		510	231
Collectively Evaluated for Impairment		5,126	5,172
Total Ending Allowance Balance		5,696	5,452	6,463	6,342
Loans:
Loans Individually Evaluated for Impairment		2,182	832
Loans Collectively Evaluated for Impairment		858,027	849,510
Loans, net of deferred income	[1]	867,635	858,030
Commercial Real Estate Loans | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		60	49
Loans:
Loans Acquired with Deteriorated Credit Quality		7,426	7,688
Loans, net of deferred income		7,426	7,688
Agricultural Loans
Allowance for Loan Losses:
Individually Evaluated for Impairment		0	0
Collectively Evaluated for Impairment		4,313	4,046
Total Ending Allowance Balance		4,361	4,094	2,529	2,115
Loans:
Loans Individually Evaluated for Impairment		657	294
Loans Collectively Evaluated for Impairment		295,235	305,946
Loans, net of deferred income	[1]	296,580	306,946
Agricultural Loans | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		48	48
Loans:
Loans Acquired with Deteriorated Credit Quality		688	706
Loans, net of deferred income		688	706
Home Equity Loans
Allowance for Loan Losses:
Individually Evaluated for Impairment		0	0
Collectively Evaluated for Impairment		299	283
Total Ending Allowance Balance		299	283	352	383
Loans:
Loans Individually Evaluated for Impairment		0	0
Loans Collectively Evaluated for Impairment		135,828	134,032
Loans, net of deferred income	[1]	135,828	134,032
Home Equity Loans | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		0	0
Loans:
Loans, net of deferred income		0	0
Consumer Loans
Allowance for Loan Losses:
Individually Evaluated for Impairment		0	0
Collectively Evaluated for Impairment		239	230
Total Ending Allowance Balance		244	235	230	230
Loans:
Loans Individually Evaluated for Impairment		0	0
Loans Collectively Evaluated for Impairment		59,035	60,046
Loans, net of deferred income	[1]	59,088	60,099
Consumer Loans | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		5	5
Loans:
Loans Acquired with Deteriorated Credit Quality		53	53
Loans, net of deferred income		53	53
Residential Mortgage Loans
Allowance for Loan Losses:
Individually Evaluated for Impairment		0	0
Collectively Evaluated for Impairment		348	329
Total Ending Allowance Balance		348	329	531	414
Loans:
Loans Individually Evaluated for Impairment		0	0
Loans Collectively Evaluated for Impairment		183,288	182,825
Loans, net of deferred income	[1]	184,218	183,770
Residential Mortgage Loans | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		0	0
Loans:
Loans Acquired with Deteriorated Credit Quality		930	945
Loans, net of deferred income		930	945
Unallocated
Allowance for Loan Losses:
Individually Evaluated for Impairment		0	0
Collectively Evaluated for Impairment		606	690
Total Ending Allowance Balance		606	690	$ 710	$ 712
Unallocated | Receivables Acquired with Deteriorated Credit Quality
Allowance for Loan Losses:
Acquired with Deteriorated Credit Quality		$ 0	$ 0

[1] Total recorded investment in loans includes $8,097 in accrued interest.

