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Bank segment (Tables)
 6 Months Ended
Jun. 30, 2017
Bank subsidiary  
Schedule of statements of income data
Statements of Income Data (unaudited)
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
52,317

 
$
49,690

 
$
103,059

 
$
98,127

Interest and dividends on investment securities
 
6,763

 
4,443

 
13,743

 
9,460

Total interest and dividend income
 
59,080

 
54,133

 
116,802

 
107,587

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
2,311

 
1,691

 
4,414

 
3,283

Interest on other borrowings
 
824

 
1,467

 
1,640

 
2,952

Total interest expense
 
3,135

 
3,158

 
6,054

 
6,235

Net interest income
 
55,945

 
50,975

 
110,748

 
101,352

Provision for loan losses
 
2,834

 
4,753

 
6,741

 
9,519

Net interest income after provision for loan losses
 
53,111

 
46,222

 
104,007

 
91,833

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
5,810

 
5,701

 
11,420

 
11,200

Fee income on deposit liabilities
 
5,565

 
5,262

 
10,993

 
10,418

Fee income on other financial products
 
1,971

 
2,207

 
3,837

 
4,412

Bank-owned life insurance
 
1,925

 
1,006

 
2,908

 
2,004

Mortgage banking income
 
587

 
1,554

 
1,376

 
2,749

Gains on sale of investment securities, net
 
—

 
598

 
—

 
598

Other income, net
 
391

 
288

 
849

 
621

Total noninterest income
 
16,249

 
16,616

 
31,383

 
32,002

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
24,742

 
21,919

 
47,979

 
44,353

Occupancy
 
4,185

 
4,115

 
8,339

 
8,253

Data processing
 
3,207

 
3,277

 
6,487

 
6,449

Services
 
2,766

 
2,755

 
5,126

 
5,666

Equipment
 
1,771

 
1,771

 
3,519

 
3,434

Office supplies, printing and postage
 
1,527

 
1,583

 
3,062

 
2,948

Marketing
 
839

 
899

 
1,356

 
1,760

FDIC insurance
 
822

 
913

 
1,550

 
1,797

Other expense
 
4,705

 
5,382

 
9,016

 
9,357

Total noninterest expense
 
44,564

 
42,614

 
86,434

 
84,017

Income before income taxes
 
24,796

 
20,224

 
48,956

 
39,818

Income taxes
 
8,063

 
6,939

 
16,410

 
13,860

Net income
 
$
16,733

 
$
13,285

 
$
32,546

 
$
25,958
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data (unaudited)
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Net income
 
$
16,733

 
$
13,285

 
$
32,546

 
$
25,958

Other comprehensive income, net of taxes:
 
 

 
 

 
 

 
 

Net unrealized gains on available-for-sale investment securities:
 
 

 
 

 
 

 
 

Net unrealized gains on available-for-sale investment securities arising during the period, net of taxes of $1,334, $1,925, $1,482 and $6,830, respectively
 
2,021

 
2,915

 
2,244

 
10,344

Reclassification adjustment for net realized gains included in net income, net of taxes of nil, $238, nil and $238, respectively
 
—

 
(360
)
 
—

 
(360
)
Retirement benefit plans:
 
 

 
 

 
 

 
 

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $133, $140, $537 and $277, respectively
 
202

 
211

 
814

 
419

Other comprehensive income, net of taxes
 
2,223

 
2,766

 
3,058

 
10,403

Comprehensive income
 
$
18,956

 
$
16,051

 
$
35,604

 
$
36,361
Schedule of balance sheets data
Balance Sheets Data (unaudited)
(in thousands)
 
June 30, 2017
 
December 31, 2016
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
128,609

 
 

 
$
137,083

Interest-bearing deposits
 
 
 
37,049

 
 
 
52,128

Restricted cash
 
 
 
—

 
 
 
1,764

Available-for-sale investment securities, at fair value
 
 

 
1,302,886

 
 

 
1,105,182

Stock in Federal Home Loan Bank, at cost
 
 

 
11,706

 
 

 
11,218

Loans receivable held for investment
 
 

 
4,744,634

 
 

 
4,738,693

Allowance for loan losses
 
 

 
(56,356
)
 
 

 
(55,533
)
Net loans
 
 

 
4,688,278

 
 

 
4,683,160

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

 
5,261

 
 

