XML 32 R21.htm IDEA: XBRL DOCUMENT
v3.20.2

FAIR VALUE | 9 Months Ended
--- | ---
Sep. 30, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE | NOTE 13 - FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate fair value: Marketable Securities: The fair values for marketable securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Loans Held For Sale: Loans held for sale are carried at the lower of cost or fair value, which is evaluated on a pool-level basis. The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2). Derivative Instruments: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Impaired Loans: For the year ended December 31, 2019, the fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on the present value of estimated future cash flows using the loan’s existing rate or, if repayment is expected solely from the collateral, the fair value of collateral, less costs to sell. The fair value of real estate collateral is determined using recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant (Level 3). Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business (Level 3). Impaired loans were evaluated on a quarterly basis for additional impairment and adjusted accordingly. Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly (Level 3). Individually Evaluated Collateral Dependent Loans: The fair value of individually evaluated collateral dependent loans is generally based on the fair value of collateral, less costs to sell. The fair value of real estate collateral is determined using recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant (Level 3). Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business (Level 3). The following tables summarize quantitative disclosures about the fair value measurements for each category of financial assets (liabilities) carried at fair value:
As of September 30, 2020 |  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Other Unobservable Inputs (Level 3) |
Assets (liabilities) at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 98,371 |  |  | $ | — |  |  | $ | 98,371 |  |  | $ | — |
Collateralized mortgage obligations |  |  | 75,329 |  |  |  | — |  |  |  | 75,329 |  |  |  | — |
Municipal securities |  |  | 175,308 |  |  |  | — |  |  |  | 175,308 |  |  |  | — |
Corporate bonds |  |  | 19,879 |  |  |  | — |  |  |  | 19,879 |  |  |  | — |
Loans held for sale |  |  | 9,148 |  |  |  | — |  |  |  | — |  |  |  | 9,148 |
Cash surrender value of life insurance |  |  | 35,304 |  |  |  | — |  |  |  | 35,304 |  |  |  | — |
SBA servicing assets |  |  | 746 |  |  |  | — |  |  |  | — |  |  |  | 746 |
Derivative instrument assets |  |  | 689 |  |  |  | — |  |  |  | 689 |  |  |  | — |
Derivative instrument liabilities |  |  | (1,256 | ) |  |  | — |  |  |  | (1,256 | ) |  |  | — |
As of December 31, 2019 |  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Other Unobservable Inputs (Level 3) |
Assets (liabilities) at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 84,182 |  |  | $ | — |  |  | $ | 84,182 |  |  | $ | — |
Collateralized mortgage obligations |  |  | 90,927 |  |  |  | — |  |  |  | 90,927 |  |  |  | — |
Municipal securities |  |  | 17,348 |  |  |  | — |  |  |  | 17,348 |  |  |  | — |
Corporate bonds |  |  | 20,259 |  |  |  | — |  |  |  | 20,259 |  |  |  | — |
Loans held for sale |  |  | 2,368 |  |  |  | — |  |  |  | — |  |  |  | 2,368 |
Cash surrender value of life insurance |  |  | 34,495 |  |  |  | — |  |  |  | 34,495 |  |  |  | — |
SBA servicing assets |  |  | 672 |  |  |  | — |  |  |  | — |  |  |  | 672 |
Derivative instrument assets |  |  | 526 |  |  |  | — |  |  |  | 526 |  |  |  | — |
Derivative instrument liabilities |  |  | (526 | ) |  |  | — |  |  |  | (526 | ) |  |  | — |
Assets at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  |  | 20,028 |  |  |  | — |  |  |  | — |  |  |  | 20,028 |
There were no transfers between Level 2 and Level 3 during the nine months ended September 30, 2020 or for the year ended December 31, 2019. Nonfinancial Assets and Nonfinancial Liabilities Nonfinancial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2020 and 2019 include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for credit losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in current earnings. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. The following table presents foreclosed assets that were remeasured and recorded at fair value as of:
|  | September 30, 2020 |  |  | December 31, 2019 |  |  | September 30, 2019 |
Other real estate owned remeasured at initial recognition: |  |  |  |  |  |  |  |  |  |  |  |
Carrying value of other real estate owned prior to remeasurement |  | $ | — |  |  | $ | 147 |  |  | $ | 137 |
Charge-offs recognized in the allowance for credit losses |  |  | — |  |  |  | (11 | ) |  |  | (9 | )
Fair value of other real estate owned remeasured at initial recognition |  | $ | — |  |  | $ | 136 |  |  | $ | 128 |
Other real estate owned remeasured subsequent to initial recognition: |  |  |  |  |  |  |  |  |  |  |  |
Carrying value of other real estate owned prior to remeasurement |  | $ | 62 |  |  | $ | 35 |  |  | $ | — |
Write-downs included in collection and other real estate owned expense |  |  | (1 | ) |  |  | (10 | ) |  |  | — |
Fair value of other real estate owned remeasured subsequent to initial recognition |  | $ | 61 |  |  | $ | 25 |  |  | $ | — |
The following table presents quantitative information about nonrecurring Level 3 fair value measurements as of:
|  | Fair Value |  |  | Valuation Technique(s) |  | Unobservable Input(s) |  | Range (Weighted Average)
September 30, 2020 |  |  |  |  |  |  |  |  |  |