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Loans (Schedule for Loans Individually Evaluated for Impairment) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
With No Related Allowance Recorded:
Unpaid Principal Balance	$ 1,678		$ 1,719
Recorded Investment	1,522		1,107
Average Recorded Investment	1,257	$ 2,299
Interest Income Recognized	9	42
Cash Basis Recognized	4	15
With An Allowance Recorded:
Unpaid Principal Balance	3,214		1,575
Recorded Investment	3,038		1,431
Allowance for Loan Losses Allocated	644		355
Average Recorded Investment	3,023	2,364
Interest Income Recognized	7	1
Cash Basis Recognized	7	0
Unpaid Principal Balance	4,892		3,294
Recorded Investment	4,560		2,538
Average Recorded Investment	4,280	4,663
Interest Income Recognized	16	43
Cash Basis Recognized	11	15
Receivables Acquired with Deteriorated Credit Quality
With No Related Allowance Recorded:
Unpaid Principal Balance	599		1,018
Recorded Investment	584		531
Average Recorded Investment	209	782
Interest Income Recognized	0	8
Cash Basis Recognized	0	1
With An Allowance Recorded:
Unpaid Principal Balance	1,053		910
Recorded Investment	1,052		768
Allowance for Loan Losses Allocated	111		100
Average Recorded Investment	1,007	0
Interest Income Recognized	7	0
Cash Basis Recognized	7	0
Commercial and Industrial Loans and Leases
With No Related Allowance Recorded:
Unpaid Principal Balance	57		85
Recorded Investment	57		29
Average Recorded Investment	16	827
Interest Income Recognized	0	23
Cash Basis Recognized	0	11
With An Allowance Recorded:
Unpaid Principal Balance	140		148
Recorded Investment	137		107
Allowance for Loan Losses Allocated	26		27
Average Recorded Investment	103	129
Interest Income Recognized	1	0
Cash Basis Recognized	1	0
Commercial Real Estate Loans
With No Related Allowance Recorded:
Unpaid Principal Balance	921		1,278
Recorded Investment	808		784
Average Recorded Investment	522	1,213
Interest Income Recognized	4	18
Cash Basis Recognized	4	3
With An Allowance Recorded:
Unpaid Principal Balance	2,487		839
Recorded Investment	2,314		827
Allowance for Loan Losses Allocated	570		280
Average Recorded Investment	2,423	2,235
Interest Income Recognized	6	1
Cash Basis Recognized	6	0
Agricultural Loans
With No Related Allowance Recorded:
Unpaid Principal Balance	700		356
Recorded Investment	657		294
Average Recorded Investment	719	259
Interest Income Recognized	5	1
Cash Basis Recognized	0	1
With An Allowance Recorded:
Unpaid Principal Balance	587		588
Recorded Investment	587		497
Allowance for Loan Losses Allocated	48		$ 48
Average Recorded Investment	497	0
Interest Income Recognized	0	0
Cash Basis Recognized	$ 0	$ 0

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Loans (Schedule of Recorded Investment in Nonaccrual Loans) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 4,510	$ 3,793
Loans Past Due 90 Days or More & Still Accruing	1,238	2
Commercial and Industrial Loans and Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	84	86
Loans Past Due 90 Days or More & Still Accruing	0	2
Commercial Real Estate Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	2,496	1,408
Loans Past Due 90 Days or More & Still Accruing	0	0
Agricultural Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	767	792
Loans Past Due 90 Days or More & Still Accruing	1,238	0
Home Equity Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	88	73
Loans Past Due 90 Days or More & Still Accruing	0	0
Consumer Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	322	85
Loans Past Due 90 Days or More & Still Accruing	0	0
Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	753	1,349
Loans Past Due 90 Days or More & Still Accruing	0	0
Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	1,051	1,264
Loans Past Due 90 Days or More & Still Accruing	$ 0	$ 0

XML

Loans (Schedule of Aging of Recorded Investment in Loans) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	$ 1,995,026	$ 2,001,415
Loans Past Due		10,674	9,435
Loans Not Past Due		1,984,352	1,991,980
Accrued interest		8,097	8,011
Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		10,348	11,048
Loans Past Due		706	757
Loans Not Past Due		9,642	10,291
Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income			262,809
Loans Past Due			4,740
Loans Not Past Due			258,069
30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		7,434	5,965
30-59 Days Past Due | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		129	130
30-59 Days Past Due | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due			2,752
60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		325	1,489
60-89 Days Past Due | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		0	0
60-89 Days Past Due | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due			862
90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		2,915	1,981
90 Days or More Past Due | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		577	627
90 Days or More Past Due | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due			1,126
Commercial and Industrial Loans and Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	451,677	458,538
Loans Past Due		1,358	101
Loans Not Past Due		450,319	458,437
Commercial and Industrial Loans and Leases | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		1,251	1,656
Commercial and Industrial Loans and Leases | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		1,278	20
Commercial and Industrial Loans and Leases | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		7	4
Commercial and Industrial Loans and Leases | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		73	77
Commercial Real Estate Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	867,635	858,030
Loans Past Due		1,114	1,860
Loans Not Past Due		866,521	856,170
Commercial Real Estate Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		7,426	7,688
Commercial Real Estate Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		838	1,509
Commercial Real Estate Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		55	21
Commercial Real Estate Loans | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		221	330
Agricultural Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	296,580	306,946
Loans Past Due		2,239	744
Loans Not Past Due		294,341	306,202
Agricultural Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		688	706
Agricultural Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		397	84
Agricultural Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		0	50
Agricultural Loans | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		1,842	610
Home Equity Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	135,828	134,032
Loans Past Due		449	796
Loans Not Past Due		135,379	133,236
Home Equity Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		0	0
Home Equity Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		309	707
Home Equity Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		52	16
Home Equity Loans | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		88	73
Consumer Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	59,088	60,099
Loans Past Due		683	407
Loans Not Past Due		58,405	59,692
Consumer Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		53	53
Consumer Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		281	175
Consumer Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		80	147
Consumer Loans | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		322	85
Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income	[1]	184,218	183,770
Loans Past Due		4,831	5,527
Loans Not Past Due		179,387	178,243
Residential Mortgage Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, net of deferred income		930	945
Residential Mortgage Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		4,331	3,470
Residential Mortgage Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		131	1,251
Residential Mortgage Loans | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due		$ 369	$ 806

