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Bank segment (Tables)
 6 Months Ended
Jun. 30, 2014
Bank subsidiary  
Schedule of statements of income data
Selected financial information
American Savings Bank, F.S.B.
Statements of Income Data
 
 
Three months  
 ended June 30
 
Six months  
 ended June 30
(in thousands)
 
2014
 
2013
 
2014
 
2013
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
43,851

 
$
43,624

 
$
87,533

 
$
86,227

Interest and dividends on investment and mortgage-related securities
 
2,950

 
3,234

 
5,985

 
6,698

Total interest and dividend income
 
46,801

 
46,858

 
93,518

 
92,925

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
1,237

 
1,296

 
2,462

 
2,608

Interest on other borrowings
 
1,420

 
1,178

 
2,825

 
2,342

Total interest expense
 
2,657

 
2,474

 
5,287

 
4,950

Net interest income
 
44,144

 
44,384

 
88,231

 
87,975

Provision (credit) for loan losses
 
1,021

 
(959
)
 
2,016

 
899

Net interest income after provision (credit) for loan losses
 
43,123

 
45,343

 
86,215

 
87,076

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
5,217

 
7,996

 
10,345

 
15,639

Fee income on deposit liabilities
 
4,645

 
4,433

 
9,066

 
8,747

Fee income on other financial products
 
2,064

 
1,780

 
4,354

 
3,574

Mortgage banking income
 
246

 
2,003

 
874

 
5,349

Gain on sale of securities
 
—

 
1,226

 
2,847

 
1,226

Other income, net
 
1,643

 
1,731

 
3,231

 
3,323

Total noninterest income
 
13,815

 
19,169

 
30,717

 
37,858

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
19,872

 
20,063

 
40,158

 
40,151

Occupancy
 
4,489

 
4,219

 
8,442

 
8,342

Data processing
 
2,971

 
2,827

 
6,031

 
5,814

Services
 
2,855

 
2,328

 
5,128

 
4,431

Equipment
 
1,609

 
1,870

 
3,254

 
3,644

Other expense
 
8,094

 
8,500

 
15,247

 
16,095

Total noninterest expense
 
39,890

 
39,807

 
78,260

 
78,477

Income before income taxes
 
17,048

 
24,705

 
38,672

 
46,457

Income taxes
 
5,372

 
8,786

 
12,457

 
16,383

Net income
 
$
11,676

 
$
15,919

 
$
26,215

 
$
30,074
Schedule of statements of comprehensive income data
American Savings Bank, F.S.B.
Statements of Comprehensive Income Data
 
 
Three months  
 ended June 30
 
Six months  
 ended June 30
(in thousands)
 
2014
 
2013
 
2014
 
2013
Net income
 
$
11,676

 
$
15,919

 
$
26,215

 
$
30,074

Other comprehensive income (loss), net of taxes:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits of ($1,679), $5,485, ($3,343) and $6,032 for the respective periods
 
2,543

 
(8,307
)
 
5,063

 
(9,135
)
Less: reclassification adjustment for net realized gains included in net income, net of taxes of nil, $488, $1,132 and $488 for the respective periods
 
—

 
(738
)
 
(1,715
)
 
(738
)
Retirement benefit plans:
 
 

 
 

 
 

 
 

Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $142, $308, $286 and $1,732 for the respective periods
 
215

 
466

 
434

 
2,623

Other comprehensive income (loss), net of taxes
 
2,758

 
(8,579
)
 
3,782

 
(7,250
)
Comprehensive income
 
$
14,434

 
$
7,340

 
$
29,997

 
$
22,824
Schedule of balance sheets data
American Savings Bank, F.S.B.
Balance Sheets Data
 
(in thousands)
 
June 30, 2014
 
December 31, 2013
Assets
 
 

 
 

 
 

 
 

Cash and cash equivalents
 
 

 
$
174,950

 
 

 
$
156,603

Available-for-sale investment and mortgage-related securities
 
 

 
549,321

 
 

