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Bank segment (Tables)
 3 Months Ended
Mar. 31, 2018
Bank Subsidiary [Abstract]  
Schedule of statements of income data
Statements of Income Data
 
 
Three months ended March 31
(in thousands)
 
2018
 
2017
Interest and dividend income
 
 

 
 

Interest and fees on loans
 
$
52,800

 
$
50,742

Interest and dividends on investment securities
 
9,202

 
6,980

Total interest and dividend income
 
62,002

 
57,722

Interest expense
 
 

 
 

Interest on deposit liabilities
 
2,957

 
2,103

Interest on other borrowings
 
496

 
816

Total interest expense
 
3,453

 
2,919

Net interest income
 
58,549

 
54,803

Provision for loan losses
 
3,541

 
3,907

Net interest income after provision for loan losses
 
55,008

 
50,896

Noninterest income
 
 

 
 

Fees from other financial services
 
4,654

 
5,610

Fee income on deposit liabilities
 
5,189

 
5,428

Fee income on other financial products
 
1,654

 
1,866

Bank-owned life insurance
 
871

 
983

Mortgage banking income
 
613

 
789

Other income, net
 
436

 
458

Total noninterest income
 
13,417

 
15,134

Noninterest expense
 
 

 
 

Compensation and employee benefits
 
24,440

 
23,042

Occupancy
 
4,280

 
4,154

Data processing
 
3,464

 
3,280

Services
 
3,047

 
2,360

Equipment
 
1,728

 
1,748

Office supplies, printing and postage
 
1,507

 
1,535

Marketing
 
645

 
517

FDIC insurance
 
713

 
728

Other expense
 
4,101

 
4,506

Total noninterest expense
 
43,925

 
41,870

Income before income taxes
 
24,500

 
24,160

Income taxes
 
5,540

 
8,347

Net income
 
$
18,960

 
$
15,813




Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
 
 
Three months ended March 31
(in thousands)
 
2018
 
2017
Interest and dividend income
 
$
62,002

 
$
57,722

Noninterest income
 
13,417

 
15,134

*Revenues-Bank
 
75,419

 
72,856

Total interest expense
 
3,453

 
2,919

Provision for loan losses
 
3,541

 
3,907

Noninterest expense
 
43,925

 
41,870

Less: Retirement defined benefits expense—other than service costs
 
(387
)
 
(195
)
*Expenses-Bank
 
50,532

 
48,501

*Operating income-Bank
 
24,887

 
24,355

Add back: Retirement defined benefits expense—other than service costs
 
387

 
195

Income before income taxes
 
$
24,500

 
$
24,160
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data
 
 
Three months ended March 31
(in thousands)
 
2018
 
2017
Net income
 
$
18,960

 
$
15,813

Other comprehensive income (loss), net of taxes:
 
 

 
 

Net unrealized gains (losses) on available-for-sale investment securities:
 
 

 
 

Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of (taxes) benefits of $4,867 and $(148), respectively
 
(13,297
)
 
223

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 $694 and $404, respectively
 
1,222

 
612

Other comprehensive income (loss), net of taxes
 
(12,075
)
 
835

Comprehensive income
 
$
6,885

 
$
16,648
Schedule of balance sheets data
Balance Sheets Data
(in thousands)
 
March 31, 2018
 
December 31, 2017
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
123,580

 
 

 
$
140,934

Interest-bearing deposits
 
 
 
90,643

 
 
 
93,165

Investment securities
 
 
 
 
 
 
 
 
Available-for-sale, at fair value
 
 

 
1,418,490

 
 

 
1,401,198

Held-to-maturity, at amortized cost (fair value of $42,491 and $44,412, respectively)
 
 
 
43,450

 
 
 
44,515

Stock in Federal Home Loan Bank, at cost
 
 

 
10,158

 
 

 
9,706

Loans held for investment
 
 

 
4,742,024

 
 

 
4,670,768

Allowance for loan losses
 
 

 
(53,895
)
 
 

 
(53,637
)
Net loans
 
 

 
4,688,129

 
 

 
4,617,131

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

 
7,379

 
 

 
11,250

Other
 
 