[1] Total recorded investment in loans includes $8,097 in accrued interest.

XML

Loans (Schedule of Recorded Investment of Troubled Debt Restructurings) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Total	$ 28	$ 28
Performing
Financing Receivable, Modifications [Line Items]
Total	28	28
Non-Accrual
Financing Receivable, Modifications [Line Items]
Total	0	0
Commercial and Industrial Loans and Leases
Financing Receivable, Modifications [Line Items]
Total	0	28
Commercial and Industrial Loans and Leases | Performing
Financing Receivable, Modifications [Line Items]
Total	0	28
Commercial and Industrial Loans and Leases | Non-Accrual
Financing Receivable, Modifications [Line Items]
Total	0	0
Commercial Real Estate Loans
Financing Receivable, Modifications [Line Items]
Total	28	0
Commercial Real Estate Loans | Performing
Financing Receivable, Modifications [Line Items]
Total	28	0
Commercial Real Estate Loans | Non-Accrual
Financing Receivable, Modifications [Line Items]
Total	$ 0	$ 0

XML

Loans (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2017 USD ($) loan	Mar. 31, 2016 USD ($) loan	Dec. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans modified as troubled debt restructurings | loan	1	0
Additional lending amount to customers whose loan terms has been modified in troubled debt restructuring	$ 0		$ 0
Increase in allowance for loan losses for troubled debt restructuring loans	2,000	$ 0
Charge-offs due to troubled debt restructurings	$ 0	$ 0
Number of loans modified as troubled debt restructuring subsequently defaulted | loan	0	0
Carrying amount of consumer mortgage loans secured by residential real estate properties	$ 168,000		$ 202,000
Receivables Acquired with Deteriorated Credit Quality
Accounts, Notes, Loans and Financing Receivable [Line Items]
Increase in allowance for purchased loans	11,000	$ 0
Loan losses reversed	$ 0	$ 0

XML

Loans Loans (Schedule of Loans Modified as Troubled Debt Restructuring) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) loan	Mar. 31, 2016 USD ($) loan
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1	0
Pre-Modification Outstanding Recorded Investment	$ 28	$ 0
Post-Modification Outstanding Recorded Investment	$ 28	$ 0
Commercial and Industrial Loans and Leases
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	$ 0	$ 0
Commercial Real Estate Loans
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1	0
Pre-Modification Outstanding Recorded Investment	$ 28	$ 0
Post-Modification Outstanding Recorded Investment	$ 28	$ 0

XML

Loans (Schedule of Risk Category of Loans) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	$ 1,995,026	$ 2,001,415
Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		10,348	11,048
Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			262,809
Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		1,526,979	1,539,361
Pass | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		1,489	1,897
Pass | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			175,915
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		57,342	51,673
Special Mention | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		3,121	3,121
Special Mention | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			11,638
Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		31,571	32,480
Substandard | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		4,755	5,032
Substandard | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			8,145
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Doubtful | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Doubtful | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			0
Total
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		1,615,892	1,623,514
Total | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		9,365	10,050
Total | Receivables Acquired with Deteriorated Credit Quality | River Valley Bancorp
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income			195,698
Commercial and Industrial Loans and Leases
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	451,677	458,538
Commercial and Industrial Loans and Leases | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		1,251	1,656
Commercial and Industrial Loans and Leases | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		432,133	437,353
Commercial and Industrial Loans and Leases | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		9,119	10,454
Commercial and Industrial Loans and Leases | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		10,425	10,731
Commercial and Industrial Loans and Leases | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Commercial and Industrial Loans and Leases | Total
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		451,677	458,538
Commercial Real Estate Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	867,635	858,030
Commercial Real Estate Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		7,426	7,688
Commercial Real Estate Loans | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		824,473	814,033
Commercial Real Estate Loans | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		25,355	26,549
Commercial Real Estate Loans | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		17,807	17,448
Commercial Real Estate Loans | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Commercial Real Estate Loans | Total
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		867,635	858,030
Agricultural Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	296,580	306,946
Agricultural Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		688	706
Agricultural Loans | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		270,373	287,975
Agricultural Loans | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		22,868	14,670
Agricultural Loans | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		3,339	4,301
Agricultural Loans | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Agricultural Loans | Total
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		$ 296,580	$ 306,946