 
18,817

Other
 
 

 
354,898

 
 

 
329,815

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
6,610,877

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,694,150

 
 

 
$
1,639,051

Deposit liabilities—interest-bearing
 
 

 
4,030,236

 
 

 
3,909,878

Other borrowings
 
 

 
188,130

 
 

 
192,618

Other
 
 

 
101,974

 
 

 
101,635

Total liabilities
 
 

 
6,014,490

 
 

 
5,843,182

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid in capital
 
 
 
344,062

 
 
 
342,704

Retained earnings
 
 

 
271,739

 
 

 
257,943

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(5,687
)
 
 

 
$
(7,931
)
 
 

Retirement benefit plans
 
(13,728
)
 
(19,415
)
 
(14,542
)
 
(22,473
)
Total shareholder’s equity
 
 

 
596,387

 
 

 
578,175

Total liabilities and shareholder’s equity
 
 

 
$
6,610,877

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
146,122

 
 

 
$
143,197

Premises and equipment, net
 
 

 
108,158

 
 

 
90,570

Prepaid expenses
 
 

 
4,632

 
 

 
3,348

Accrued interest receivable
 
 

 
16,949

 
 

 
16,824

Mortgage-servicing rights
 
 

 
9,181

 
 

 
9,373

Low-income housing equity investments
 
 
 
48,596

 
 
 
47,081

Real estate acquired in settlement of loans, net
 
 

 
1,554

 
 

 
1,189

Other
 
 

 
19,706

 
 

 
18,233

 
 
 

 
$
354,898

 
 

 
$
329,815

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
34,451

 
 

 
$
36,754

Federal and state income taxes payable
 
 

 
6,336

 
 

 
4,728

Cashier’s checks
 
 

 
24,191

 
 

 
24,156

Advance payments by borrowers
 
 

 
10,334

 
 

 
10,335

Other
 
 

 
26,662

 
 

 
25,662

 
 
 

 
$
101,974

 
 

 
$
101,635
Schedule of the book value and aggregate fair value by major security type
The major components of investment securities 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
(dollars in thousands)
 
 
 
 
 
Number of issues
 
Fair 
value
 
Amount
 
Number of issues
 
Fair 
value
 
Amount
June 30, 2017
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
187,289

 
$
947

 
$
(1,653
)
 
$
186,583

 
16

 
$
104,417

 
$
(1,532
)
 
1

 
$
3,186

 
$
(121
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
1,109,613

 
2,202

 
(10,939
)
 
1,100,876

 
98

 
759,643

 
(9,658
)
 
13

 
43,296

 
(1,281
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,312,329

 
$
3,149

 
$
(12,592
)
 
$
1,302,886

 
114

 
$
864,060

 
$
(11,190
)
 
14

 
$
46,482

 
$
(1,402
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
193,515

 
$
920

 
$
(2,154
)
 
$
192,281

 
18

 
$
123,475

 
$
(2,010
)
 
1

 
$
3,485

 
$
(144
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
909,408

 
1,742

 
(13,676
)
 
897,474

 
88

 
709,655

 
(12,143
)
 
13

 
47,485

 
(1,533
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,118,350

 
$
2,662

 
$
(15,830
)
 
$
1,105,182

 
106

 
$
833,130

 
$
(14,153
)
 
14

 
$
50,970

 
$
(1,677
)
Schedule of contractual maturities of available-for-sale securities
The contractual maturities of available-for-sale investment securities were as follows:
June 30, 2017
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Due in one year or less
 
$
9,992

 
$
9,993

Due after one year through five years
 
77,151

 
77,307

Due after five years through ten years
 
85,724

 
85,258

Due after ten years
 
29,849

 
29,452

 
 
202,716

 
202,010

Mortgage-related securities-FNMA, FHLMC and GNMA
 
1,109,613

 
1,100,876

Total available-for-sale securities
 
$
1,312,329

 
$
1,302,886
Schedule of components of loans receivable
The components of loans receivable were summarized as follows:
 
June 30, 2017
 
December 31, 2016
(in thousands)
 

 
 

Real estate:
 

 
 