Other real estate owned |  | $ | 310 |  |  | Appraisal value of collateral |  | Selling costs or other normal adjustments |  | 10%-20% (16%)
|  | Fair Value |  |  | Valuation Technique(s) |  | Unobservable Input(s) |  | Range (Weighted Average)
December 31, 2019 |  |  |  |  |  |  |  |  |  |
Impaired loans |  | $ | 20,028 |  |  | Fair value of collateral - sales comparison approach |  | Selling costs or other normal adjustments: Real estate Equipment |  | 10%-20% (16%) 10%-20% (12%)
Other real estate owned |  | $ | 603 |  |  | Appraisal value of collateral |  | Selling costs or other normal adjustments |  | 10%-20% (16%)
The following table presents information on individually evaluated collateral dependent loans as of September 30, 2020:
|  | Fair Value Measurements Using |  |  |  |  |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total Fair Value |
Commercial and industrial |  | $ | — |  |  | $ | — |  |  | $ | 92 |  |  | $ | 92 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and development |  |  | — |  |  |  | — |  |  |  | 435 |  |  |  | 435 |
Commercial real estate |  |  | — |  |  |  | — |  |  |  | 7,997 |  |  |  | 7,997 |
Farmland |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
1-4 family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Overdrafts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | — |  |  | $ | — |  |  | $ | 8,524 |  |  | $ | 8,524 |
The carrying amounts and estimated fair values of financial instruments not previously discussed in this note, as of September 30, 2020 and December 31, 2019, are as follows:
|  | Fair value measurements as of September 30, 2020 using: |
|  | Carrying Amount |  |  | Level 1 Inputs |  |  | Level 2 Inputs |  |  | Level 3 Inputs |  |  | Total Fair Value |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash, due from banks, federal funds sold and interest-bearing deposits |  | $ | 193,371 |  |  | $ | 193,371 |  |  | $ | — |  |  | $ | — |  |  | $ | 193,371 |
Loans, net |  |  | 1,921,234 |  |  |  | — |  |  |  | — |  |  |  | 1,932,813 |  |  |  | 1,932,813 |
Accrued interest receivable |  |  | 8,361 |  |  |  | — |  |  |  | 8,361 |  |  |  | — |  |  |  | 8,361 |
Nonmarketable equity securities |  |  | 13,493 |  |  |  | — |  |  |  | 13,493 |  |  |  | — |  |  |  | 13,493 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 2,223,082 |  |  | $ | 1,834,047 |  |  | $ | 391,237 |  |  | $ | — |  |  | $ | 2,225,284 |
Securities sold under repurchase agreements |  |  | 20,520 |  |  |  | — |  |  |  | 20,520 |  |  |  | — |  |  |  | 20,520 |
Accrued interest payable |  |  | 945 |  |  |  | — |  |  |  | 945 |  |  |  | — |  |  |  | 945 |
Federal Home Loan Bank advances |  |  | 99,105 |  |  |  | — |  |  |  | 99,144 |  |  |  | — |  |  |  | 99,144 |
Subordinated debentures |  |  | 20,310 |  |  |  | — |  |  |  | 17,891 |  |  |  | — |  |  |  | 17,891 |
|  | Fair value measurements as of December 31, 2019 using: |
|  | Carrying Amount |  |  | Level 1 Inputs |  |  | Level 2 Inputs |  |  | Level 3 Inputs |  |  | Total Fair Value |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash, due from banks, federal funds sold and interest-bearing deposits |  | $ | 90,714 |  |  | $ | 90,714 |  |  | $ | — |  |  | $ | — |  |  | $ | 90,714 |
Marketable securities held to maturity |  |  | 155,458 |  |  |  | — |  |  |  | 160,460 |  |  |  | — |  |  |  | 160,460 |
Loans, net |  |  | 1,690,794 |  |  |  | — |  |  |  | — |  |  |  | 1,705,155 |  |  |  | 1,705,155 |
Accrued interest receivable |  |  | 9,151 |  |  |  | — |  |  |  | 9,151 |  |  |  | — |  |  |  | 9,151 |
Nonmarketable equity securities |  |  | 12,301 |  |  |  | — |  |  |  | 12,301 |  |  |  | — |  |  |  | 12,301 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 1,956,804 |  |  | $ | 1,438,509 |  |  | $ | 520,469 |  |  | $ | — |  |  | $ | 1,958,978 |
Securities sold under repurchase agreements |  |  | 11,100 |  |  |  | — |  |  |  | 11,100 |  |  |  | — |  |  |  | 11,100 |
Accrued interest payable |  |  | 1,642 |  |  |  | — |  |  |  | 1,642 |  |  |  | — |  |  |  | 1,642 |
Federal Home Loan Bank advances |  |  | 55,118 |  |  |  | — |  |  |  | 55,125 |  |  |  | — |  |  |  | 55,125 |
Subordinated debentures |  |  | 10,810 |  |  |  | — |  |  |  | 8,677 |  |  |  | — |  |  |  | 8,677 |
The methods and assumptions, not previously presented, used to estimate fair values are described as follows: Cash and Cash Equivalents The carrying amounts of cash and short-term instruments approximate fair values (Level 1). Loans, net The fair value of fixed-rate loans and variable-rate loans that reprice on an infrequent basis is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality (Level 3). Cash Surrender Value of Life Insurance The carrying amounts of bank-owned life insurance approximate their fair value (Level 2). Nonmarketable Equity Securities It is not practical to determine the fair value of Independent Bankers Financial Corporation, Federal Home Loan Bank, Federal Reserve Bank and other stock due to restrictions placed on its transferability. Deposits and Securities Sold Under Repurchase Agreements The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) (Level 1). The fair values of deposit liabilities with defined maturities are estimated by discounting future cash flows using interest rates currently offered for deposits of similar remaining maturities (Level 2). Other Borrowings The fair value of borrowings, consisting of lines of credit, Federal Home Loan Bank advances and Subordinated debentures is estimated by discounting future cash flows using currently available rates for similar financing (Level 2). Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate their fair values (Level 2). Off-balance Sheet Instruments Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration