Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2012

Fair Values of Financial Instruments

Fair Values of Financial Instruments

Note 14 – Fair Values of Financial Instruments

The estimated fair values approximate carrying amount for all items except those described in the following table.  Investment security 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 fair value of the collateralized debt obligations included in investment securities includes a risk premium adjustment to provide an estimate of the amount that a market participant would demand because of uncertainty in cash flows and the methods for determining fair value of securities as discussed in detail in Note 12.  It is not practicable to determine the fair value of FHLBC stock due to restrictions on transferability.  Fair values of loans were estimated for portfolios of loans with similar financial characteristics, such as type and fixed or variable interest rate terms.  Cash flows were discounted using current rates at which similar loans would be made to borrowers with similar ratings and for similar maturities.  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 items is not considered material.

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

	June 30, 2012
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash, due from banks and federal funds sold	$	45,015	$	45,015	$	45,015	$	-	$	-
Interest bearing deposits with financial institutions	85,014		85,014		85,014		-		-
Securities available-for-sale	398,895		398,895		53,267		336,327		9,301
FHLBC and FRB Stock	12,177		12,177		-		-		12,177
Bank-owned life insurance	53,416		53,416		-		53,416		-
Loans held for sale	6,445		6,445		-		6,445		-
Loans, net	1,197,848		1,227,552		-		-		1,227,552
Accrued interest receivable	5,146		5,146		-		5,146		-
Financial liabilities:
Noninterest bearing deposits	$	412,635	$	412,635	$	412,635	$	-	$	-
Interest bearing deposits	1,357,389		1,360,820		-		1,360,820		-
Securities sold under repurchase agreements	13,802		13,802		-		13,802		-
Junior subordinated debentures	58,378		28,030		16,628		11,402		-
Subordinated debenture	45,000		22,080		-		22,080		-
Note payable and other borrowings	500		270		-		270		-
Borrowing interest payable	9,232		9,232		5,447		3,785		-
Deposit interest payable	1,191		1,191		-		1,191		-

	December 31, 2011
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash, due from banks and federal funds sold	$	2,692	$	2,692	$	2,692	$	-	$	-
Interest bearing deposits with financial institutions	48,257		48,257		48,257		-		-
Securities available-for-sale	307,564		307,564		1,524		295,928		10,112
FHLBC and FRB Stock	14,050		14,050		-		-		14,050
Bank-owned life insurance	52,595		52,595		-		52,595		-
Loans held for sale	12,806		12,806		-		12,806		-
Loans, net	1,316,988		1,352,335		-		-		1,352,335
Accrued interest receivable	5,708		5,708		-		5,708		-
Financial liabilities:
Noninterest bearing deposits	$	361,963	$	361,963	$	361,963	$	-	$	-
Interest bearing deposits	1,378,818		1,382,663		-		1,382,663		-
Securities sold under repurchase agreements	901		901		-		901		-
Junior subordinated debentures	58,378		22,203		13,172		9,031		-
Subordinated debenture	45,000		24,532		-		24,532		-
Note payable and other borrowings	500		260		-		260		-
Borrowing interest payable	6,815		6,815		4,006		2,809		-
Deposit interest payable	1,718		1,718		-		1,718		-