v3.26.1
Note 11 - Fair Values of Financial Instruments
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

11.  FAIR VALUES OF FINANCIAL INSTRUMENTS

 

The carrying amounts, estimated fair values and level within the fair value hierarchy of financial instruments were as follows:

 

  

Level in

 

June 30, 2026

  

December 31, 2025

 
  

Fair

                
  

Value

 

Carrying

  

Fair

  

Carrying

  

Fair

 

(Dollars in thousands)

 Hierarchy Values  Values  Values  Values 

Financial assets:

                   

Cash and cash equivalents

 

Level 1

 $340,931  $340,931  $473,324  $473,324 

Securities available for sale

 (1)  1,125,529   1,125,529   1,102,230   1,102,230 

FHLBI stock

 (2)  22,099   22,099   22,099   22,099 

Loans, net

 Level 3  4,860,112   4,898,266   4,763,697   4,830,844 

Mortgage loans held for sale

 

Level 2

  31,272   31,783   17,160   17,319 

Accrued interest receivable

 

Level 2

  23,685   23,685   23,638   23,638 

Interest rate swaps

 

Level 2

  16,923   16,923   23,212   23,212 
                    

Financial liabilities:

                   

Deposits

 Level 2  5,296,388   4,634,787   5,284,452   5,024,489 

Securities sold under agreements to repurchase

 

Level 2

  217,470   217,470   232,291   232,291 

FHLBI advances

 Level 2  305,322   297,864   326,221   321,069 

Subordinated debentures

 Level 2  51,358   58,076   51,015   51,019 

Subordinated notes

 Level 2  89,829   87,813   89,657   86,826 

Term note

 Level 2  25,000   25,000   30,000   30,000 

Accrued interest payable

 

Level 2

  7,208   7,208   9,921   9,921 

Interest rate swaps

 Level 2  17,126   17,126   23,532   23,532 

 

 

(1)

See Note 12 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 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.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market for the asset or liability. The price of the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.