 
425,426

 
 

 
398,570

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
6,889,445

 
 

 
$
6,798,659

Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,795,114

 
 

 
$
1,760,233

Deposit liabilities—interest-bearing
 
 

 
4,283,953

 
 

 
4,130,364

Other borrowings
 
 

 
100,430

 
 

 
190,859

Other
 
 

 
106,482

 
 

 
110,356

Total liabilities
 
 

 
6,285,979

 
 

 
6,191,812

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid in capital
 
 
 
345,652

 
 
 
345,018

Retained earnings
 
 

 
300,837

 
 

 
292,957

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(28,248
)
 
 

 
$
(14,951
)
 
 

Retirement benefit plans
 
(14,776
)
 
(43,024
)
 
(16,178
)
 
(31,129
)
Total shareholder’s equity
 
 

 
603,466

 
 

 
606,847

Total liabilities and shareholder’s equity
 
 

 
$
6,889,445

 
 

 
$
6,798,659

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
149,656

 
 

 
$
148,775

Premises and equipment, net
 
 

 
164,702

 
 

 
136,270

Prepaid expenses
 
 

 
4,549

 
 

 
3,961

Accrued interest receivable
 
 

 
18,461

 
 

 
18,724

Mortgage-servicing rights
 
 

 
8,541

 
 

 
8,639

Low-income housing equity investments
 
 
 
57,222

 
 
 
59,016

Real estate acquired in settlement of loans, net
 
 

 
—

 
 

 
133

Other
 
 

 
22,295

 
 

 
23,052

 
 
 

 
$
425,426

 
 

 
$
398,570

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
49,034

 
 

 
$
39,312

Federal and state income taxes payable
 
 

 
1,369

 
 

 
3,736

Cashier’s checks
 
 

 
22,990

 
 

 
27,000

Advance payments by borrowers
 
 

 
6,255

 
 

 
10,245

Other
 
 

 
26,834

 
 

 
30,063

 
 
 

 
$
106,482

 
 

 
$
110,356
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
March 31, 2018
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
181,919

 
$
164

 
$
(3,255
)
 
$
178,828

 
18

 
$
93,034

 
$
(1,424
)
 
9

 
$
68,489

 
$
(1,831
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
1,259,732

 
389

 
(35,886
)
 
1,224,235

 
86

 
762,936

 
(17,161
)
 
79

 
447,876

 
(18,725
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,457,078

 
$
553

 
$
(39,141
)
 
$
1,418,490

 
104

 
$
855,970

 
$
(18,585
)
 
88

 
$
516,365

 
$
(20,556
)
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-related securities- FNMA, FHLMC and GNMA
 
$
43,450

 
$
—

 
$
(959
)
 
$
42,491

 
3

 
$
42,491

 
$
(959
)
 
—

 
$
—

 
$
—

 
 
$
43,450

 
$
—

 
$
(959
)
 
$
42,491

 
3

 
$
42,491

 
$
(959
)
 
—

 
$
—

 
$
—

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
185,891

 
$
438

 
$
(2,031
)
 
$
184,298

 
15

 
$
83,137

 
$
(825
)
 
8

 
$
62,296

 
$
(1,206
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
1,220,304

 
793

 
(19,624
)
 
1,201,473

 
67

 
653,635

 
(6,839
)
 
77

 
459,912

 
(12,785
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,421,622

 
$
1,231

 
$
(21,655
)
 
$
1,401,198

 
82

 
$
736,772

 
$
(7,664
)
 
85

 
$
522,208

 
$
(13,991
)
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-related securities- FNMA, FHLMC and GNMA
 
$
44,515

 
$
1

 
$
(104
)
 
$
44,412

 
2

 
$
35,744

 
$
(104
)
 
—

 
$
—

 
$
—

 
 
$
44,515

 
$
1

 
$
(104
)
 
$
44,412

 
2

 
$
35,744

 
$
(104
)
 
—

 
$
—

 
$
—
Schedule of contractual maturities of available-for-sale securities
The contractual maturities of investment securities were as follows:
March 31, 2018
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Available-for-sale
 
 
 