Residential 1-4 family
$
2,061,549

 
$
2,048,051

Commercial real estate
808,900

 
800,395

Home equity line of credit
883,135

 
863,163

Residential land
16,009

 
18,889

Commercial construction
116,548

 
126,768

Residential construction
10,759

 
16,080

Total real estate
3,896,900

 
3,873,346

Commercial
649,657

 
692,051

Consumer
201,199

 
178,222

Total loans
4,747,756

 
4,743,619

Less: Deferred fees and discounts
(3,122
)
 
(4,926
)
          Allowance for loan losses
(56,356
)
 
(55,533
)
Total loans, net
$
4,688,278

 
$
4,683,160
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
 
Unallo-cated
 
Total
Three months ended June 30, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,781

 
$
16,504

 
$
5,417

 
$
1,479

 
$
7,257

 
$
11

 
$
14,902

 
$
7,646

 
$
—

 
$
55,997

Charge-offs
 
—

 
—

 
—

 
(92
)
 
—

 
—

 
(752
)
 
(2,390
)
 
—

 
(3,234
)
Recoveries
 
49

 
—

 
39

 
15

 
—

 
—

 
299

 
357

 
—

 
759

Provision
 
300

 
2,336

 
71

 
(138
)
 
(2,551
)
 
(2
)
 
103

 
2,715

 
—

 
2,834

Ending balance
 
$
3,130

 
$
18,840

 
$
5,527

 
$
1,264

 
$
4,706

 
$
9

 
$
14,552

 
$
8,328

 
$
—

 
$
56,356

Three months ended June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,593

 
$
11,806

 
$
7,172

 
$
1,740

 
$
6,164

 
$
12

 
$
16,991

 
$
3,848

 
$
—

 
$
52,326

Charge-offs
 
(15
)
 
—

 
—

 
—

 
—

 
—

 
(962
)
 
(1,528
)
 
—

 
(2,505
)
Recoveries
 
35

 
—

 
16

 
16

 
—

 
—

 
425

 
265

 
—

 
757

Provision
 
(229
)
 
1,755

 
648

 
(67
)
 
829

 
—

 
631

 
1,186

 
—

 
4,753

Ending balance
 
$
4,384

 
$
13,561

 
$
7,836

 
$
1,689

 
$
6,993

 
$
12

 
$
17,085

 
$
3,771

 
$
—

 
$
55,331

Six months ended June 30, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,873

 
$
16,004

 
$
5,039

 
$
1,738

 
$
6,449

 
$
12

 
$
16,618

 
$
6,800

 
$
—

 
$
55,533

Charge-offs
 
(6
)
 
—

 
(14
)
 
(92
)
 
—

 
—

 
(2,262
)
 
(5,200
)
 
—

 
(7,574
)
Recoveries
 
58

 
—

 
130

 
218

 
—

 
—

 
596

 
654

 
—

 
1,656

Provision
 
205

 
2,836

 
372

 
(600
)
 
(1,743
)
 
(3
)
 
(400
)
 
6,074

 
—

 
6,741

Ending balance
 
$
3,130

 
$
18,840

 
$
5,527

 
$
1,264

 
$
4,706

 
$
9

 
$
14,552

 
$
8,328

 
$
—

 
$
56,356

June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,332

 
$
73

 
$
275

 
$
480

 
$
—

 
$
—

 
$
939

 
$
30

 
 
 
$
3,129

Ending balance: collectively evaluated for impairment
 
$
1,798

 
$
18,767

 
$
5,252

 
$
784

 
$
4,706

 
$
9

 
$
13,613

 
$
8,298

 
$
—

 
$
53,227

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,061,549

 
$
808,900

 
$
883,135

 
$
16,009

 
$
116,548

 
$
10,759

 
$
649,657

 
$
201,199

 
 
 
$
4,747,756

Ending balance: individually evaluated for impairment
 
$
19,188

 
$
1,289

 
$
6,684

 
$
2,589

 
$
—

 
$
—

 
$
4,283

 
$
68

 
 
 
$
34,101

Ending balance: collectively evaluated for impairment
 
$
2,042,361

 
$
807,611

 
$
876,451

 
$
13,420

 
$
116,548

 
$
10,759

 
$
645,374

 
$
201,131

 
 
 
$
4,713,655

Six months ended June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,186

 
$
11,342

 
$
7,260

 
$
1,671

 
$
4,461

 
$
13

 
$
17,208

 
$
3,897

 
$
—

 
$
50,038

Charge-offs
 
(60
)
 