 
529,007

Investment in stock of Federal Home Loan Bank of Seattle
 
 

 
80,863

 
 

 
92,546

Loans receivable held for investment
 
 

 
4,287,612

 
 

 
4,150,229

Allowance for loan losses
 
 

 
(42,372
)
 
 

 
(40,116
)
Loans receivable held for investment, net
 
 

 
4,245,240

 
 

 
4,110,113

Loans held for sale, at lower of cost or fair value
 
 

 
956

 
 

 
5,302

Other
 
 

 
284,607

 
 

 
268,063

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
5,418,127

 
 

 
$
5,243,824

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,301,758

 
 

 
$
1,214,418

Deposit liabilities—interest-bearing
 
 

 
3,223,102

 
 

 
3,158,059

Other borrowings
 
 

 
242,455

 
 

 
244,514

Other
 
 

 
116,953

 
 

 
105,679

Total liabilities
 
 

 
4,884,268

 
 

 
4,722,670

Commitments and contingencies (see “Litigation” below)
 
 

 
 

 
 

 
 

Common stock
 
 

 
337,262

 
 

 
336,054

Retained earnings
 
 

 
205,012

 
 

 
197,297

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(315
)
 
 

 
$
(3,663
)
 
 

Retirement benefit plans
 
(8,100
)
 
(8,415
)
 
(8,534
)
 
(12,197
)
Total shareholder’s equity
 
 

 
533,859

 
 

 
521,154

Total liabilities and shareholder’s equity
 
 

 
$
5,418,127

 
 

 
$
5,243,824

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
131,959

 
 

 
$
129,963

Premises and equipment, net
 
 

 
68,254

 
 

 
67,766

Prepaid expenses
 
 

 
3,878

 
 

 
3,616

Accrued interest receivable
 
 

 
13,354

 
 

 
13,133

Mortgage-servicing rights
 
 

 
11,605

 
 

 
11,687

Low-income housing equity investments
 
 
 
23,820

 
 
 
14,543

Real estate acquired in settlement of loans, net
 
 

 
1,045

 
 

 
1,205

Other
 
 

 
30,692

 
 

 
26,150

 
 
 

 
$
284,607

 
 

 
$
268,063

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
24,440

 
 

 
$
19,989

Federal and state income taxes payable
 
 

 
38,940

 
 

 
37,807

Cashier’s checks
 
 

 
21,286

 
 

 
21,110

Advance payments by borrowers
 
 

 
9,852

 
 

 
9,647

Other
 
 

 
22,435

 
 

 
17,126

 
 
 

 
$
116,953

 
 

 
$
105,679
Schedule of the book value and aggregate fair value by major security type
Available-for-sale securities.  The book value (amortized cost), gross unrealized gains and losses, estimated fair value and gross unrealized losses (fair value and amount by duration of time in which positions have been held in a continuous loss position) for securities held in ASB’s “available-for-sale” portfolio by major security type were as follows:
 
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair
value
 
Gross unrealized losses
 
 
 
 
 
 
Less than 12 months
 
12 months or longer
(in thousands)
 
 
 
 
 
Fair value
 
Amount
 
Fair value
 
Amount
June 30, 2014
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury and federal agency obligations
 
$
102,472

 
$
889

 
$
(1,332
)
 
$
102,029

 
$
14,950

 
$
(79
)
 
$
29,443

 
$
(1,253
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
447,373

 
6,529

 
(6,610
)
 
447,292

 
72,721

 
(443
)
 
154,149

 
(6,167
)
Municipal bonds
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
549,845

 
$
7,418

 
$
(7,942
)
 
$
549,321

 
$
87,671

 
$
(522
)
 
$
183,592

 
$
(7,420
)
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal agency obligations
 
$
83,193

 
$
174

 
$
(2,394
)
 
$
80,973

 
$
70,779

 
$
(2,394
)
 
$
—

 
$
—

Mortgage-related securities- FNMA, FHLMC and GNMA
 
374,993

 
4,911

 
(10,460
)
 
