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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value, Assets Measured on Recurring Basis

The following tables present the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and December 31, 2019.


			September 30, 2020 Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Government-sponsored agencies	$	63,682	$	—	$	63,682	$	—
Municipal securities	86,421		—		86,421		—
Agency mortgage-backed securities	253,292		—		253,292		—
Private label mortgage-backed securities	72,626				72,626		—
Asset-backed securities	4,921		—		4,921		—
Corporate securities	47,369		—		47,369		—

Total available-for-sale securities	528,311		—		528,311		—
Loans held-for-sale (mandatory pricing agreements)	35,321		—		35,321		—
Servicing asset	2,818		—		—		2,818

Interest rate swap agreements	(32,492)		—		(32,492)		—
Forward contracts	(485)		(485)		—		—
IRLCs	3,116		—		—		3,116


			December 31, 2019 Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Government-sponsored agencies	$	75,872	$	—	$	75,872	$	—
Municipal securities	97,652		—		97,652		—
Agency mortgage-backed securities	261,440		—		261,440		—
Private label mortgage-backed securities	63,613		—		63,613		—
Asset-backed securities	4,955		—		4,955		—
Corporate securities	37,320		—		37,320		—

Total available-for-sale securities	540,852		—		540,852		—
Loans held-for-sale (mandatory pricing agreements)	56,097		—		56,097		—
Servicing asset	2,481		—		—		2,481

Interest rate swap agreements	(37,786)		—		(37,786)		—
Forward contracts	(153)		(153)		—		—
IRLCs	910		—		—		910

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables reconcile the beginning and ending balances of recurring fair value measurements recognized in the accompanying condensed consolidated balance sheets using significant unobservable (Level 3) inputs for the three and nine months ended September 30, 2020 and 2019.


	Three Months Ended
(in thousands)	Servicing Asset		Interest Rate Lock Commitments
Balance, July 1, 2020	$	2,522	$	282
Total realized gains (losses)
Additions	399		—
Change in fair value	(103)		2,834

Balance, September 30, 2020	2,818		3,116

Balance as of July 1, 2019	$	—	$	1,209
Total realized gains

Change in fair value	—		275

Balance, September 30, 2019	$	—	$	1,484



(in thousands)	Nine Months Ended
	Servicing Asset		Interest Rate Lock Commitments
Balance January 1, 2020	$	2,481	$	910
Total realized gains (losses)
Additions	709		—
Change in fair value	(372)		2,206

Balance, September 30, 2020	$	2,818	3,116

Balance as of January 1, 2019	$	—	$	389
Total realized gains
Change in fair value	—		1,095

Balance, September 30, 2019	$	—	$	1,484

Schedule Of Impaired Loans, Including Valuation Allowance, Fair Value, Unobservable Inputs Reconciliation

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurement falls at September 30, 2020 and December 31, 2019.


			September 30, 2020
(in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans	$	2,102	$	—	$	—	$	2,102

Other real estate owned	—		—		—		—


			December 31, 2019
(in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	3,019	$	—	$	—	$	3,019

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.


(dollars in thousands)	Fair Value at September 30, 2020		Valuation Technique	Significant Unobservable Inputs	Range	Weighted-Average Range

Impaired loans	$	2,102	Fair value of collateral	Discount for type of property and current market conditions	8% - 20%	15%
IRLCs	3,116		Discounted cash flow	Loan closing rates	45% - 100%	84%
Servicing asset	2,818		Discounted cash flow	Prepayment speeds	0% - 25%	12.8%
Other real estate owned	—		Fair value of collateral	Discount to reflect current market conditions	100%	100%


(dollars in thousands)	Fair Value at December 31, 2019		Valuation Technique	Significant Unobservable Inputs	Range	Weighted-Average Range
Impaired loans	$	3,019	Fair value of collateral	Discount for type of property and current market conditions	10%	10%

IRLCs	910		Discounted cash flow	Loan closing rates	50% - 100%	84%
Servicing asset	2,481		Discounted cash flow	Prepayment speeds	0% - 25%	13.5%

Fair Value, by Balance Sheet Grouping

The following tables present the carrying value and estimated fair value of all financial assets and liabilities at September 30, 2020 and December 31, 2019.


	September 30, 2020 Fair Value Measurements Using
(in thousands)	Carrying Amount		Fair Value		Quoted Prices In Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	488,453	$	488,453	$	488,453	$	—	$	—

Securities held-to-maturity	68,254		69,176		—		69,176		—
Loans held-for-sale (best efforts pricing agreements)	40,887		40,887		—		40,887		—
Net loans	2,985,997		3,049,741		—		—		3,049,741
Accrued interest receivable	17,768		17,768		17,768		—		—
Federal Home Loan Bank of Indianapolis stock	25,650		25,650		—		25,650		—
Deposits	3,372,391		3,417,780		1,650,210		—		1,767,570
Advances from Federal Home Loan Bank	514,914		545,751		—		545,751		—
Subordinated debt	69,758		72,333		62,146		10,187		—
Accrued interest payable	1,249		1,249		1,249		—		—


	December 31, 2019 Fair Value Measurements Using
(in thousands)	Carrying Amount		Fair Value		Quoted Prices In Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	327,361	$	327,361	$	327,361	$	—	$	—

Securities held-to-maturity	61,878		62,560		—		62,560		—

Net loans	2,941,707		2,876,688		—		—		2,876,688
Accrued interest receivable	18,607		18,607		18,607		—		—
Federal Home Loan Bank of Indianapolis stock	25,650		25,650		—		25,650		—
Deposits	3,153,963		3,232,065		1,002,141		—		2,229,924
Advances from Federal Home Loan Bank	514,910		520,950		—		520,950		—
Subordinated debt	69,528		75,206		64,996		10,210		—
Accrued interest payable	3,767		3,767		3,767		—		—