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FAIR VALUE MEASUREMENT (Tables)
 3 Months Ended
Mar. 31, 2016
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 March 31, 2016 Using:

 

 

 

 

 

 

Quoted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prices in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Unobservable

 

 

March 31,

 

 

Assets

 

 

Inputs

 

 

Inputs

 

 

2016

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and government sponsored entities' securities

$

212,898

 

 

$

—

 

 

$

212,898

 

 

$

—

 

States of the U.S. and political subdivisions

 

35,740

 

 

 

—

 

 

 

35,740

 

 

 

 

 

Mortgage-backed GSE securities: residential

 

116,731

 

 

 

—

 

 

 

116,731

 

 

 

—

 

Loans held for sale, at fair value

 

32,007

 

 

 

—

 

 

 

5,247

 

 

 

26,760

 

Interest rate caps

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Purchased certificate of deposit option

 

913

 

 

 

—

 

 

 

913

 

 

 

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Written certificate of deposit option

 

913

 

 

 

—

 

 

 

913

 

 

 

—

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2015 Using:

 

 

 

 

 

 

Quoted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prices in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Unobservable

 

 

December 31,

 

 

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

$

218,650

 

 

$

—

 

 

$

218,650

 

 

$

—

 

States of the U.S. and political subdivisions

 

11,040

 

 

 

—

 

 

 

11,040

 

 

 

 

 

Mortgage-backed GSE securities: residential

 

127,980

 

 

 

—

 

 

 

127,980

 

 

 

—

 

Loans held for sale, at fair value

 

26,716

 

 

 

—

 

 

 

—

 

 

 

26,716

 

Interest rate caps

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

Purchased certificate of deposit option

 

805

 

 

 

—

 

 

 

805

 

 

 

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Written certificate of deposit option

 

805

 

 

 

—

 

 

 

805

 

 

 

—

 

 
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 March 31, 2016 and 2015.  

 

 

Loans Held for Sale, At Fair Value

 

 

For the Three Months Ended March 31,

 

 

2016

 

 

2015

 

 

(Dollars in thousands)

 

Balance of recurring Level 3 assets at beginning of period

$

26,716

 

 

$

—

 

Total gains (losses) for the period

 

 

 

 

 

 

 

Included in change in fair value of loans held for sale

 

669

 

 

 

561

 

Included in other comprehensive income

 

—

 

 

 

—

 

Originations/Draws on construction perm loans

 

16,687

 

 

 

1,047

 

Amortization

 

—

 

 

 

—

 

Sales

 

(17,312

)

 

 

—

 

Balance of recurring Level 3 assets at end of period

$

26,760

 

 

$

1,608

 

 

 

Interest Rate Caps

 

 

For the Three Months Ended March 31,

 

 

2016

 

 

2015

 

 

(Dollars in thousands)

 

Balance of recurring Level 3 assets at beginning of period

$

3

 

 

$

180

 

Total gains (losses) for the period

 

 

 

 

 

 

 

Included in other income

 

127

 

 

 

75

 

Included in other comprehensive income

 

—

 

 

 

—

 

Purchases

 

—

 

 

 

—

 

Amortization

 

(130

)

 

 

(129

)

Sales

 

—

 

 

 

—

 

Balance of recurring Level 3 assets at end of period

$

—

 

 

$

126

 

 
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 March 31, 2016 Using:

 

 

 

 

 

 

Quoted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prices in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Unobservable

 

 

March 31,

 

 

Assets

 

 

Inputs

 

 

Inputs

 

 

2016

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonresidential

$

6,458

 

 

$

—

 

 

$

—

 

 

$

6,458

 

Secured

 

546

 

 

 

—

 

 

 

—

 

 

 

546

 

Residential loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

867

 

 

 

—

 

 

 

—

 

 

 

867

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Equity

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

Auto

 

4

 

 

 

—

 

 

 

—

 

 

 

4

 

Marine

 

163

 

 

 

—

 

 

 

—

 

 

 

163

 

Recreational vehicle

 

213

 

 

 

—

 

 

 

—

 

 

 

213

 

Mortgage servicing rights

 

2,704

 

 

 

—

 

 

 

2,704

 

 

 

—

 

Other real estate owned, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction loans

 

785

 

 

 

—

 