369,444

 
228,543

 
(8,819
)
 
19,655

 
(1,641
)
Municipal bonds
 
76,904

 
1,826

 
(140
)
 
78,590

 
14,478

 
(140
)
 
—

 
—

 
 
$
535,090

 
$
6,911

 
$
(12,994
)
 
$
529,007

 
$
313,800

 
$
(11,353
)
 
$
19,655

 
$
(1,641
)
Schedule of contractual maturities of available-for-sale securities
The following table details the contractual maturities of available-for-sale securities. All positions with variable maturities (e.g. callable debentures and mortgage-related securities) are disclosed based upon the bond’s contractual maturity. Actual maturities will likely differ from these contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.
June 30, 2014
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Due in one year or less
 
$
—

 
$
—

Due after one year through five years
 
44,492

 
44,538

Due after five years through ten years
 
32,303

 
32,839

Due after ten years
 
25,677

 
24,652

 
 
102,472

 
102,029

Mortgage-related securities-FNMA,FHLMC and GNMA
 
447,373

 
447,292

Total available-for-sale securities
 
$
549,845

 
$
549,321
Schedule of allowance for loan losses
The allowance for loan losses (balances and changes) and financing receivables were as follows:
(in thousands)
 
Residential
1-4 family
 
Commercial real
estate
 
Home
equity line of credit
 
Residential land
 
Commercial construction
 
Residential construction
 
Commercial loans
 
Consumer loans
 
Unallocated
 
Total
Three months ended 
 June 30, 2014
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
5,475

 
$
5,715

 
$
5,969

 
$
1,575

 
$
3,063

 
$
24

 
$
15,592

 
$
2,316

 
$
1,194

 
$
40,923

Charge-offs
 
(94
)
 
—

 
(136
)
 
(47
)
 
—

 
—

 
(246
)
 
(461
)
 
—

 
(984
)
Recoveries
 
555

 
—

 
314

 
77

 
—

 
—

 
225

 
241

 
—

 
1,412

Provision
 
(269
)
 
1,515

 
934

 
232

 
327

 
2

 
(427
)
 
(99
)
 
(1,194
)
 
1,021

Ending balance
 
$
5,667

 
$
7,230

 
$
7,081

 
$
1,837

 
$
3,390

 
$
26

 
$
15,144

 
$
1,997

 
$
—

 
$
42,372

Three months ended 
 June 30, 2013
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
6,011

 
$
6,656

 
$
4,557

 
$
2,743

 
$
1,872

 
$
12

 
$
14,963

 
$
3,655

 
$
2,261

 
$
42,730

Charge-offs
 
(846
)
 
—

 
(68
)
 
(8
)
 
—

 
—

 
(924
)
 
(759
)
 
—

 
(2,605
)
Recoveries
 
1,033

 
—

 
62

 
363

 
—

 
—

 
220

 
160

 
—

 
1,838

Provision
 
159

 
(2,539
)
 
458

 
(911
)
 
433

 
2

 
2,048

 
(657
)
 
48

 
(959
)
Ending balance
 
$
6,357

 
$
4,117

 
$
5,009

 
$
2,187

 
$
2,305

 
$
14

 
$
16,307

 
$
2,399

 
$
2,309

 
$
41,004

Six months ended 
 June 30, 2014
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
5,534

 
$
5,059

 
$
5,229

 
$
1,817

 
$
2,397

 
$
19

 
$
15,803

 
$
2,367

 
$
1,891

 
$
40,116

Charge-offs
 
(360
)
 
—

 
(136
)
 
(53
)
 
—

 
—

 
(370
)
 
(1,022
)
 
—

 
(1,941
)
Recoveries
 
896

 
—

 
325

 
163

 
—

 
—

 
325

 
472

 
—

 
2,181

Provision
 
(403
)
 
2,171

 
1,663

 
(90
)
 
993

 
7

 
(614
)
 
180

 
(1,891
)
 