[1] Total recorded investment in loans includes $8,097 in accrued interest.

XML

Loans (Schedule of Recorded Investment in Home Equity, Consumer and Residential Mortgage Loans) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	$ 1,995,026	$ 2,001,415
Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		10,348	11,048
Home Equity Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	135,828	134,032
Home Equity Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		0	0
Home Equity Loans | Performing
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		135,740	133,959
Home Equity Loans | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		88	73
Consumer Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	59,088	60,099
Consumer Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		53	53
Consumer Loans | Performing
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		58,766	60,014
Consumer Loans | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		322	85
Residential Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	184,218	183,770
Residential Mortgage Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		930	945
Residential Mortgage Loans | Performing
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		183,465	182,421
Residential Mortgage Loans | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		$ 753	$ 1,349

[1] Total recorded investment in loans includes $8,097 in accrued interest.

XML

Loans (Schedule of Carrying Amount of Loans with Deterioration of Credit Quality) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	$ 1,995,026	$ 2,001,415
Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		10,348	11,048
Carrying Amount, Net of Allowance		10,232	10,943
Commercial and Industrial Loans and Leases
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	451,677	458,538
Commercial and Industrial Loans and Leases | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		1,251	1,656
Commercial Real Estate Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	867,635	858,030
Commercial Real Estate Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		7,426	7,688
Agricultural Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	296,580	306,946
Agricultural Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		688	706
Consumer Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	59,088	60,099
Consumer Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		53	53
Residential Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income	[1]	184,218	183,770
Residential Mortgage Loans | Receivables Acquired with Deteriorated Credit Quality
Financing Receivable, Recorded Investment [Line Items]
Loans, net of deferred income		$ 930	$ 945

[1] Total recorded investment in loans includes $8,097 in accrued interest.

XML

Loans (Schedule of Accretable Yield, or Income Expected to be Collected) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Beginning Balance	$ 2,521	$ 1,279
New Loans Purchased	0	1,395
Accretion of Income	(42)	(61)
Reclassifications from Non-accretable Difference	311	0
Charge-off of Accretable Yield	0	0
Ending Balance	$ 2,790	$ 2,613

XML

Repurchase Agreements Accounted for as Secured Borrowings (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Collateralized Mortgage Backed Securities | Maturity Overnight | FHLB Advances and Other Borrowings
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchased agreements	$ 35,564	$ 42,412

XML

Segment Information (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2017 segment office
Segment Reporting [Abstract]
Number of operating segments | segment	3
Number of offices | office	52