 
Due in one year or less
 
$
15,000

 
$
14,902

Due after one year through five years
 
83,983

 
82,887

Due after five years through ten years
 
69,986

 
68,521

Due after ten years
 
28,377

 
27,945

 
 
197,346

 
194,255

Mortgage-related securities-FNMA, FHLMC and GNMA
 
1,259,732

 
1,224,235

Total available-for-sale securities
 
$
1,457,078

 
$
1,418,490

Held-to-maturity
 
 
 
 
Mortgage-related securities-FNMA, FHLMC and GNMA
 
$
43,450

 
$
42,491

Total held-to-maturity securities
 
$
43,450

 
$
42,491
Schedule of components of loans receivable
The components of loans were summarized as follows:
 
March 31, 2018
 
December 31, 2017
(in thousands)
 

 
 

Real estate:
 

 
 

Residential 1-4 family
$
2,116,121

 
$
2,118,047

Commercial real estate
766,522

 
733,106

Home equity line of credit
914,941

 
913,052

Residential land
16,569

 
15,797

Commercial construction
114,535

 
108,273

Residential construction
15,363

 
14,910

Total real estate
3,944,051

 
3,903,185

Commercial
568,371

 
544,828

Consumer
230,258

 
223,564

Total loans
4,742,680

 
4,671,577

Less: Deferred fees and discounts
(656
)
 
(809
)
          Allowance for loan losses
(53,895
)
 
(53,637
)
Total loans, net
$
4,688,129

 
$
4,617,131
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 March 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,902

 
$
15,796

 
$
7,522

 
$
896

 
$
4,671

 
$
12

 
$
10,851

 
$
10,987

 
$
—

 
$
53,637

Charge-offs
 
(31
)
 
—

 
—

 
(8
)
 
—

 
—

 
(602
)
 
(4,232
)
 
—

 
(4,873
)
Recoveries
 
54

 
—

 
14

 
5

 
—

 
—

 
1,170

 
347

 
—

 
1,590

Provision
 
(400
)
 
163

 
446

 
(219
)
 
(310
)
 
(8
)
 
(1,064
)
 
4,933

 
—

 
3,541

Ending balance
 
$
2,525

 
$
15,959

 
$
7,982

 
$
674

 
$
4,361

 
$
4

 
$
10,355

 
$
12,035

 
$
—

 
$
53,895

March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,207

 
$
68

 
$
892

 
$
17

 
$
—

 
$
—

 
$
519

 
$
3

 
 
 
$
2,706

Ending balance: collectively evaluated for impairment
 
$
1,318

 
$
15,891

 
$
7,090

 
$
657

 
$
4,361

 
$
4

 
$
9,836

 
$
12,032

 
$
—

 
$
51,189

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,116,121

 
$
766,522

 
$
914,941

 
$
16,569

 
$
114,535

 
$
15,363

 
$
568,371

 
$
230,258

 
 
 
$
4,742,680

Ending balance: individually evaluated for impairment
 
$
17,728

 
$
1,004

 
$
10,265

 
$
1,184

 
$
—

 
$
—

 
$
4,385

 
$
65

 
 
 
$
34,631

Ending balance: collectively evaluated for impairment
 
$
2,098,393

 
$
765,518

 
$
904,676

 
$
15,385

 
$
114,535

 
$
15,363

 
$
563,986

 
$
230,193

 
 
 
$
4,708,049

Three months ended March 31, 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
)
 
—

 
—

 
—

 
(1,510
)
 
(2,810
)
 
—

 
(4,340
)
Recoveries
 
9

 
—

 
91

 
203

 
—

 
—

 
297

 
297

 
—

 
897

Provision
 
(95
)
 
500

 
301

 
(462
)
 
808

 
(1
)
 
(503
)
 
3,359

 
—

 
3,907

Ending balance
 
$
2,781

 
$
16,504

 
$
5,417

 
$
1,479

 
$
7,257

 
$
11

 
$
14,902

 
$
7,646

 
$
—

 
$
55,997

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,248

 
$
65

 
$
647

 
$
47

 
$
—

 
$
—

 
$
694

 
$
29

 
 
