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Note 10 - Fair Values of Financial Instruments
 9 Months Ended
Sep. 30, 2024
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 September 30, 2024 and December 31, 2023:

 

  

Level in

 

September 30, 2024

  

December 31, 2023

 
  

Fair

                
  

Value

 

Carrying

  

Fair

  

Carrying

  

Fair

 

(Dollars in thousands)

 Hierarchy Values  Values  Values  Values 

Financial assets:

                   

Cash and cash equivalents

 

Level 1

 $328,546  $328,546  $130,533  $130,533 

Securities available for sale

 (1)  703,375   703,375   617,092   617,092 

FHLBI stock

 (2)  21,513   21,513   21,513   21,513 

Loans, net

 

Level 3

  4,496,428   4,553,183   4,253,844   4,191,644 

Mortgage loans held for sale

 

Level 2

  29,260   29,713   18,607   19,027 

Accrued interest receivable

 

Level 2

  22,414   22,414   19,806   19,806 

Interest rate swaps

 

Level 2

  29,646   29,646   27,505   27,505 
                    

Financial liabilities:

                   

Deposits

 Level 2  4,455,898   4,377,403   3,900,918   3,814,778 

Securities sold under agreements to repurchase

 

Level 2

  220,936   220,936   229,734   229,734 

FHLBI advances

 Level 2  417,083   410,057   467,910   454,857 

Subordinated debentures

 Level 2  50,158   50,165   49,644   49,653 

Subordinated notes

 Level 2  89,228   80,925   88,971   77,218 

Accrued interest payable

 

Level 2

  10,267   10,267   9,012   9,012 

Interest rate swaps

 

Level 2

  30,255   30,255   27,964   27,964 

 

 

(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. 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. 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.

 

(Continued)