—

 
—

 
—

 
—

 
—

 
(2,305
)
 
(3,098
)
 
—

 
(5,463
)
Recoveries
 
52

 
—

 
31

 
119

 
—

 
—

 
560

 
475

 
—

 
1,237

Provision
 
206

 
2,219

 
545

 
(101
)
 
2,532

 
(1
)
 
1,622

 
2,497

 
—

 
9,519

Ending balance
 
$
4,384

 
$
13,561

 
$
7,836

 
$
1,689

 
$
6,993

 
$
12

 
$
17,085

 
$
3,771

 
$
—

 
$
55,331

December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,352

 
$
80

 
$
215

 
$
789

 
$
—

 
$
—

 
$
1,641

 
$
6

 
 
 
$
4,083

Ending balance: collectively evaluated for impairment
 
$
1,521

 
$
15,924

 
$
4,824

 
$
949

 
$
6,449

 
$
12

 
$
14,977

 
$
6,794

 
$
—

 
$
51,450

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,048,051

 
$
800,395

 
$
863,163

 
$
18,889

 
$
126,768

 
$
16,080

 
$
692,051

 
$
178,222

 
 
 
$
4,743,619

Ending balance: individually evaluated for impairment
 
$
19,854

 
$
1,569

 
$
6,158

 
$
3,629

 
$
—

 
$
—

 
$
20,539

 
$
10

 
 
 
$
51,759

Ending balance: collectively evaluated for impairment
 
$
2,028,197

 
$
798,826

 
$
857,005

 
$
15,260

 
$
126,768

 
$
16,080

 
$
671,512

 
$
178,212

 
 
 
$
4,691,860
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, 2017
 
December 31, 2016
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
660,015

 
$
92,069

 
$
602,903

 
$
701,657

 
$
102,955

 
$
614,139

Special mention
 
95,656

 
22,500

 
19,429

 
65,541

 
—

 
25,229

Substandard
 
53,229

 
1,979

 
27,325

 
33,197

 
23,813

 
52,683

Doubtful
 
—

 
—

 
—

 
—

 
—

 
—

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
808,900

 
$
116,548

 
$
649,657

 
$
800,395

 
$
126,768

 
$
692,051
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, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
2,308

 
$
2,694

 
$
5,411

 
$
10,413

 
$
2,051,136

 
$
2,061,549

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
808,900

 
808,900

 
—

Home equity line of credit
 
502

 
494

 
1,516

 
2,512

 
880,623

 
883,135

 
—

Residential land
 
—

 
—

 
305

 
305

 
15,704

 
16,009

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
116,548

 
116,548

 
—

Residential construction
 
—

 
—

 
—

 
—

 
10,759

 
10,759

 
—

Commercial
 
1,486

 
614

 
1,096

 
3,196

 
646,461

 
649,657

 
—

Consumer
 
2,266

 
1,305

 
863

 
4,434

 
196,765

 
201,199

 
—

Total loans
 
$
6,562

 
$
5,107

 
$
9,191

 
$
20,860

 
$
4,726,896

 
$
4,747,756

 
$
—

December 31, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
5,467

 
$
2,338

 
$
3,505

 
$
11,310

 
$
2,036,741

 
$
2,048,051

 
$
—

Commercial real estate
 
2,416

 
—

 
—

 
2,416

 
797,979

 
800,395

 
—

Home equity line of credit
 
1,263

 
381

 
1,342

 
2,986

 
860,177

 
863,163

 
—

Residential land
 
—

 
—

 
255

 
255

 
18,634

 
18,889

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
126,768

 
126,768

 
—

Residential construction
 
—

 
—

 
—

 
—

 
16,080

 
16,080

 
—

Commercial
 
413

 
510

 
1,303

 
2,226

 
689,825

 
692,051

 
—

Consumer
 
1,945

 
1,001

 
963

 
3,909

 
174,313

 
178,222

 
—

Total loans
 
$
11,504

 
$
4,230

 
$
7,368

 
$
23,102

 
$
4,720,517

 
$
4,743,619

 
$
—
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, accruing loans 90 days or more past due and TDR loans was as follows:
(in thousands)
 
June 30, 2017
 
December 31, 2016
Real estate:
 
 

 
 