2,016

Ending balance
 
$
5,667

 
$
7,230

 
$
7,081

 
$
1,837

 
$
3,390

 
$
26

 
$
15,144

 
$
1,997

 
$
—

 
$
42,372

Ending balance: individually evaluated for impairment
 
$
969

 
$
941

 
$
14

 
$
1,202

 
$
—

 
$
—

 
$
1,239

 
$
5

 
$
—

 
$
4,370

Ending balance: collectively evaluated for impairment
 
$
4,698

 
$
6,289

 
$
7,067

 
$
635

 
$
3,390

 
$
26

 
$
13,905

 
$
1,992

 
$
—

 
$
38,002

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,019,092

 
$
476,116

 
$
790,837

 
$
17,189

 
$
80,312

 
$
17,441

 
$
782,804

 
$
111,254

 
$
—

 
$
4,295,045

Ending balance: individually evaluated for impairment
 
$
17,978

 
$
4,512

 
$
612

 
$
9,320

 
$
—

 
$
—

 
$
18,042

 
$
17

 
$
—

 
$
50,481

Ending balance: collectively evaluated for impairment
 
$
2,001,114

 
$
471,604

 
$
790,225

 
$
7,869

 
$
80,312

 
$
17,441

 
$
764,762

 
$
111,237

 
$
—

 
$
4,244,564

Six months ended 
 June 30, 2013
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
6,068

 
$
2,965

 
$
4,493

 
$
4,275

 
$
2,023

 
$
9

 
$
15,931

 
$
4,019

 
$
2,202

 
$
41,985

Charge-offs
 
(1,056
)
 
—

 
(738
)
 
(235
)
 
—

 
—

 
(1,350
)
 
(1,404
)
 
—

 
(4,783
)
Recoveries
 
1,225

 
—

 
256

 
500

 
—

 
—

 
612

 
310

 
—

 
2,903

Provision
 
120

 
1,152

 
998

 
(2,353
)
 
282

 
5

 
1,114

 
(526
)
 
107

 
899

Ending balance
 
$
6,357

 
$
4,117

 
$
5,009

 
$
2,187

 
$
2,305

 
$
14

 
$
16,307

 
$
2,399

 
$
2,309

 
$
41,004

Ending balance: individually evaluated for impairment
 
$
944

 
$
820

 
$
—

 
$
1,641

 
$
—

 
$
—

 
$
3,367

 
$
—

 
$
—

 
$
6,772

Ending balance: collectively evaluated for impairment
 
$
5,413

 
$
3,297

 
$
5,009

 
$
546

 
$
2,305

 
$
14

 
$
12,940

 
$
2,399

 
$
2,309

 
$
34,232

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
0

Ending balance
 
$
2,001,035

 
$
382,735

 
$
673,727

 
$
21,836

 
$
50,114

 
$
9,664

 
$
719,519

 
$
104,759

 
$
—

 
$
3,963,389

Ending balance: individually evaluated for impairment
 
$
21,417

 
$
3,811

 
$
837

 
$
16,041

 
$
—

 
$
—

 
$
21,431

 
$
20

 
$
—

 
$
63,557

Ending balance: collectively evaluated for impairment
 
$
1,979,618

 
$
378,924

 
$
672,890

 
$
5,795

 
$
50,114

 
$
9,664

 
$
698,088

 
$
104,739

 
$
—

 
$
3,899,832
Schedule of credit risk profile by internally assigned grade for loans
The credit risk profile by internally assigned grade for loans was as follows:
 
 
June 30, 2014
 
December 31, 2013
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
413,902

 
$
63,454

 
$
723,201

 
$
375,217

 
$
52,112

 
$
703,053

Special mention
 
28,488

 
16,858

 
16,185

 
33,436

 
—

 
17,634

Substandard
 
29,995

 
—

 
40,366

 
28,020

 
—

 
59,663

Doubtful
 
3,731

 
—

 
3,052

 
3,770

 
—

 
3,038

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
476,116

 
$
80,312

 
$
782,804

 
$
440,443

 
$
52,112

 
$
783,388
Schedule of credit risk profile based on payment activity for loans
The credit risk profile based on payment activity for loans was as follows:
(in thousands)
 
