FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2015		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities’ securities	$	225,151	$	—	$	225,151	$	—
Mortgage-backed GSE securities: residential		141,614		—		141,614		—
Loans held for sale, at fair value		24,079		—		—		24,079
Interest rate caps		5		—		—		5
Purchased certificate of deposit option		698		—		698		—
Liabilities
Written certificate of deposit option		698		—		698		—

			Fair Value Measurements at December 31, 2014 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2014		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities’ securities	$	227,957	$	—	$	227,957	$	—
Mortgage-backed GSE securities: residential		271,833		—		271,833		—
Interest rate caps		180		—		—		180
Purchased certificate of deposit option		930		—		930		—
Liabilities
Written certificate of deposit option		930		—		930		—

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 and nine months ended September 30, 2015. There were no loans held for sale, carried at fair value during 2014.

	Loans Held for Sale, At Fair Value
	For the Three Months Ended September 30,			For the Nine Months Ended September 30,
	2015			2015
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	9,839		$	—
Total gains (losses) for the period
Included in change in fair value of loans held for sale		1,421			1,836
Included in other comprehensive income		—			—
Originations		15,655			25,079
Amortization		—			—
Sales		(2,836	)		(2,836	)
Balance of recurring Level 3 assets at end of period	$	24,079		$	24,079

	Interest Rate Caps						Interest Rate Caps
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	24		$	214		$	180		$	546
Total gains (losses) for the period
Included in other income		111			184			214			111
Included in other comprehensive income		—			—			—			—
Purchases		—			—			—			—
Amortization		(130	)		(130	)		(389	)		(389	)
Sales		—			—			—			—
Balance of recurring Level 3 assets at end of period	$	5		$	268		$	5		$	268

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 September 30, 2015 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2015		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans	$	3,439	$	—	$	—	$	3,439
Residential loans		750		—		—		750
Consumer loans		292		—		—		292
Mortgage servicing rights		1,099		—		1,099		—
Other real estate owned, net
Residential loans		1,186		—		—		1,186
Construction loans		804		—		—		804
Nonresidential loans		175		—		—		175

			Fair Value Measurements at December 31, 2014 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2014		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans	$	3,803	$	—	$	—	$	3,803
Residential loans		765		—		—		765
Consumer loans		260		—		—		260
Mortgage servicing rights		1,138		—		1,138		—
Other real estate owned, net
Residential loans		640		—		—		640
Construction loans		1,286		—		—		1,286

Fair Value Option for Newly Originated Permanent Construction Loans Held for Sale

The Company has elected the fair value option for newly originated permanent construction loans held for sale. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 or more days past due nor on nonaccrual status as of September 30, 2015.

	September 30, 2015
	(Dollars in thousands)
Aggregate fair value	$	24,079
Contractual balance		22,243
Gain (loss)		1,836

Amount of Gains and Losses from Changes in Fair Value Included in Earnings

The total amount of gains and losses from changes in fair value included in earnings for the three and nine months ended September 30, 2015 for loans held for sale, at fair value were:

	For the Three Months Ended		For the Nine Months Ended
	September 30, 2015		September 30, 2015
	(Dollars in thousands)
Interest income	$	—	$	—
Interest expense		—		—
Change in fair value		1,421		1,836
Total change in fair value	$	1,421	$	1,836

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, 2015 and December 31, 2014, were as follows:

				Fair Value Measurements at September 30, 2015 Using:
	September 30,
	2015
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	44,680		$	44,680		$	—		$	—
Available for sale securities		366,765			—			366,765			—
Held to maturity securities		113,052			—			113,152			—
Loans held for sale		14,195			—			14,756			—
Loans held for sale, at fair value		24,079			—			—			24,079
Loans, net		1,277,330			—			—			1,290,832
FHLB stock		18,068		n/a			n/a			n/a
Accrued interest receivable		5,530			—			1,831			3,699
Interest rate caps		5			—			—			5
Purchased certificate of deposit option		698			—			698			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(962,940	)		(962,940	)		—			—
Certificates of deposit		(447,544	)		—			(452,779	)		—
FHLB advances		(262,780	)		—			(262,881	)		—
Repurchase agreements and other		(30,540	)		—			(32,157	)		—
Advance payments by borrowers for taxes and insurance		(14,360	)		(14,360	)		—			—
Accrued interest payable		(233	)		—			(233	)		—
Written certificate of deposit option		(698	)		—			(698	)		—

				Fair Value Measurements at December 31, 2014 Using:
	December 31,
	2014
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	32,980		$	32,980		$	—		$	—
Available for sale securities		499,790			—			499,790			—
Loans held for sale		20,730			—			21,528			—
Loans, net		1,148,093			—			—			1,167,372
FHLB stock		18,068		n/a			n/a			n/a
Accrued interest receivable		5,763			—			2,374			3,389
Interest rate caps		180			—			—			180
Purchased certificate of deposit option		930			—			930			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(912,536	)		(912,536	)		—			—
Certificates of deposit		(435,300	)		—			(442,268	)		—
FHLB advances		(186,194	)		—			(186,290	)		—
Repurchase agreements and other		(30,558	)		—			(32,817	)		—
Advance payments by borrowers for taxes and insurance		(19,904	)		(19,904	)		—			—
Accrued interest payable		(185	)		—			(185	)		—
Written certificate of deposit option		(930	)		—			(930	)		—

Fair Value, Measurements, Recurring [Member]

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

The following table presents quantitative information about recurring Level 3 fair value measurements at September 30, 2015:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Loans held for sale, at fair value	$	24,079	Comparable sales	Time discount	0.00-1.80%
Interest rate caps		5	Discounted cash flow	Discount rate	0.49-1.18%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2014:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Interest rate caps	$	180	Discounted cash flow	Discount rate	0.49-1.18%

Fair Value, Measurements, Nonrecurring [Member]

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

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, 2015:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired loans:
Commercial loans	$	3,439	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-20.00% (10.00%)
Residential loans		750	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.77% (10.00%)
Consumer loans		292	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85% (17.85%)
Other real estate owned:
Residential loans		1,186	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-40.50% (14.55%)
Construction loans		804	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (12.13%)
Nonresidential loans		175	Income approach	Adjustment for differences in net operating income capitalization rate	0.00-12.50% (12.50%)

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, 2014:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired loans:
Commercial loans	$	3,803	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-20.00% (10.00%)
Residential loans		765	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-11.80% (3.70%)
Consumer loans		260	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.00% (5.00%)
Other real estate owned:
Residential loans		640	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-51.10% (26.83%)
Construction loans		1,286	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-58.10% (22.20%)

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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