Residential 1-4 family
 
$
12,270

 
$
11,154

Commercial real estate
 
—

 
223

Home equity line of credit
 
4,306

 
3,080

Residential land
 
915

 
878

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
1,972

 
6,708

Consumer
 
1,501

 
1,282

  Total nonaccrual loans
 
$
20,964

 
$
23,325

Real estate:
 
 
 
 
Residential 1-4 family
 
$
—

 
$
—

Commercial real estate
 
—

 
—

Home equity line of credit
 
—

 
—

Residential land
 
—

 
—

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
—

 
—

Consumer
 
—

 
—

     Total accruing loans 90 days or more past due
 
$
—

 
$
—

Real estate:
 
 
 
 
Residential 1-4 family
 
$
13,112

 
$
14,450

Commercial real estate
 
1,289

 
1,346

Home equity line of credit
 
4,548

 
4,934

Residential land
 
1,674

 
2,751

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
2,692

 
14,146

Consumer
 
68

 
10

     Total troubled debt restructured loans not included above
 
$
23,383

 
$
37,637
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 were as follows:
 
 
June 30, 2017
 
Three months ended June 30, 2017
 
Six months ended June 30, 2017
(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:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,364

 
$
9,963

 
$
—

 
$
9,304

 
$
76

 
$
9,429

 
$
160

Commercial real estate
 
—

 
—

 
—

 
143

 
11

 
182

 
11

Home equity line of credit
 
2,287

 
2,707

 
—

 
2,401

 
51

 
2,203

 
65

Residential land
 
1,249

 
1,788

 
—

 
1,075

 
8

 
1,016

 
34

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
1,592

 
4,267

 
—

 
1,949

 
2

 
3,428

 
8

Consumer
 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
 
$
14,492

 
$
18,725

 
$
—

 
$
14,873

 
$
148

 
$
16,258

 
$
278

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,824

 
$
10,027

 
$
1,332

 
$
10,054

 
$
117

 
$
10,051

 
$
236

Commercial real estate
 
1,289

 
1,289

 
73

 
1,292

 
14

 
1,296

 
28

Home equity line of credit
 
4,397

 
4,425

 
275

 
4,372

 
47

 
4,467

 
96

Residential land
 
1,340

 
1,340

 
480

 
1,532

 
24

 
1,804

 
61

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
2,691

 
2,691

 
939

 
2,562

 
68

 
4,915

 
469

Consumer
 
68

 
68

 
30

 
68

 
1

 
49

 
1

 
 
$
19,609

 
$
19,840

 
$
3,129

 
$
19,880

 
$
271

 
$
22,582

 
$
891

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,188

 
$
19,990

 
$
1,332

 
$
19,358

 
$
193

 
$
19,480

 
$
396

Commercial real estate
 
1,289

 
1,289

 
73

 
1,435

 
25

 
1,478

 
39

Home equity line of credit
 
6,684

 
7,132

 
275

 
6,773

 
98

 
6,670

 
161

Residential land
 
2,589

 
3,128

 
480

 
2,607

 
32

 
2,820

 
95

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
4,283

 
6,958

 
939

 
4,511

 
70

 
8,343

 
477

Consumer
 
68

 
68

 
30

 
69

 
1

 
49

 
1

 
 
$
34,101

 
$
38,565

 
$
3,129

 
$
34,753

 
$
419

 
$
38,840

 
$
1,169


 
 
December 31, 2016
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
(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:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,571

 
$
10,400

 
$
—

 
$
10,672

 
$
152

 
$
10,532

 
$
203

Commercial real estate
 
223

 
228

 
—

 
1,152

 
—

 
1,163

 
—

Home equity line of credit
 
1,500

 
1,900

 
—

 
1,038

 
9

 
943

 
9

Residential land
 
1,218

 
1,803

 
—

 
1,484

 
15

 
1,537

 
31

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
6,299

 
8,869

 
—

 
8,369

 
7

 
5,818

 
13

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
18,811

 
$
23,200

 
$
—

 
$
22,715

 
$
183

 
$
19,993

 
$
256

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,283

 
$
10,486

 
$
1,352

 
$
11,982

 
$
115

 
$
12,000

 
$
237

Commercial real estate
 
1,346

 
1,346

 
80

 
2,519

 
—

 
1,686

 
—

Home equity line of credit
 
4,658

 
4,712

 
215

 
3,299

 
28

 
3,122

 
55

Residential land
 
2,411

 
2,411

 
789

 
2,977

 
54

 
3,177

 
121

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
14,240

 
14,240

 
1,641

 
16,821

 
180

 
16,896

 
210

Consumer
 
10

 
10

 
6

 
12

 
—

 
12

 
—

 
 
$
32,948

 
$
33,205

 
$
4,083

 
$
37,610

 
$
377

 
$
36,893

 
$
623

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,854

 
$
20,886

 
$
1,352

 
$
22,654

 
$
267

 
$
22,532

 
$
440

Commercial real estate
 
1,569

 
1,574

 
80

 
3,671

 
—

 
2,849

 
—

Home equity line of credit
 
6,158

 
6,612

 
215

 
4,337

 
37

 
4,065

 
64

Residential land
 
3,629

 
4,214

 
789

 
4,461

 
69

 
4,714

 
152

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
20,539

 
23,109

 
1,641

 
25,190

 
187

 
22,714

 
223

Consumer
 
10

 
10

 
6

 
12

 
—

 
12

 
—

 
 
$
51,759

 
$
56,405

 
$
4,083

 
$
60,325

 
$
560

 
$
56,886

 
$
879

*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred during the second quarters and first six months of 2017 and 2016 and the impact on the allowance for loan losses were as follows:
 
 
Three months ended June 30, 2017
 
Six months ended June 30, 2017
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Residential 1-4 family
 
2

 
$
360

 
$
360

 
$
—

 
5

 
$
872

 
$
880

 
$
45

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
5

 
298

 
298

 
59

 
13

 
524

 
510

 
93

Residential land
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
—

 
—

 
—

 
—

 
1

 
342

 
342

 
—

Consumer
 
—

 
—

 
—

 
—

 
1

 
59

 
59

 
27

 
 
7

 
$
658

 
$
658

 
$
59

 
20

 
$
1,797

 
$
1,791

 
$
165

 
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 
Residential 1-4 family
 
5

 
$
891

 
$
885

 
$
98

 
9

 
$
1,988

 
$
2,100

 
$
259

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
8

 
768

 
768

 
181

 
18

 
1,437

 
1,437

 
255

Residential land
 
1

 
120

 
121

 
—

 
1

 
120

 
121

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
5

 
457

 
457

 
145

 
8

 
16,657

 
16,657

 
670

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
19

 
$
2,236

 
$
2,231

 
$
424

 
36

 
$
20,202

 
$
20,315

 
$
1,184


1
The reported balances include loans that became TDR during the period, and were fully paid-off, charged-off, or sold prior to period end.
Schedule of troubled debt restructuring on financing receivables that experienced default
Loans modified in TDRs that experienced a payment default of 90 days or more during the second quarters and first six months of 2017 and 2016, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended June 30, 2017
 
Six months ended June 30, 2017
(dollars in thousands)
 
Number of contracts
 
Recorded investment
 
Number of contracts
 
Recorded investment
Troubled debt restructurings that
 subsequently defaulted
 
 
 
 
 
 
 
 
Real estate:
 
 
 
 

 
 
 
 

Residential 1-4 family
 
1
 
$
222

 
2
 
$
523

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
—
 
—

 
—
 
—

Consumer
 
—
 
—

 
—
 
—

 
 
1
 
$
222

 
2
 
$
523


 
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
(dollars in thousands)
 
Number of contracts
 
Recorded investment
 
Number of contracts
 
Recorded investment
Troubled debt restructurings that
 subsequently defaulted
 
 
 
 
 
 
 
 
Real estate:
 
 
 
 

 
 
 
 

Residential 1-4 family
 
—
 
$
—

 
1
 
$
488

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
1
 
26

 
1
 
26

Consumer
 
—
 
—

 
—
 
—

 
 
1
 
$
26

 
2
 
$
514
Schedule of amortized intangible assets
Changes in the carrying value of mortgage servicing rights were as follows:
(in thousands)
 
Gross
carrying amount1
 
Accumulated amortization1
 
Valuation allowance
 
Net
carrying amount
June 30, 2017
 
$
18,069

 
$
(8,888
)
 
$
—

 
$
9,181

December 31, 2016
 
17,271

 
(7,898
)
 
—

 
9,373

1 Reflects the impact of loans paid in full.

Changes related to mortgage servicing rights were as follows:
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
$
9,294

