Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and Liabilities Measured on a Recurring Basis: Assets and liabilities measured at fair value on a recurring basis are summarized below:


			Fair Value Measurements at September 30, 2013 Using:
	September 30,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	2013		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
US Treasury and government sponsored entities’ securities	$	229,763	$	—	$	229,763	$	—
Equity securities		396		396		—		—
Mortgage-backed GSE securities: residential		312,652		—		312,652		—
Interest rate caps		594		—		—		594


			Fair Value Measurements at December 31, 2012 Using:
	December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
US Treasury and government sponsored entities’ securities	$	163,692	$	—	$	163,692	$	—
Equity securities		313		313		—		—
Mortgage-backed GSE securities: residential		410,557		—		410,557		—
Interest rate caps		436		—		—		436

Reconciliation of All Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013 and 2012:


	Interest Rate Caps
	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	436		$	1,933
Total gains (losses) for the period
Included in other income		547			(1,077	)
Included in other comprehensive income		—			—
Purchases		—			—
Amortization		(389	)		(346	)
Sales		—			—

Balance of recurring Level 3 assets at end of period	$	594		$	510

Quantitative Information About Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Nonrecurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at September 30, 2013:


	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
			(Dollars in thousands)
Impaired loans:
Permanent real estate loans	$	637	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-56.90% (11.78%)

			Income approach	Adjustment for differences in net operating income Capitalization rate	3.95%-14.62% (9.41%)

Construction loans		1,564	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (11.90%)
Foreclosed assets:

Permanent real estate		2,315	Sales comparison approach	Adjustment for differences between comparable sales	6.00%-46.53% (17.76%)

Construction		4,125	Sales comparison approach	Adjustment for differences between comparable sales	6.54%-26.63% (9.24%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2012:


	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
			(Dollars in thousands)
Impaired loans:

Permanent real estate loans	$	6,166	Sales comparison approach	Adjustment for differences between comparable sales	12.07%-45.44% (28.75%)

			Income approach	Adjustment for differences in net operating income Capitalization rate	7.52%-10.73% (9.49%)

Construction loans		3,489	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (9.83%)

			Income approach	Adjustment for differences in net operating income Capitalization rate	10.00%

Commercial loans		257	Sales comparison approach	Adjustment for differences between comparable sales	1.6%-24.18% (11.15%)

			Income approach	Adjustment for differences in net operating income Capitalization rate	8.5%-10% (9.25%)
Foreclosed assets:

Permanent real estate		3,172	Sales comparison approach	Adjustment for differences between comparable sales	3.60%-16.47% (10.20%)

Construction		6,918	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-47.24% (17.63%)

Assets Measured on Non-recurring Basis

Assets and Liabilities Measured on a Non-Recurring Basis: Assets and liabilities measured at fair value on a non-recurring basis are summarized below:


			Fair Value Measurements at September 30, 2013 Using:
	September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Permanent real estate loans	$	637	$	—	$	—	$	637
Construction loans		1,564		—		—		1,564
Mortgage servicing assets		387		—		387		—
Other real estate owned, net:
Permanent real estate		2,315		—		—		2,315
Construction		4,125		—		—		4,125

			Fair Value Measurements at December 31, 2012 Using:
	December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Permanent real estate loans	$	6,166	$	—	$	—	$	6,166
Construction loans		3,489		—		—		3,489
Commercial loans		257		—		—		257
Mortgage servicing assets		4,920		—		4,920		—
Other real estate owned, net:
Permanent real estate		3,172		—		—		3,172
Construction		6,918		—		—		6,918

Carrying Value and Estimated Fair Values of Financial Instruments

In accordance with U.S. GAAP, the carrying value and estimated fair values of financial instruments at September 30, 2013 and December 31, 2012, were as follows:


				Fair Value Measurements at September 30, 2013 Using:
	September 30, 2013 Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	86,130		$	86,130		$	—		$	—
Available for sale securities		542,811			396			542,415			—
Loans held for sale		2,894			—			2,947			—
Loans, net		1,009,029			—			—			1,021,206
FHLB stock		26,464			n/a			n/a			n/a
Accrued interest receivable		5,200			—			2,081			3,119
Interest rate caps		594			—			—			594
Liabilities:
Deposits:
Checking, savings and money market accounts		(900,444	)		(900,444	)		—			—
Certificates of deposit		(510,166	)		—			(519,632	)		—
FHLB advances		(50,000	)		—			(55,808	)		—
Repurchase agreements and other		(90,583	)		—			(99,292	)		—
Advance payments by borrowers for taxes and insurance		(12,126	)		—			(12,126	)		—
Accrued interest payable		(592	)		—			(592	)		—


				Fair Value Measurements at December 31, 2012 Using:
	December 31, 2012 Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	42,613		$	42,613		$	—		$	—
Available for sale securities		574,562			313			574,249			—
Loans held for sale		13,031			—			13,428			—
Loans, net		1,066,240			—			—			1,087,205
FHLB stock		26,464			n/a			n/a			n/a
Accrued interest receivable		6,238			—			2,380			3,858
Interest rate caps		436			—			—			436
Liabilities:
Deposits:
Checking, savings and money market accounts		(902,776	)		(902,776	)		—			—
Certificates of deposit		(559,298	)		—			(571,836	)		—
FHLB advances		(50,000	)		—			(57,077	)		—
Repurchase agreements and other		(90,598	)		—			(102,086	)		—
Advance payments by borrowers for taxes and insurance		(23,590	)		—			(23,590	)		—
Accrued interest payable		(563	)		—			(563	)		—

Interest Rate Cap [Member]

Quantitative Information About Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Nonrecurring Basis

The following table presents quantitative information about recurring Level 3 fair value measurements at September 30, 2013:


	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
	(Dollars in thousands)
Interest rate caps	$	594	Discounted cash flow	Discount rate	0.47%-1.5%

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References+ Details