30-59
days
past due
 
60-89
days
past due
 
Greater
than
90 days
 
Total
past due
 
Current
 
Total
financing
receivables
 
Recorded
investment>
90 days and
accruing
June 30, 2014
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
5,161

 
$
2,233

 
$
14,739

 
$
22,133

 
$
1,996,959

 
$
2,019,092

 
$
—

Commercial real estate
 
—

 
—

 
3,731

 
3,731

 
472,385

 
476,116

 
—

Home equity line of credit
 
956

 
545

 
364

 
1,865

 
788,972

 
790,837

 
—

Residential land
 
230

 
—

 
145

 
375

 
16,814

 
17,189

 
52

Commercial construction
 
—

 
—

 
—

 
—

 
80,312

 
80,312

 
—

Residential construction
 
—

 
—

 
—

 
—

 
17,441

 
17,441

 
—

Commercial loans
 
266

 
52

 
2,717

 
3,035

 
779,769

 
782,804

 
—

Consumer loans
 
551

 
301

 
173

 
1,025

 
110,229

 
111,254

 
—

Total loans
 
$
7,164

 
$
3,131

 
$
21,869

 
$
32,164

 
$
4,262,881

 
$
4,295,045

 
$
52

December 31, 2013
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
2,728

 
$
622

 
$
15,411

 
$
18,761

 
$
1,987,246

 
$
2,006,007

 
$
—

Commercial real estate
 
—

 
—

 
3,770

 
3,770

 
436,673

 
440,443

 
—

Home equity line of credit
 
765

 
312

 
960

 
2,037

 
737,294

 
739,331

 
—

Residential land
 
184

 
48

 
2,756

 
2,988

 
13,188

 
16,176

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
52,112

 
52,112

 
—

Residential construction
 
—

 
—

 
—

 
—

 
12,774

 
12,774

 
—

Commercial loans
 
1,668

 
612

 
3,026

 
5,306

 
778,082

 
783,388

 
—

Consumer loans
 
436

 
158

 
304

 
898

 
107,824

 
108,722

 
—

Total loans
 
$
5,781

 
$
1,752

 
$
26,227

 
$
33,760

 
$
4,125,193

 
$
4,158,953

 
$
—
Schedule of credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due
The credit risk profile based on nonaccrual loans and accruing loans 90 days or more past due was as follows:
 
 
June 30, 2014
 
December 31, 2013
(in thousands)
 
Nonaccrual
loans
 
Accruing loans
90 days or
more past due
 
Nonaccrual
loans
 
Accruing loans
90 days or
more past due
Real estate loans:
 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
20,769

 
$
—

 
$
19,679

 
$
—

Commercial real estate
 
4,351

 
—

 
4,439

 
—

Home equity line of credit
 
1,197

 
—

 
2,060

 
—

Residential land
 
2,879

 
52

 
3,161

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial loans
 
14,391

 
—

 
18,781

 
—

Consumer loans
 
306

 
—

 
401

 
—

Total
 
$
43,893

 
$
52

 
$
48,521

 
$
—
Schedule of the carrying amount and the total unpaid principal balance of impaired loans, with and without recorded allowance for loans losses
The total carrying amount and the total unpaid principal balance of impaired loans, with and without recorded allowance for loan losses and combined, were as follows:
 
 
June 30, 2014
 
Three months ended 
 June 30, 2014
 
Six months ended 
 June 30, 2014
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
Allowance
 
Average
recorded
investment
 
Interest
income
recognized*
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
5,529