 

 

—

 

 

 

785

 

Nonresidential loans

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Residential loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

344

 

 

 

—

 

 

 

—

 

 

 

344

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2015 Using:

 

 

 

 

 

 

Quoted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prices in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Unobservable

 

 

December 31,

 

 

Assets

 

 

Inputs

 

 

Inputs

 

 

2015

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonresidential

$

2,857

 

 

$

—

 

 

$

—

 

 

$

2,857

 

Land

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Residential loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

1,493

 

 

 

—

 

 

 

—

 

 

 

1,493

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Equity

 

392

 

 

 

—

 

 

 

—

 

 

 

392

 

Auto

 

1

 

 

 

—

 

 

 

—

 

 

 

1

 

Mortgage servicing rights

 

604

 

 

 

—

 

 

 

604

 

 

 

—

 

Other real estate owned, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction loans

 

785

 

 

 

—

 

 

 

—

 

 

 

785

 

Nonresidential loans

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Residential loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

1,088

 

 

 

—

 

 

 

—

 

 

 

1,088

 

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

The Company has elected the fair value option for newly originated residential mortgage and 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 March 31, 2016.  

 

 

 

March 31, 2016

 

 

December 31, 2015

 

 

 

(Dollars in thousands)

 

Aggregate fair value

 

$

32,007

 

 

$

26,716

 

Contractual balance

 

 

29,684

 

 

 

25,197

 

Gain (loss)

 

 

2,323

 

 

 

1,519

 

 
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 months ended March 31, 2016 for loans held for sale, at fair value were:

 

 

 

For the Three Months Ended

 

 

 

March 31, 2016

 

 

March 31, 2015

 

 

 

(Dollars in thousands)

 

Interest  income

 

$

—

 

 

$

—

 

Interest expense

 

 

—

 

 

 

—

 

Change in fair value

 

 

803

 

 

 

561

 

Total change in fair value

 

$

803

 

 

$

561

 

 
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 March 31, 2016 and December 31, 2015, were as follows:

 

 

 

 

 

 

Fair Value Measurements at March 31, 2016 Using:

 

 

March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

40,570

 

 

$

40,570

 

 

$

—

 

 

$

—

 

Available for sale securities

 

365,369

 

 

 

—

 

 

 

365,369

 

 

 

—

 

Held to maturity securities

 

107,838

 

 

 

—

 

 

 

107,595

 

 

 

1,107

 

Loans held for sale

 

3,991

 

 

 

—

 

 

 

4,079

 

 

 

—

 

Loans held for sale, at fair value

 

32,007

 

 

 

—

 

 

 

5,247

 

 

 

26,760

 

Loans, net

 

1,359,146

 

 

 

—

 

 

 

—

 

 

 

1,365,391

 

FHLB stock

 

18,068

 

 

n/a

 

 

n/a

 

 

n/a

 

Accrued interest receivable

 

5,783

 

 

 

—

 

 

 

2,095

 

 

 

3,688

 

Interest rate caps

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Purchased certificate of deposit option

 

913

 

 

 

—

 

 

 

913

 

 

 

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking, savings and money market accounts

 

(1,026,318

)

 

 

(1,026,318

)

 

 

—

 

 

 

—

 

Certificates of deposit

 

(440,296

)

 

 

—

 

 

 

(444,173

)

 

 

—

 

FHLB advances

 

(291,170

)

 

 

—

 

 

 

(291,070

)

 

 

—

 

Repurchase agreements and other

 

(529

)

 

 

—

 

 

 

(540

)

 

 

—

 

Advance payments by borrowers for taxes and insurance

 

(16,247

)

 

 

(16,247

)

 

 

—

 

 

 

—

 

Accrued interest payable

 

(110

)

 

 

—

 

 

 

(110

)

 

 

—

 

Written certificate of deposit option

 

(913

)

 

 

—

 

 

 

(913

)

 

 

—

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2015 Using:

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

35,910

 

 

$

35,910

 

 

$

—

 

 

$

—

 

Available for sale securities

 

357,670

 

 

 

—

 

 

 

357,670

 

 

 

—

 

Held to maturity securities

 

110,699

 

 

 

—

 

 

 

108,536

 

 

 

1,108

 

Loans held for sale

 

9,085

 

