Note 10 - Fair Values of Financial Instruments

3 Months Ended

Mar. 31, 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 March 31, 2024 and December 31, 2023:

	Level in	March 31, 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	$	237,231	$	237,231	$	130,533	$	130,533
Securities available for sale	(1)		609,153		609,153		617,092		617,092
FHLBI stock	(2)		21,513		21,513		21,513		21,513
Loans, net	Level 3		4,270,368		4,243,647		4,253,844		4,191,644
Mortgage loans held for sale	Level 2		14,393		14,603		18,607		19,027
Accrued interest receivable	Level 2		21,681		21,681		19,806		19,806
Interest rate swaps	Level 2		29,661		29,661		27,505		27,505
Financial liabilities:
Deposits	Level 2		4,007,810		3,900,366		3,900,918		3,814,778
Securities sold under agreements to repurchase	Level 2		228,618		228,618		229,734		229,734
FHLBI advances	Level 2		447,083		430,397		467,910		454,857
Subordinated debentures	Level 2		49,815		49,824		49,644		49,653
Subordinated notes	Level 2		89,057		78,131		88,971		77,218
Accrued interest payable	Level 2		10,107		10,107		9,012		9,012
Interest rate swaps	Level 2		30,036		30,036		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.