 
$
7,267

 
$
—

 
$
8,232

 
$
71

 
$
9,356

 
$
159

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
150

 
331

 
—

 
426

 
1

 
537

 
4

Residential land
 
2,876

 
3,759

 
—

 
2,844

 
42

 
2,930

 
98

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial loans
 
2,278

 
3,673

 
—

 
2,903

 
16

 
3,142

 
16

Consumer loans
 
—

 
—

 
—

 
12

 
—

 
15

 
—

 
 
10,833

 
15,030

 
—

 
14,417

 
130

 
15,980

 
277

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
10,264

 
10,352

 
969

 
8,219

 
88

 
6,912

 
191

Commercial real estate
 
4,512

 
4,650

 
941

 
4,527

 
1

 
4,550

 
3

Home equity line of credit
 
207

 
248

 
14

 
69

 
1

 
35

 
1

Residential land
 
6,445

 
6,523

 
1,202

 
6,509

 
88

 
6,838

 
220

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial loans
 
15,764

 
19,116

 
1,239

 
15,649

 
50

 
16,099

 
94

Consumer loans
 
17

 
17

 
5

 
5

 
—

 
3

 
—

 
 
37,209

 
40,906

 
4,370

 
34,978

 
228

 
34,437

 
509

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
15,793

 
17,619

 
969

 
16,451

 
159

 
16,268

 
350

Commercial real estate
 
4,512

 
4,650

 
941

 
4,527

 
1

 
4,550

 
3

Home equity line of credit
 
357

 
579

 
14

 
495

 
2

 
572

 
5

Residential land
 
9,321

 
10,282

 
1,202

 
9,353

 
130

 
9,768

 
318

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial loans
 
18,042

 
22,789

 
1,239

 
18,552

 
66

 
19,241

 
110

Consumer loans
 
17

 
17

 
5

 
17

 
—

 
18

 
—

 
 
$
48,042

 
$
55,936

 
$
4,370

 
$
49,395

 
$
358

 
$
50,417

 
$
786


 
 
December 31, 2013
 
Year ended December 31, 2013
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
allowance
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,708

 
$
12,144

 
$
—

 
$
11,674

 
$
386

Commercial real estate
 
—

 
—

 
—

 
802

 
—

Home equity line of credit
 
672

 
1,227

 
—

 
623

 
2

Residential land
 
2,622

 
3,612

 
—

 
6,675

 
482

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial loans
 
3,466

 
4,715

 
—

 
4,837

 
12

Consumer loans
 
19

 
19

 
—

 
20

 
—

 
 
16,487

 
21,717

 
—

 
24,631

 
882

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
6,216

 
6,236

 
642

 
6,455

 
372

Commercial real estate
 
4,604

 
4,686

 
1,118

 
5,745

 
152

Home equity line of credit
 
—

 
—

 
—

 
—

 
—

Residential land
 
7,452

 
7,623

 
1,332

 
6,844

 
409

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial loans
 
17,759

 
20,640

 
2,246

 
15,635

 
139

Consumer loans
 
—

 
—

 
—

 
—

 
—

 
 
36,031

 
39,185

 
5,338

 
34,679

 
1,072

Total
 
 

 
 

 
 

 
 

 
 

Real estate loans:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
15,924

 
18,380

 
642

 
18,129

 
758

Commercial real estate
 
4,604

 
4,686

 
1,118

 
6,547

 
152

Home equity line of credit
 
672

 
1,227

 
—

 
623

 
2

Residential land
 
10,074

 
11,235

 
1,332

 
13,519

 
891

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial loans
 
21,225

 
25,355

 
2,246

 
20,472

 
151

Consumer loans
 
19

 
19

 
—

 
20

 
—

 
 
$
52,518

 
$
60,902

 
$
5,338

 
$
59,310

 
$
1,954

 
*                 Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred were as follows for the indicated periods: 
 
 
Three months ended June 30, 2014
 
Six months ended June 30, 2014
 
 
Number of
 
Outstanding recorded investment
 
Number of
 
Outstanding recorded investment
(dollars in thousands)
 
contracts
 
Pre-modification
 
Post-modification
 
contracts
 
Pre-modification
 
Post-modification
Troubled debt restructurings
 
 
 
 

 
 

 
 
 
 

 
 

Real estate loans:
 
 
 
 

 
 

 
 
 
 

 
 

Residential 1-4 family
 
7
 
$
2,194

 
$
2,212

 
12
 
$
3,115

 
$
3,147

Commercial real estate
 
—
 
—

 
—

 
—
 
—

 
—

Home equity line of credit
 
—
 
—

 
—

 
—
 
—

 
—

Residential land
 
9
 
2,915

 
2,915

 
16
 
4,048

 
4,048

Commercial loans
 
2
 
754

 
754

 
5
 
1,227

 
1,227

Consumer loans
 
—
 
—

 
—

 
—
 
—

 
—

 
 
18
 
$
5,863

 
$
5,881

 
33
 
$
8,390

 
$
8,422


 
 
Three months ended June 30, 2013
 
Six months ended June 30, 2013
 
 
Number of
 
Outstanding recorded investment
 
Number of
 
Outstanding recorded investment
(dollars in thousands)
 
contracts
 
Pre-modification
 
Post-modification
 
contracts
 
Pre-modification
 
Post-modification
Troubled debt restructurings
 
 
 
 

 
 

 
 
 
 

 
 

Real estate loans:
 
 
 
 

 
 

 
 
 
 

 
 

Residential 1-4 family
 
14
 
$
4,645

 
$
4,775

 
18
 
$
5,767

 
$
5,838

Commercial real estate
 
—
 
—

 
—

 
—
 
—

 
—

Home equity line of credit
 
—
 
—

 
—

 
4
 
462

 
215

Residential land
 
4
 
1,116

 
1,163

 
7
 
2,040

 
2,031

Commercial loans
 
3
 
714

 
714

 
3
 
714

 
714

Consumer loans
 
—
 
—

 
—

 
—
 
—

 
—

 
 
21
 
$
6,475

 
$
6,652

 
32
 
$
8,983

 
$
8,798


Loans modified in TDRs that experienced a payment default of 90 days or more for the indicated periods, and for which the payment default occurred within one year of the modification, were as follows: 
 
 
Three months ended June 30, 2014
 
Six months ended June 30, 2014
(dollars in thousands)
 
Number of contracts
 
Recorded investment
 
Number of contracts
 
Recorded investment
Troubled debt restructurings that
 subsequently defaulted
 
 
 
 
 
 
 
 
Real estate loans:
 
 
 
 

 
 
 
 

Residential 1-4 family
 
1
 
$
390

 
1
 
$
390

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial loans
 
—
 
—

 
—
 
—

Consumer loans
 
—
 
—

 
—
 
—

 
 
1
 
$
390

 
1
 
$
390
Schedule of information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties
The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:
(in millions)
 
Gross amount of
recognized liabilities
 
Gross amount offset in
the Balance Sheet
 
Net amount of liabilities presented
in the Balance Sheet
Repurchase agreements
 
 

 
 

 
 

June 30, 2014
 
$
142

 
$
—

 
$
142

December 31, 2013
 
145

 
—

 
145

 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
Net amount of 
liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
 
Net amount
June 30, 2014
 
 

 
 

 
 

 
 

Financial institution
 
$
50

 
$
50

 
$
—

 
$
—

Commercial account holders
 
92

 
92

 
—

 
—

Total
 
$
142

 
$
142

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
December 31, 2013
 
 

 
 

 
 

 
 

Financial institution
 
$
51

 
$
51

 
$
—

 
$
—

Commercial account holders
 
94

 
94

 
—

 
—

Total
 
$
145

 
$
145

 
$
—

 
$
—
Schedule of amortized intangible assets
Amortized intangible assets. The table below presents the gross carrying amount, accumulated amortization, valuation allowance and net carrying amount of ASB’s mortgage servicing assets as of June 30, 2014 and 2013:
June 30
 
2014
 
2013
(in thousands)
 
Gross
carrying amount
 
Accumulated amortization
 
Valuation allowance
 
Net
carrying amount
 
Gross
carrying amount
 
Accumulated amortization
 
Valuation allowance
 
Net
carrying amount
Mortgage servicing assets
 
$
26,357

 
(14,578
)
 
(174
)
 
$
11,605

 
$
24,508

 
(12,866
)
 
(279
)
 
$
11,363

Changes in the valuation allowance for mortgage servicing assets were as follows:
(in thousands)
 
2014

 
2013

Valuation allowance, January 1
 
$
251

 
$
498

Provision (recovery)
 
(37
)
 
(98
)
Other-than-temporary impairment
 
(40
)
 
(121
)
Valuation allowance, June 30
 
$
174

 
$
279
Schedule of key assumptions used in estimating fair value
Key assumptions used in estimating the fair value of the bank’s mortgage servicing rights were as follows:
 
 
June 30, 2014

 
June 30, 2013

Unpaid principal balance (000s)
 
$
1,392,590

 
$
1,300,370

Weighted average note-rate
 
4.08
%
 
4.08
%
Weighted average discount rate
 
9.6
%
 
10.1
%
Weighted average prepayment speed
 
8.3
%
 
9.7
%
For loans classified as Level 3 as of June 30, 2014, the significant unobservable inputs used in the fair value measurement were as follows:
 
 
 
 
 
 
 
 
 
Significant unobservable
 input value 1
($ in thousands)
 
Fair value
 
Valuation technique
 
Significant unobservable input
 
Range
 
Weighted
Average
June 30, 2014
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
2,519

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
61-96%
 
85%
Commercial loans
 
336

 
Fair value of property or collateral
 
Fair value of business assets
 
19-49%
 
25%
Total loans
 
$
2,855

 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
2,361

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
44-96%
 
87%
Home equity lines of credit
 
170

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
45-50%
 
50%
Commercial loans
 
217

 
Fair value of property or collateral
 
Fair value of business assets
 
 
 
19%
Commercial loans
 
1,668

 
Discounted cash flow
 
Present value of expected future cash flows
 
 
 
58%
 
 
 
 
 
 
Discount rate
 
 
 
4.5%
Total loans
 
$
4,416

 
 
 
 
 
 
 
 
 1 Represent percent of outstanding principal balance.
Schedule of notional and fair value of derivatives
The notional amount and fair value of ASB’s derivative financial instruments as of June 30, 2014 and December 31, 2013 were as follows:
 
 
June 30, 2014
 
December 31, 2013
(dollars in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
6,932

 
$
—

 
$
25,070

 
$
464

Forward commitments
 
7,887

 
—

 
26,018

 
139
Schedule of derivative financial instruments
The following table presents ASB’s derivative financial instruments, their fair values, and balance sheet location as of June 30, 2014 and December 31, 2013:
Derivative Financial Instruments Not Designated
 
 
 
 
 
 
 
 
as Hedging Instruments 1
 
June 30, 2014
 
December 31, 2013
(dollars in thousands)
 
 Derivative asset
 
 Derivative liability
 
 Derivative asset
 
 Derivative liability
Interest rate lock commitments
 
$
—

 
$
—

 
$
488

 
$
24

Forward commitments
 
—

 
—

 
141

 
2

 
 
$
—

 
$
—

 
$
629

 
$
26

1 Derivative assets are included in other assets and derivative liabilities are included in other liabilities in the balance sheets.
Schedule of derivative financial instruments and net gain or loss
The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in the statements of income for the six months ended June 30, 2014 and 2013.
Derivative Financial Instruments Not Designated
Location of net gains
 
 
 
 
as Hedging Instruments
(losses) recognized in
 
Six months ended June 30
(dollars in thousands)
the Statement of Income
 
2014
 
2013
Interest rate lock commitments
Mortgage banking income
 
$
(464
)
 
$
(262
)
Forward commitments
Mortgage banking income
 
(139
)
 
900

 
 
 
$
(603
)
 
$
638