 
$
2,730

Ending balance: collectively evaluated for impairment
 
$
1,654

 
$
15,731

 
$
6,875

 
$
849

 
$
4,671

 
$
12

 
$
10,157

 
$
10,958

 
$
—

 
$
50,907

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,118,047

 
$
733,106

 
$
913,052

 
$
15,797

 
$
108,273

 
$
14,910

 
$
544,828

 
$
223,564

 
 
 
$
4,671,577

Ending balance: individually evaluated for impairment
 
$
18,284

 
$
1,016

 
$
8,188

 
$
1,265

 
$
—

 
$
—

 
$
4,574

 
$
66

 
 
 
$
33,393

Ending balance: collectively evaluated for impairment
 
$
2,099,763

 
$
732,090

 
$
904,864

 
$
14,532

 
$
108,273

 
$
14,910

 
$
540,254

 
$
223,498

 
 
 
$
4,638,184
Schedule of credit risk profile by internally assigned grade for loans
The credit risk profile by internally assigned grade for loans was as follows:
 
 
March 31, 2018
 
December 31, 2017
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
667,555

 
$
89,802

 
$
518,819

 
$
630,877

 
$
83,757

 
$
492,942

Special mention
 
46,283

 
22,500

 
27,876

 
49,347

 
22,500

 
27,997

Substandard
 
52,684

 
2,233

 
21,676

 
52,882

 
2,016

 
23,421

Doubtful
 
—

 
—

 
—

 
—

 
—

 
468

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
766,522

 
$
114,535

 
$
568,371

 
$
733,106

 
$
108,273

 
$
544,828
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
March 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
1,902

 
$
662

 
$
4,605

 
$
7,169

 
$
2,108,952

 
$
2,116,121

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
766,522

 
766,522

 
—

Home equity line of credit
 
1,943

 
1,350

 
2,121

 
5,414

 
909,527

 
914,941

 
—

Residential land
 
—

 
—

 
640

 
640

 
15,929

 
16,569

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
114,535

 
114,535

 
—

Residential construction
 
—

 
—

 
—

 
—

 
15,363

 
15,363

 
—

Commercial
 
344

 
689

 
232

 
1,265

 
567,106

 
568,371

 
—

Consumer
 
2,889

 
1,523

 
1,856

 
6,268

 
223,990

 
230,258

 
—

Total loans
 
$
7,078

 
$
4,224

 
$
9,454

 
$
20,756

 
$
4,721,924

 
$
4,742,680

 
$
—

December 31, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
1,532

 
$
1,715

 
$
5,071

 
$
8,318

 
$
2,109,729

 
$
2,118,047

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
733,106

 
733,106

 
—

Home equity line of credit
 
425

 
114

 
2,051

 
2,590

 
910,462

 
913,052

 
—

Residential land
 
23

 
—

 
625

 
648

 
15,149

 
15,797

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
108,273

 
108,273

 
—

Residential construction
 
—

 
—

 
—

 
—

 
14,910

 
14,910

 
—

Commercial
 
1,825

 
2,025

 
730

 
4,580

 
540,248

 
544,828

 
—

Consumer
 
3,432

 
2,159

 
1,876

 
7,467

 
216,097

 
223,564

 
—

Total loans
 
$
7,237

 
$
6,013

 
$
10,353

 
$
23,603

 
$
4,647,974

 
$
4,671,577

 
$
—
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 troubled debt restructuring (TDR) loans was as follows:
(in thousands)
 
March 31, 2018
 
December 31, 2017
Real estate:
 
 

 
 

Residential 1-4 family
 
$
13,578

 
$
12,598

Commercial real estate
 
—

 
—

Home equity line of credit
 
5,049

 
4,466

Residential land
 
853

 
841

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
2,714

 
3,069

Consumer
 
2,949

 
2,617

  Total nonaccrual loans
 
$
25,143

 
$
23,591

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
 
$
10,874

 
$
10,982

Commercial real estate
 
1,004

 
1,016

Home equity line of credit
 
8,467

 
6,584

Residential land
 
331

 
425

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
1,886

 
1,741

Consumer
 
65

 
66

     Total troubled debt restructured loans not included above
 
$
22,627

 
$
20,814
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:
 