XML

Segment Information (Segment Financial Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Net Interest Income	$ 24,725	$ 20,784
Net Gains on Sales of Loans	687	720
Net Gains on Securities	0	0
Trust and Investment Product Fees	1,243	1,021
Insurance Revenues	2,640	2,727
Noncash Items:
Provision for Loan Losses	500	850
Depreciation and Amortization	1,127	1,048
Income Tax Expense (Benefit)	3,821	1,765
Segment Profit (Loss)	9,556	5,146
Segment Assets	2,933,144		$ 2,955,994
Operating Segments | Core Banking
Segment Reporting Information [Line Items]
Net Interest Income	24,909	20,898
Net Gains on Sales of Loans	687	720
Net Gains on Securities	0	0
Trust and Investment Product Fees	1	1
Insurance Revenues	2	4
Noncash Items:
Provision for Loan Losses	500	850
Depreciation and Amortization	1,041	973
Income Tax Expense (Benefit)	3,622	1,681
Segment Profit (Loss)	8,965	5,081
Segment Assets	2,934,056		2,958,585
Operating Segments | Trust and Investment Advisory Services
Segment Reporting Information [Line Items]
Net Interest Income	1	(1)
Net Gains on Sales of Loans	0	0
Net Gains on Securities	0	0
Trust and Investment Product Fees	1,244	1,020
Insurance Revenues	5	8
Noncash Items:
Provision for Loan Losses	0	0
Depreciation and Amortization	3	3
Income Tax Expense (Benefit)	34	14
Segment Profit (Loss)	44	7
Segment Assets	1,865		1,851
Operating Segments | Insurance
Segment Reporting Information [Line Items]
Net Interest Income	2	2
Net Gains on Sales of Loans	0	0
Net Gains on Securities	0	0
Trust and Investment Product Fees	0	0
Insurance Revenues	2,633	2,715
Noncash Items:
Provision for Loan Losses	0	0
Depreciation and Amortization	19	26
Income Tax Expense (Benefit)	427	510
Segment Profit (Loss)	673	790
Segment Assets	9,532		8,494
Other
Segment Reporting Information [Line Items]
Net Interest Income	(187)	(115)
Net Gains on Sales of Loans	0	0
Net Gains on Securities	0	0
Trust and Investment Product Fees	(2)	0
Insurance Revenues	0	0
Noncash Items:
Provision for Loan Losses	0	0
Depreciation and Amortization	64	46
Income Tax Expense (Benefit)	(262)	(440)
Segment Profit (Loss)	(126)	$ (732)
Segment Assets	$ (12,309)		$ (12,936)

XML

Stock Repurchase Plan (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Apr. 26, 2001
Stockholders' Equity Note [Abstract]
Common stock, authorized shares repurchase (up to) (in shares)			911,631
Common stock, total shares repurchased (in shares)	502,447
Common stock, shares purchased (in shares)	0	0

XML

Equity Plans and Equity Based Compensation (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2017 USD ($) Plan installment shares	Mar. 31, 2016 USD ($) shares	Dec. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, number of plans | Plan	3
Number of shares available for grant (in shares) | shares	412,104
Stock compensation expense | $	$ 158,000	$ 142,000
Stock granted during period percentage	60.00%
Stock cash credit entitlement percentage	40.00%
Number of equal installments | installment	3
Stock issued during period (in shares) | shares	37,890	48,375
Unvested restricted stock awards (in shares) | shares	91,053		53,163
Unrecognized stock expenses in restricted stock | $	$ 3,201,000	$ 2,820,000
Discount from market price, offering date	95.00%
Installment 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested in period percentage	33.30%
Installment 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested in period percentage	33.30%
Installment 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested in period percentage	33.30%
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested in period percentage	100.00%
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted (in shares) | shares	0	0
Stock compensation expense | $	$ 0	$ 0
Unrecognized option expense | $	0	0
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense | $	0	0
Unrecognized option expense | $	$ 0	$ 0
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares) | shares		577,426
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares	750,000

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Equity Plans and Equity Based Compensation (Expense Recorded For Restricted Stock And Cash Entitlements) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Restricted Stock Expense	$ 306	$ 588
Cash Entitlement Expense	158	142
Tax Effect	(182)	(296)
Net of Tax	$ 282	$ 434

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Fair Value (Additional Information) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loan held for sale, at fair value	$ 6,856,000		$ 15,273,000
Contractual principal balance of Loan held for sale	6,697,000		14,983,000
Difference in amount of loan held for sale	159,000		290,000
Impaired loans, carrying amount	3,214,000		1,575,000
Valuation allowance for loans losses	644,000		355,000
Cost of real estate sales	0	$ 0	75,000
Other real estate, carrying value	0		0
Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	726,352,000		709,786,000
Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	6,800,000		7,648,000
Obligations of State and Political Subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total gains/loss included in earnings attributable to other changes in fair value	17,000	121,000
Obligations of State and Political Subdivisions | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	257,343,000		247,519,000
Total gains/loss included in earnings attributable to other changes in fair value	17,000	121,000
Obligations of State and Political Subdivisions | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	6,447,000		7,295,000
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total gains/loss included in earnings attributable to interest income	0	0
Equity Securities | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	353,000		353,000
Total gains/loss included in earnings attributable to other changes in fair value	0	0
Equity Securities | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities	353,000		353,000
Commercial Real Estate Loans
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, carrying amount	1,985,000		663,000
Valuation allowance for loans losses	533,000		255,000
Increase (decrease) to provision for loan losses	$ 278,000	$ 5,000	$ 115,000

