Note 14 – 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. 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 volume is not considered material.

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


	March 31, 2017
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	41,332	$	41,332	$	41,332	$	-	$	-
Interest bearing deposits with financial institutions		19,347		19,347		19,347		-		-
Securities available-for-sale		611,054		611,054		-		576,545		34,509
FHLBC and FRBC Stock		8,593		8,593		-		8,593		-
Loans held-for-sale		3,933		3,933		-		3,933		-
Loans, net		1,472,280		1,468,691		-		-		1,468,691
Accrued interest receivable		6,898		6,898		-		6,898		-

Financial liabilities:
Noninterest bearing deposits	$	559,666	$	559,666	$	559,666	$	-	$	-
Interest bearing deposits		1,377,488		1,374,677		-		1,374,677		-
Securities sold under repurchase agreements		34,731		34,731		-		34,731		-
Other short-term borrowings		85,000		85,000		-		85,000		-
Junior subordinated debentures		57,603		55,972		32,889		23,083		-
Senior notes		43,982		46,233		-		46,233		-
Interest rate swap agreements		845		845		-		845		-
Borrowing interest payable		867		867		-		867		-
Deposit interest payable		555		555		-		555		-


	December 31, 2016
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	33,805	$	33,805	$	33,805	$	-	$	-
Interest bearing deposits with financial institutions		13,529		13,529		13,529		-		-
Securities available-for-sale		531,838		531,838		-		506,493		25,345
FHLBC and FRBC Stock		7,918		7,918		-		7,918		-
Loans held-for-sale		4,918		4,918		-		4,918		-
Loans, net		1,462,651		1,453,429		-		-		1,453,429
Accrued interest receivable		5,928		5,928		-		5,928		-

Financial liabilities:
Noninterest bearing deposits	$	513,688	$	513,688	$	513,688	$	-	$	-
Interest bearing deposits		1,353,097		1,351,000		-		1,351,000		-
Securities sold under repurchase agreements		25,715		25,715		-		25,715		-
Other short-term borrowings		70,000		70,000		-		70,000		-
Junior subordinated debentures		57,591		55,163		32,404		22,759		-
Subordinated debenture		43,998		43,998		-		43,998		-
Interest rate swap agreements		994		994		-		994		-
Borrowing interest payable		202		202		-		202		-
Deposit interest payable		599		599		-		599		-