 
March 31, 2018
 
Three months ended March 31, 2018
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
Allowance
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
8,673

 
$
9,205

 
$
—

 
$
8,496

 
$
107

Commercial real estate
 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
1,690

 
1,982

 
—

 
1,700

 
5

Residential land
 
1,130

 
1,429

 
—

 
1,168

 
5

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
2,499

 
3,411

 
—

 
2,357

 
10

Consumer
 
7

 
7

 
—

 
7

 
—

 
 
$
13,999

 
$
16,034

 
$
—

 
$
13,728

 
$
127

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,055

 
$
9,258

 
$
1,207

 
$
9,129

 
$
93

Commercial real estate
 
1,004

 
1,004

 
68

 
1,008

 
11

Home equity line of credit
 
8,575

 
8,619

 
892

 
7,741

 
81

Residential land
 
54

 
54

 
17

 
77

 
2

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
1,886

 
1,886

 
519

 
1,957

 
36

Consumer
 
58

 
58

 
3

 
58

 
1

 
 
$
20,632

 
$
20,879

 
$
2,706

 
$
19,970

 
$
224

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
17,728

 
$
18,463

 
$
1,207

 
$
17,625

 
$
200

Commercial real estate
 
1,004

 
1,004

 
68

 
1,008

 
11

Home equity line of credit
 
10,265

 
10,601

 
892

 
9,441

 
86

Residential land
 
1,184

 
1,483

 
17

 
1,245

 
7

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
4,385

 
5,297

 
519

 
4,314

 
46

Consumer
 
65

 
65

 
3

 
65

 
1

 
 
$
34,631

 
$
36,913

 
$
2,706

 
$
33,698

 
$
351


 
 
December 31, 2017
 
Three months ended March 31, 2017
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
allowance
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,097

 
$
9,644

 
$
—

 
$
9,555

 
$
84

Commercial real estate
 
—

 
—

 
—

 
220

 
—

Home equity line of credit
 
1,496

 
1,789

 
—

 
2,004

 
14

Residential land
 
1,143

 
1,434

 
—

 
957

 
26

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
2,328

 
3,166

 
—

 
4,907

 
6

Consumer
 
8

 
8

 
—

 
—

 
—

 
 
$
14,072

 
$
16,041

 
$
—

 
$
17,643

 
$
130

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,187

 
$
9,390

 
$
1,248

 
$
10,048

 
$
119

Commercial real estate
 
1,016

 
1,016

 
65

 
1,300

 
14

Home equity line of credit
 
6,692

 
6,736

 
647

 
4,562

 
49

Residential land
 
122

 
122

 
47

 
2,076

 
37

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
2,246

 
2,252

 
694

 
7,268

 
401

Consumer
 
58

 
58

 
29

 
30

 
—

 
 
$
19,321

 
$
19,574

 
$
2,730

 
$
25,284

 
$
620

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
18,284

 
$
19,034

 
$
1,248

 
$
19,603

 
$
203

Commercial real estate
 
1,016

 
1,016

 
65

 
1,520

 
14

Home equity line of credit
 
8,188

 
8,525

 
647

 
6,566

 
63

Residential land
 
1,265

 
1,556

 
47

 
3,033

 
63

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
4,574

 
5,418

 
694

 
12,175

 
407

Consumer
 
66

 
66

 
29

 
30

 
—

 
 
$
33,393

 
$
35,615

 
$
2,730

 
$
42,927

 
$
750

*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred during the first quarters of 2018 and 2017 and the impact on the allowance for loan losses were as follows:
 
 
Three months ended March 31, 2018
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
Residential 1-4 family
 
1

 
$
339

 
$
344

 
$
16

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
18

 
2,170

 
2,174

 
388

Residential land
 
1

 
109

 
109

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
5

 
2,251

 
2,251

 
—

Consumer
 
—

 
—

 
—

 
—

 
 
25

 
$
4,869

 
$
4,878

 
$
404

 
 
Three months ended March 31, 2017
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 
 
 

 
 

 
 
Real estate:
 
 
 
 

 
 

 
 
Residential 1-4 family
 
3

 
$
512

 
$
520

 
$
45

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
8

 
226

 
212

 
34

Residential land
 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
1

 
342

 
342

 
—

Consumer
 
1

 
59

 
59

 
27

 
 
13

 
$
1,139

 
$
1,133

 
$
106


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 first quarters of 2018 and 2017, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended March 31, 2018
 
Three months ended March 31, 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
 
$
49

 
1
 
$
301

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
1
 
86

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
—
 
—

 
—
 
—

Consumer
 
—
 
—

 
—
 
—

 
 
2
 
$
135

 
1
 
$
301
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
March 31, 2018
 
$
17,846

 
$
(9,305
)
 
$
—

 
$
8,541

December 31, 2017
 
17,511

 
(8,872
)
 
—

 
8,639

1 Reflects the impact of loans paid in full.

Changes related to mortgage servicing rights were as follows:
 
 
Three months ended March 31
(in thousands)
 
2018
 
2017
Mortgage servicing rights
 
 
 
 
Beginning balance
 
$
8,639

 
$
9,373

Amount capitalized
 
335

 
436

Amortization
 
(433
)
 
(515
)
Other-than-temporary impairment
 
—

 
—

Carrying amount before valuation allowance
 
8,541

 
9,294

Valuation allowance for mortgage servicing rights
 
 
 
 
Beginning balance
 
—

 
—

Provision (recovery)
 
—

 
—

Other-than-temporary impairment
 
—

 
—

Ending balance
 
—

 
—

Net carrying value of mortgage servicing rights
 
$
8,541

 
$
9,294
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)
 
March 31, 2018

 
December 31, 2017

Unpaid principal balance
 
$
1,184,160

 
$
1,195,454

Weighted average note rate
 
3.94
%
 
3.94
%
Weighted average discount rate
 
10.0
%
 
10.0
%
Weighted average prepayment speed
 
7.1
%
 
9.0
%
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
March 31, 2018
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
545

 
Fair value of collateral
 
Appraised value less 7% selling cost
 
69-95%
 
84%
Total loans
 
$
545

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
613

 
Fair value of collateral
 
Appraised value less 7% selling cost
 
71-92%
 
84%
Commercial loans
 
2,008

 
Fair value of collateral
 
Appraised value
 
71-76%
 
75%
Total loans
 
$
2,621

 
 
 
 
 
 
 
 
(1) Represent percent of outstanding principal balance.
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)
 
March 31, 2018

 
December 31, 2017

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(378
)
 
$
(869
)
  50 basis points adverse rate change
 
(883
)
 
(1,828
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(127
)
 
(111
)
  50 basis points adverse rate change
 
(252
)
 
(220
)
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
 
 

 
 

 
 

March 31, 2018
 
$
50

 
$
—

 
$
50

December 31, 2017
 
141

 
—

 
141

 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
 Net amount of liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
March 31, 2018
 
 

 
 

 
 

Commercial account holders
 
$
50

 
$
97

 
$
—

Total
 
$
50

 
$
97

 
$
—

December 31, 2017
 
 

 
 

 
 

Commercial account holders
 
$
141

 
$
165

 
$
—

Total
 
$
141

 
$
165

 
$
—
Schedule of notional and fair value of derivatives
The notional amount and fair value of ASB’s derivative financial instruments were as follows:
 
 
March 31, 2018
 
December 31, 2017
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
24,741

 
$
255

 
$
13,669

 
$
131

Forward commitments
 
26,844

 
(60
)
 
14,465

 
(24
)
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
 
March 31, 2018
 
December 31, 2017
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
264

 
$
9

 
$
133

 
$
2

Forward commitments
 
18

 
78

 
4

 
28

 
 
$
282

 
$
87

 
$
137

 
$
30

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 March 31
(in thousands)
 
 
2018
 
2017
Interest rate lock commitments
 
Mortgage banking income
 
$
124

 
$
(104
)
Forward commitments
 
Mortgage banking income
 
(36
)
 
73

 
 
 
 
$
88

 
$
(31
)