Note 18 Fair Value of Financial Instruments

The fair value of a financial instrument is the amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is determined based upon quoted market prices to the extent possible; however, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques that may be significantly impacted by the assumptions used, including the discount rate and estimates of future cash flows. Changes in any of these assumptions could significantly affect the fair value estimates. The fair value of the financial instruments listed below does not reflect a premium or discount that could result from offering all of the Company’s holdings of financial instruments at one time, nor does it reflect the underlying value of the Company, as ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies and are based on the exit price concept within ASC Topic 825 and applied to this disclosure on a prospective basis. Considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange.

The fair value of financial instruments at March 31, 2019 and December 31, 2018, including methods and assumptions utilized for determining fair value of financial instruments, are set forth below:


	Level in fair value	March 31, 2019				December 31, 2018
	measurement	Carrying		Estimated		Carrying		Estimated
	hierarchy	amount		fair value		amount		fair value
ASSETS
Cash and cash equivalents	Level 1	$	105,258	$	105,258	$	109,556	$	109,556
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		134,488		134,488		146,642		146,642
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale	Level 2		613,970		613,970		643,381		643,381
Municipal securities	Level 2		441		441		441		441
Municipal securities	Level 3		169		169		169		169
Other available-for-sale securities	Level 3		469		469		469		469
Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		147,221		146,316		157,115		154,412
Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity	Level 2		74,506		73,291		78,283		76,514
Non-marketable securities	Level 2		24,574		24,574		27,555		27,555
Loans receivable	Level 3		4,246,941		4,279,916		4,092,308		4,082,146
Loans held for sale	Level 2		59,324		59,324		48,120		48,120
Accrued interest receivable	Level 2		22,362		22,362		17,852		17,852
Interest rate swap derivatives	Level 2		14,035		14,035		20,627		20,627
Mortgage banking derivatives	Level 3		1,552		1,552		871		871
LIABILITIES
Deposit transaction accounts	Level 2		3,633,356		3,633,356		3,445,092		3,445,092
Time deposits	Level 2		1,081,092		1,072,986		1,080,529		1,068,233
Securities sold under agreements to repurchase	Level 2		59,543		59,543		66,047		66,047
Federal Home Loan Bank advances	Level 2		228,421		228,810		301,660		301,933
Accrued interest payable	Level 2		8,731		8,731		6,889		6,889
Interest rate swap derivatives	Level 2		7,772		7,772		3,577		3,577
Mortgage banking derivatives	Level 3		811		811		544		544