FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 2014

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 June 30, 2014 Using:
	June 30,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	2014		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities’ securities	$	231,597	$	—	$	231,597	$	—
Equity securities		452		452		—		—
Mortgage-backed GSE securities: residential		284,588		—		284,588		—
Mortgage servicing assets		157		—		157		—
Interest rate caps		214		—		—		214
Purchased certificate of deposit option		489		—		489		—
Liabilities
Written certificate of deposit option		489		—		489		—


			Fair Value Measurements at December 31, 2013 Using:
	December 31,		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
U.S. Treasury and government sponsored entities’ securities	$	222,293	$	—	$	222,293	$	—
Equity securities		445		445		—		—
Mortgage-backed GSE securities: residential		288,268		—		288,268		—
Interest rate caps		546		—		—		546
Purchased certificate of deposit option		155		—		155		—
Liabilities
Written certificate of deposit option		155		—		155		—

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 three months ended June 30, 2014 and 2013:


	Interest Rate Caps
	Six Months Ended June 30, 2014			Six Months Ended June 30, 2013
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	546		$	436
Total gains (losses) for the period
Included in other income		(73	)		700
Included in other comprehensive income		—			—
Purchases		—			—
Amortization		(259	)		(259	)
Sales		—			—

Balance of recurring Level 3 assets at end of period	$	214		$	877

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 June 30, 2014:


	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
			(Dollars in thousands)
Impaired loans:
Permanent real estate loans	$	1,062	Sales comparison approach Income approach	Adjustment for differences between comparable sales Adjustment for differences in net operating income Capitalization rate	0.00%-56.90% (11.78%) 3.95%-14.62% (9.41%)
Construction loans		1,997	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (11.90%)
Consumer loans		163	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (11.90%)
Other real estate owned, net:
Permanent real estate loans		1,366	Sales comparison approach	Adjustment for differences between comparable sales	6.00%-46.53% (17.76%)
Construction loans		1,848	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, 2013:


	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
			(Dollars in thousands)
Impaired loans:
Permanent real estate loans	$	2,219	Sales comparison approach Income approach	Adjustment for differences between comparable sales Adjustment for differences in net operating income Capitalization rate	0.00%-56.90% (11.78%) 3.95%-14.62% (9.41%)
Construction loans		1,587	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (11.90%)
Consumer loans		339	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.00% (5.00%)
Other real estate owned, net:
Permanent real estate loans		1,939	Sales comparison approach	Adjustment for differences between comparable sales	6.00%-46.53% (17.76%)
Construction loans		2,310	Sales comparison approach	Adjustment for differences between comparable sales	6.54%-26.63% (9.24%)

Assets and Liabilities 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 June 30, 2014 Using:
	June 30, 2014		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	$	1,062	$	—	$	—	$	1,062
Construction loans		1,997		—		—		1,997
Consumer loans		163		—		—		163
Other real estate owned, net:
Permanent real estate		1,366		—		—		1,366
Construction		1,848		—		—		1,848


			Fair Value Measurements at December 31, 2013 Using:
	December 31, 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	$	2,219	$	—	$	—	$	2,219
Construction loans		1,587		—		—		1,587
Consumer loans		339		—		—		339
Other real estate owned, net:
Permanent real estate loans		1,939		—		—		1,939
Construction loans		2,310		—		—		2,310

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 June 30, 2014 and December 31, 2013, were as follows:


				Fair Value Measurements at June 30, 2014 Using:
	June 30, 2014
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	43,590		$	43,590		$	—		$	—
Available for sale securities		516,637			452			516,185			—
Loans held for sale		9,290			—			9,507			—
Loans, net		1,086,771			—			—			1,096,670
FHLB stock		18,068			n/a			n/a			n/a
Accrued interest receivable		5,762			—			2,513			3,249
Interest rate caps		214			—			—			214
Purchased certificate of deposit option		489			—			489			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(923,552	)		(923,552	)		—			—
Certificates of deposit		(451,922	)		—			(457,181	)		—
FHLB advances		(65,000	)		—			(69,647	)		—
Repurchase agreements and other		(90,567	)		—			(96,904	)		—
Advance payments by borrowers for taxes and insurance		(12,708	)		—			(12,708	)		—
Accrued interest payable		(573	)		—			(573	)		—
Written certificate of deposit option		(489	)		—			(489	)		—



	December 31,
	2013			Fair Value Measurements at December 31, 2013 Using:
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	77,331		$	77,331		$	—		$	—
Available for sale securities		511,006			445			510,561			—
Loans held for sale		4,838			—			4,866			—
Loans, net		1,029,192			—			—			1,031,491
FHLB stock		26,464			n/a			n/a			n/a
Accrued interest receivable		5,694			—			2,584			3,110
Interest rate caps		546			—			—			546
Purchased certificate of deposit option		155			—			155			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(899,481	)		(899,481	)		—			—
Certificates of deposit		(492,271	)		—			(500,651	)		—
FHLB advances		(50,000	)		—			(55,327	)		—
Repurchase agreements and other		(90,578	)		—			(98,462	)		—
Advance payments by borrowers for taxes and insurance		(20,060	)		—			(20,060	)		—
Accrued interest payable		(550	)		—			(550	)		—
Written certificate of deposit option		(155	)		—			(155	)		—

Interest Rate Caps [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 June 30, 2014:

Fair Value

Valuation
Technique(s)

Unobservable
Input(s)

Range

(Dollars in thousands)

Interest rate caps

214

Discounted

cash flow

Discount rate

0.40

%-1.18%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2013:

Fair Value

Valuation
Technique(s)

Unobservable
Input(s)

Range

(Dollars in thousands)

Interest rate caps

546

Discounted

cash flow

Discount rate

0.35

%-1.18%

- 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.

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- 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.

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- 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.

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