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. As of September 30, 2019 and 2018, 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, 2019
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	42,671	$	42,671	$	42,671	$	-	$	-
Interest bearing deposits with financial institutions		11,366		11,366		11,366		-		-
Securities available-for-sale		488,422		488,422		4,038		478,511		5,873
FHLBC and FRBC stock		10,711		10,711		-		10,711		-
Loans held-for-sale		5,592		5,592		-		5,592		-
Net loans		1,880,160		1,915,103		-		-		1,915,103
Accrued interest receivable		9,854		9,854		-		9,854		-

Financial liabilities:
Noninterest bearing deposits	$	643,355	$	643,355	$	643,355	$	-	$	-
Interest bearing deposits		1,431,136		1,431,267		-		1,431,267		-
Securities sold under repurchase agreements		48,870		48,870		-		48,870		-
Other short-term borrowings		84,000		84,000		-		84,000		-
Junior subordinated debentures		57,722		42,170		34,557		7,613		-
Senior notes		44,244		46,269		46,269		-		-
Note payable and other borrowings		8,856		8,856		-		8,856		-
Interest rate swap agreements		4,696		4,696		-		4,696		-
Borrowing interest payable		744		744		-		744		-
Deposit interest payable		950		950		-		950		-


	December 31, 2018
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	38,599	$	38,599	$	38,599	$	-	$	-
Interest bearing deposits with financial institutions		16,636		16,636		16,636		-		-
Securities available-for-sale		541,248		541,248		3,923		529,160		8,165
FHLBC and FRBC stock		13,433		13,433		-		13,433		-
Loans held-for-sale		2,984		2,984		-		2,984		-
Net loans		1,878,021		1,867,594		-		-		1,867,594
Accrued interest receivable		10,940		10,940		-		10,940		-

Financial liabilities:
Noninterest bearing deposits	$	618,830	$	618,830	$	618,830	$	-	$	-
Interest bearing deposits		1,497,843		1,495,614		-		1,495,614		-
Securities sold under repurchase agreements		46,632		46,632		-		46,632		-
Other short-term borrowings		149,500		149,500		-		149,500		-
Junior subordinated debentures		57,686		47,625		32,989		14,636		-
Senior notes		44,158		45,008		45,008		-		-
Note payable and other borrowings		15,379		15,379		-		15,379		-
Interest rate swap agreements		58		58		-		58		-
Borrowing interest payable		281		281		-		281		-
Deposit interest payable		973		973		-		973		-