XML 27 R18.htm IDEA: XBRL DOCUMENT

Note 10 - Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

10. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts, estimated fair values and level within the fair value hierarchy of financial instruments were as follows as of June 30, 2023 and December 31, 2022 (dollars in thousands):

	Level in		June 30, 2023								December 31, 2022
	Fair
	Value		Carrying				Fair				Carrying				Fair
	Hierarchy		Values				Values				Values				Values
Financial assets:
Cash and cash equivalents	Level 1		$	207,796			$	207,796			$	96,772			$	96,772
Securities available for sale	(1)			608,972				608,972				602,936				602,936
FHLBI stock	(2)			21,513				21,513				17,721				17,721
Loans, net	Level 3			4,007,122				3,993,406				3,874,373				3,800,042
Mortgage loans held for sale	Level 2			11,942				12,202				3,565				3,643
Mortgage servicing rights	Level 3			11,201				18,676				11,837				17,727
Accrued interest receivable	Level 2			16,962				16,962				15,476				15,476
Interest rate swaps	Level 2			26,880				26,880				25,697				25,697

Financial liabilities:
Deposits	Level 2			3,756,789				3,735,556				3,712,811				3,379,403
Repurchase agreements	Level 2			219,457				219,457				194,340				194,340
FHLBI advances	Level 2			467,910				447,929				308,263				292,044
Subordinated debentures	Level 2			49,301				55,991				48,958				49,531
Subordinated notes	Level 2			88,800				75,911				88,628				75,024
Accrued interest payable	Level 2			5,652				5,652				3,223				3,223
Interest rate swaps	Level 2			27,190				27,190				25,900				25,900

(1)

See Note 11 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.

(2)

It is not practical to determine the fair value of FHLBI stock due to transferability restrictions; therefore, fair value is estimated at carrying amount.

Carrying amount is the estimated fair value for cash and cash equivalents, FHLBI stock, accrued interest receivable and payable, noninterest-bearing checking accounts and securities sold under agreements to repurchase. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. Fair value for loans is based on an exit price model as required by ASU 2016-01, taking into account inputs such as discounted cash flows, probability of default and loss given default assumptions. As of December 31, 2022, the fair value for deposit accounts other than noninterest-bearing checking accounts is based on discounted cash flows using current market rates applied to the estimated life, while as of June 30, 2023, the fair value only for time deposits is based on discounted cash flows using current market rates applied to the estimated life. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. The fair values of subordinated debentures, subordinated notes, and FHLBI advances are based on current rates for similar financing. The fair values of interest rate swaps are based on discounted cash flows using forecasted yield curves, along with insignificant unobservable inputs, such as borrower credit spreads. The fair value of other off-balance sheet items is estimated to be nominal.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details