Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2020

Fair Values of Financial Instruments

Fair Values of Financial Instruments

Note 13 – Fair Values of Financial Instruments

The estimated fair values approximate carrying amount for all items except those described in the following table.  Securities available-for-sale fair values are based upon market prices or dealer quotes, and if no such information is available, on the rate and term of the security.  The carrying value of FHLBC stock approximates fair value as the stock is nonmarketable and can only be sold to the FHLBC or another member institution at par.  FHLBC stock is carried at cost and considered a Level 2 fair value.  For September 30, 2020 and December 31, 2019, the fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.  The fair value of time deposits is estimated using discounted future cash flows at current rates offered for deposits of similar remaining maturities.  The fair values of borrowings were estimated based on interest rates available to the Company for debt with similar terms and remaining maturities.  The fair value of off balance sheet volume is not considered material.

The carrying amount and estimated fair values of financial instruments were as follows:

	September 30, 2020
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	29,489	$	29,489	$	29,489	$	-	$	-
Interest earning deposits with financial institutions		283,651		283,651		283,651		-		-
Securities available-for-sale		448,421		448,421		4,134		439,497		4,790
FHLBC and FRBC stock		9,917		9,917		-		9,917		-
Loans held-for-sale		10,229		10,229		-		10,229		-
Net loans		1,997,409		2,013,415		-		-		2,013,415
Interest rate swap agreements		10,506		10,506		-		10,506		-
Interest receivable on securities and loans		9,706		9,706		-		9,706		-
Financial liabilities:
Noninterest bearing deposits	$	889,085	$	889,085	$	889,085	$	-	$	-
Interest bearing deposits		1,590,158		1,593,058		-		1,593,058		-
Securities sold under repurchase agreements		59,268		59,268		-		59,268		-
Other short-term borrowings		6,125		6,125		-		6,125		-
Junior subordinated debentures		25,773		14,167		-		14,167		-
Senior notes		44,349		44,799		44,799		-		-
Note payable and other borrowings		24,469		25,160		-		25,160		-
Interest rate swap agreements		15,128		15,128		-		15,128		-
Interest payable on deposits and borrowings		1,257		1,257		-		1,257		-

	December 31, 2019
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	34,096	$	34,096	$	34,096	$	-	$	-
Interest earning deposits with financial institutions		16,536		16,536		16,536		-		-
Securities available-for-sale		484,648		484,648		4,036		475,193		5,419
FHLBC and FRBC stock		9,917		9,917		-		9,917		-
Loans held-for-sale		3,061		3,061		-		3,061		-
Net loans		1,911,023		1,915,531		-		-		1,915,531
Interest rate swap agreements		2,771		2,771		-		2,771		-
Interest receivable on securities and loans		9,697		9,697		-		9,697		-
Financial liabilities:
Noninterest bearing deposits	$	669,795	$	669,795	$	669,795	$	-	$	-
Interest bearing deposits		1,456,954		1,457,832		-		1,457,832		-
Securities sold under repurchase agreements		48,693		48,693		-		48,693		-
Other short-term borrowings		48,500		48,500		-		48,500		-
Junior subordinated debentures		57,734		51,188		33,614		17,574		-
Senior notes		44,270		46,269		46,269		-		-
Note payable and other borrowings		6,673		7,003		-		7,003		-
Interest rate swap agreements		5,921		5,921		-		5,921		-
Interest payable on deposits and borrowings		1,079		1,079		-		1,079		-