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Fair Value (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Assets:
Securities	$ 726,352	$ 709,786
Loans Held-for-Sale	6,856	15,273
Derivative Assets	1,548	1,291
Mortgage Servicing Rights	593	611
Derivative Liabilities	1,579	1,238
Obligations of State and Political Subdivisions
Assets:
Securities	257,343	247,519
MBS/CMO - Residential
Assets:
Securities	468,656	461,914
Equity Securities
Assets:
Securities	353	353
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Securities	0	0
Loans Held-for-Sale	0	0
Derivative Assets	0	0
Mortgage Servicing Rights	0	0
Derivative Liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of State and Political Subdivisions
Assets:
Securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | MBS/CMO - Residential
Assets:
Securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity Securities
Assets:
Securities	0	0
Significant Other Observable Inputs (Level 2)
Assets:
Securities	719,552	702,138
Loans Held-for-Sale	6,856	15,273
Derivative Assets	1,548	1,291
Mortgage Servicing Rights	593	611
Derivative Liabilities	1,579	1,238
Significant Other Observable Inputs (Level 2) | Obligations of State and Political Subdivisions
Assets:
Securities	250,896	240,224
Significant Other Observable Inputs (Level 2) | MBS/CMO - Residential
Assets:
Securities	468,656	461,914
Significant Other Observable Inputs (Level 2) | Equity Securities
Assets:
Securities	0	0
Significant Unobservable Inputs (Level 3)
Assets:
Securities	6,800	7,648
Loans Held-for-Sale	0	0
Derivative Assets	0	0
Mortgage Servicing Rights	0	0
Derivative Liabilities	0	0
Significant Unobservable Inputs (Level 3) | Obligations of State and Political Subdivisions
Assets:
Securities	6,447	7,295
Significant Unobservable Inputs (Level 3) | MBS/CMO - Residential
Assets:
Securities	0	0
Significant Unobservable Inputs (Level 3) | Equity Securities
Assets:
Securities	$ 353	$ 353

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Fair Value (Reconciliation of all Assets Measured at Fair Value on Recurring Basis, Using Significant Unobservable Inputs (Level 3) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Obligations of State and Political Subdivisions
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	$ 17	$ 121
Fair Value, Measurements, Recurring | Obligations of State and Political Subdivisions
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance of Recurring Level 3 Assets at January 1	7,295	9,020
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	17	121
Maturities / Calls	(865)	(845)
Purchases	0	0
Balance of Recurring Level 3 Assets at March 31	6,447	8,296
Fair Value, Measurements, Recurring | Equity Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance of Recurring Level 3 Assets at January 1	353	353
Total Gains or Losses (realized/unrealized) Included in Other Comprehensive Income	0	0
Maturities / Calls	0	0
Purchases	0	0
Balance of Recurring Level 3 Assets at March 31	$ 353	$ 353

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Fair Value (Assets and Liabilities Measured at Fair Value on Non-Recurring Basis) (Details) - Fair Value, Measurements, Nonrecurring - Impaired Loans - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Commercial and Industrial Loans and Leases
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	$ 57	$ 60
Commercial Real Estate Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	1,395	348
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial and Industrial Loans and Leases
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial Real Estate Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	0	0
Significant Other Observable Inputs (Level 2) | Commercial and Industrial Loans and Leases
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	0	0
Significant Other Observable Inputs (Level 2) | Commercial Real Estate Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	0	0
Significant Unobservable Inputs (Level 3) | Commercial and Industrial Loans and Leases
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	57	60
Significant Unobservable Inputs (Level 3) | Commercial Real Estate Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Assets	$ 1,395	$ 348

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Fair Value (Quantitative Information of Fair Value Measurements) (Details) - Impaired Loans - Significant Unobservable Inputs (Level 3) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Commercial and Industrial Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 57	$ 60
Commercial and Industrial Loans | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.00%	0.00%
Commercial and Industrial Loans | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	100.00%	100.00%
Commercial and Industrial Loans | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	89.00%	89.00%
Commercial Real Estate Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 1,395	$ 348
Commercial Real Estate Loans | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	30.00%	33.00%
Commercial Real Estate Loans | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	76.00%	77.00%
Commercial Real Estate Loans | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	64.00%	56.00%