 

 

—

 

 

 

9,207

 

 

 

—

 

Loans held for sale, at fair value

 

26,716

 

 

 

—

 

 

 

—

 

 

 

26,716

 

Loans, net

 

1,316,192

 

 

 

—

 

 

 

—

 

 

 

1,322,338

 

FHLB stock

 

18,068

 

 

n/a

 

 

n/a

 

 

n/a

 

Accrued interest receivable

 

5,978

 

 

 

—

 

 

 

2,276

 

 

 

3,702

 

Interest rate caps

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

Purchased certificate of deposit option

 

805

 

 

 

—

 

 

 

805

 

 

 

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking, savings and money market accounts

 

(980,783

)

 

 

(980,783

)

 

 

—

 

 

 

—

 

Certificates of deposit

 

(454,960

)

 

 

—

 

 

 

(459,433

)

 

 

—

 

FHLB advances

 

(278,975

)

 

 

—

 

 

 

(279,053

)

 

 

—

 

Repurchase agreements and other

 

(535

)

 

 

—

 

 

 

(548

)

 

 

—

 

Advance payments by borrowers for taxes and insurance

 

(21,174

)

 

 

(21,174

)

 

 

—

 

 

 

—

 

Accrued interest payable

 

(53

)

 

 

—

 

 

 

(53

)

 

 

—

 

Written certificate of deposit option

 

(805

)

 

 

—

 

 

 

(805

)

 

 

—

 

 
Significant Unobservable Inputs (Level 3) [Member] | 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 March 31, 2016:

 

 

 

 

 

 

Valuation

 

Unobservable

 

 

 

Fair Value

 

 

Technique(s)

 

Input(s)

 

Range

Loans held for sale, at fair value

$

26,760

 

 

Comparable sales

 

Time discount

 

0.00-1.80%

Interest rate caps

 

—

 

 

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, 2015:

 

 

 

 

 

 

Valuation

 

Unobservable

 

 

 

Fair Value

 

 

Technique(s)

 

Input(s)

 

Range

Loans held for sale, at fair value

$

26,716

 

 

Comparable sales

 

Time discount

 

0.00-1.80%

Interest rate caps

 

3

 

 

Discounted cash flow

 

Discount rate

 

0.49-1.18%

 
Significant Unobservable Inputs (Level 3) [Member] | 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 March 31, 2016:

 

 

 

Fair Value

 

 

Valuation Technique(s)

 

Unobservable Input(s)

 

Range     (Weighted Average)

Impaired loans:

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

Nonresidential

 

$

6,458

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-35.00%  (14.14%)

Secured

 

 

546

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-27.47%  (13.74%)

Residential loans

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

 

867

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-10.77%  (4.27%)

Consumer loans

 

 

 

 

 

 

 

 

 

 

Home Equity

 

 

3

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-17.85%  (8.93%)

Auto

 

 

4

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-10.00%  (10.00%)

Marine

 

 

163

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-37.00%  (37.00%)

Recreational vehicle

 

 

213

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-37.00%  (37.00%)

Other real estate owned, net

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

Construction loans

 

 

785

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-50.00%  (21.71%)

Nonresidential loans

 

 

175

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

40.00%-60.00%  (50.00%)

Residential loans

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

 

344

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-40.50%  (15.51%)

 

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, 2015:

 

 

 

Fair Value

 

 

Valuation Technique(s)

 

Unobservable Input(s)

 

Range     (Weighted Average)

Impaired loans:

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

Nonresidential

 

$

2,857

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

9.19%-12.38%  (10.79%)

Land

 

 

175

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-27.47%  (13.74%)

Residential loans

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

 

1,493

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-10.77%  (4.27%)

Consumer loans

 

 

 

 

 

 

 

 

 

 

Home Equity

 

 

392

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-17.85%  (8.93%)

Other real estate owned:

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

 

 

 

 

 

 

 

 

 

Construction loans

 

 

785

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-50.00%  (21.71%)

Nonresidential loans

 

 

175

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

40.00%-60.00%  (50.00%)

Residential loans

 

 

 

 

 

 

 

 

 

 

One-to four-family residential

 

 

1,088

 

 

Sales comparison approach

 

Adjustment for differences between comparable sales

 

0.00%-40.50%  (15.51%)