 
$
8,857

 
$
9,373

 
$
8,884

Amount capitalized
 
362

 
665

 
798

 
1,120

Amortization
 
(475
)
 
(506
)
 
(990
)
 
(988
)
Other-than-temporary impairment
 
—

 
—

 
—

 
—

Carrying amount before valuation allowance
 
9,181

 
9,016

 
9,181

 
9,016

Valuation allowance for mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
—

 
—

 
—

 
—

Provision (recovery)
 
—

 
—

 
—

 
—

Other-than-temporary impairment
 
—

 
—

 
—

 
—

Ending balance
 
—

 
—

 
—

 
—

Net carrying value of mortgage servicing rights
 
$
9,181

 
$
9,016

 
$
9,181

 
$
9,016
Schedule of key assumptions used in estimating fair value
Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
(dollars in thousands)
 
June 30, 2017

 
December 31, 2016

Unpaid principal balance
 
$
1,208,404

 
$
1,188,380

Weighted average note rate
 
3.95
%
 
3.96
%
Weighted average discount rate
 
10.0
%
 
9.4
%
Weighted average prepayment speed
 
8.8
%
 
8.5
%
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
 
 
 
 
 
 
 
 
Significant unobservable
 input value (1)
($ in thousands)
 
Fair value
 
Valuation technique
 
Significant unobservable input
 
Range
 
Weighted
Average
June 30, 2017
 
 
 
 
 
 
 
 
 
 
Residential loan
 
$
448

 
Fair value of collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Commercial loan
 
810

 
Sales price
 
Sales price
 
 
 
N/A (2)
Total loans
 
$
1,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
2,468

 
Sales price
 
Sales price
 
95-100%
 
97%
Residential loans
 
287

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
42-65%
 
61%
Home equity lines of credit
 
12

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Total loans
 
$
2,767

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
1,189

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
100%
 
100%
(1) Represent percent of outstanding principal balance.
(2) N/A - Not applicable. There is one loan in each fair value measurement type.
Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets
The sensitivity analysis of fair value of MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
(dollars in thousands)
 
June 30, 2017

 
December 31, 2016

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(939
)
 
$
(567
)
  50 basis points adverse rate change
 
(2,048
)
 
(1,154
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(115
)
 
(128
)
  50 basis points adverse rate change
 
(227
)
 
(254
)
Schedule of securities sold under agreements to repurchase
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, 2017
 
$88
 
$—
 
$88
December 31, 2016
 
93
 
—
 
93
 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
 Net amount of liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
June 30, 2017
 
 

 
 

 
 

Financial institution
 
$
—

 
$
—

 
$
—

Government entities
 
—

 
—

 
—

Commercial account holders
 
88

 
120

 
—

Total
 
$
88

 
$
120

 
$
—

December 31, 2016
 
 

 
 

 
 

Financial institution
 
$
—

 
$
—

 
$
—

Government entities
 
14

 
15

 
—

Commercial account holders
 
79

 
101

 
—

Total
 
$
93

 
$
116

 
$
—
Schedule of notional and fair value of derivatives
The notional amount and fair value of ASB’s derivative financial instruments were as follows:
 
 
June 30, 2017
 
December 31, 2016
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
22,737

 
$
126

 
$
25,883

 
$
421

Forward commitments
 
22,925

 
88

 
30,813

 
(177
)
Schedule of derivative financial instruments
ASB’s derivative financial instruments, their fair values and balance sheet location were as follows:
Derivative Financial Instruments Not Designated as Hedging Instruments 1
 
June 30, 2017
 
December 31, 2016
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
142

 
$
16

 
$
445

 
$
24

Forward commitments
 
88

 
—

 
8

 
185

 
 
$
230

 
$
16

 
$
453

 
$
209

1 Asset derivatives are included in other assets and liability derivatives 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 ASB’s statements of income:
Derivative Financial Instruments Not Designated as Hedging Instruments
 
Location of net gains (losses) recognized in the Statement of Income
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
 
2017
 
2016
 
2017
 
2016
Interest rate lock commitments
 
Mortgage banking income
 
$
(191
)
 
$
140

 
$
(295
)
 
$
411

Forward commitments
 
Mortgage banking income
 
192

 
(74
)
 
265

 
(237
)
 
 
 
 
$
1

 
$
66

 
$
(30
)
 
$
174