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Fair Value (Carrying Amounts and Estimated Fair Values of Company's Financial Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financial Assets:
Loans, Net	$ 1,968,406	$ 1,975,147
FHLB Stock and Other Restricted Stock	13,048	13,048
Financial Liabilities:
Time Deposits	(363,835)	(378,181)
Level 1
Financial Assets:
Cash and Short-term Investments	30,151	48,467
Securities Held-to-Maturity	0	0
Loans, Net	0	0
Accrued Interest Receivable	0	0
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637)	(1,971,370)
Time Deposits	0	0
Short-term Borrowings	0	0
Long-term Debt	0	0
Accrued Interest Payable	0	0
Level 2
Financial Assets:
Cash and Short-term Investments	7,288	16,349
Securities Held-to-Maturity	0	0
Loans, Net	0	0
Accrued Interest Receivable	3,660	3,289
Financial Liabilities:
Demand, Savings, and Money Market Deposits	0	0
Time Deposits	(362,964)	(378,000)
Short-term Borrowings	(96,569)	(137,554)
Long-term Debt	(133,465)	(109,709)
Accrued Interest Payable	(722)	(775)
Level 3
Financial Assets:
Cash and Short-term Investments	0	0
Securities Held-to-Maturity	0	0
Loans, Net	1,968,693	1,980,523
Accrued Interest Receivable	8,156	8,124
Financial Liabilities:
Demand, Savings, and Money Market Deposits	0	0
Time Deposits	0	0
Short-term Borrowings	0	0
Long-term Debt	(10,859)	(10,793)
Accrued Interest Payable	(14)	(14)
Carrying Value
Financial Assets:
Cash and Short-term Investments	37,439	64,816
Securities Held-to-Maturity	0	0
Loans, Net	1,966,954	1,974,074
FHLB Stock and Other Restricted Stock	13,048	13,048
Accrued Interest Receivable	11,816	11,413
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637)	(1,971,370)
Time Deposits	(363,835)	(378,181)
Short-term Borrowings	(96,569)	(137,554)
Long-term Debt	(144,789)	(120,560)
Accrued Interest Payable	(736)	(789)
Total
Financial Assets:
Cash and Short-term Investments	37,439	64,816
Securities Held-to-Maturity	0	0
Loans, Net	1,968,693	1,980,523
Accrued Interest Receivable	11,816	11,413
Financial Liabilities:
Demand, Savings, and Money Market Deposits	(1,962,637)	(1,971,370)
Time Deposits	(362,964)	(378,000)
Short-term Borrowings	(96,569)	(137,554)
Long-term Debt	(144,324)	(120,502)
Accrued Interest Payable	$ (736)	$ (789)

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Other Comprehensive Income (Loss) (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance at January 1	$ 330,267
Other Comprehensive Income (Loss) Before Reclassification	3,998	$ 4,029
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	0	0
Total Other Comprehensive Income	3,998	4,029
Ending Balance at March 31	341,216
Unrealized Gains and Losses on Available-for-Sale Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance at January 1	(6,312)	3,890
Other Comprehensive Income (Loss) Before Reclassification	3,998	4,029
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	0	0
Total Other Comprehensive Income	3,998	4,029
Ending Balance at March 31	(2,314)	7,919
Postretirement Benefit Items
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance at January 1	(92)	(78)
Other Comprehensive Income (Loss) Before Reclassification	0	0
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	0	0
Total Other Comprehensive Income	0	0
Ending Balance at March 31	(92)	(78)
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance at January 1	(6,404)	3,812
Ending Balance at March 31	$ (2,406)	$ 7,841

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Other Comprehensive Income (Loss) (Classifications out of accumulated other comprehensive income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income Tax Expense	$ (3,821)	$ (1,765)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	0
Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	0
Unrealized Gains and Losses on Available-for-Sale Securities
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	0
Unrealized Gains and Losses on Available-for-Sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Gains on Securities	0	0
Income Tax Expense	0	0
Amount Reclassified From Accumulated Other Comprehensive Income (Loss)	$ 0	$ 0

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Newly Issued Accounting Pronouncements Newly Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Mar. 31, 2017	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets		$ 2,933,144	$ 2,955,994
Liabilities and Equity		$ 2,933,144	$ 2,955,994
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-02 | Scenario, Forecast
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	$ 6,000
Liabilities and Equity	$ 6,000

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Subsequent Events (Details)	Apr. 21, 2017
Subsequent Event
Subsequent Event [Line Items]
Stock split, conversion ratio	0.6667