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FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2017

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 December 31, 2017 Using:
			Quoted				Significant
			Prices in				Unobservable
			Active		Significant		Inputs
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
US Treasury and government sponsored entities’ securities	$	123,817	$	—	$	123,817	$	—
States of the U.S. and political subdivisions		59,623		—		59,623		—
Mortgage-backed GSE securities: residential		87,121		—		87,121		—
Loans held for sale, at fair value		83,541		—		18,525		65,016
Purchased certificate of deposit option		809		—		809		—
Liabilities
Written certificate of deposit option		809		—		809		—

			Fair Value Measurements at December 31, 2016 Using:
			Quoted				Significant
			Prices in				Unobservable
			Active		Significant		Inputs
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
US Treasury and government sponsored entities’ securities	$	186,033	$	—	$	186,033	$	—
States of the U.S. and political subdivisions		57,757		—		57,757		—
Mortgage-backed GSE securities: residential		99,494		—		99,494		—
Loans held for sale, at fair value		62,593		—		8,832		53,761
Purchased certificate of deposit option		882		—		882		—
Liabilities
Written certificate of deposit option		882		—		882		—

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 years ended December 31, 2017 and 2016, in thousands:

	Construction loans held for sale
	Twelve months ended			Twelve months ended
	December 31, 2017			December 31, 2016
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	53,761		$	26,716
Total gains (losses) for the period
Included in change in fair value of loans held for sale		3,893			(1,769	)
Originations		108,617			82,878
Sales		(101,255	)		(54,064	)
Balance of recurring Level 3 assets at end of period	$	65,016		$	53,761

	Interest Rate Caps
	Twelve months ended
	December 31, 2016
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	3
Total gains (losses) for the period
Included in other income		385
Included in other comprehensive income		—
Purchases		—
Amortization		(388	)
Sales		—
Balance of recurring Level 3 assets at end of period	$	—

Assets Measured on Non-recurring Basis

Assets Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements at December 31, 2017 Using:
			Quoted				Significant
			Prices in				Unobservable
			Active		Significant		Inputs
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans
Commercial loans
Multifamily	$	247	$	—	$	—	$	247
Nonresidential		2		—		—		2
Secured		40		—		—		40
Residential loans
One-to four-family residential		1,010		—		—		1,010
Consumer loans
Home Equity		89		—		—		89
Auto		13		—		—		13
Marine		169		—		—		169
Recreational vehicle		86		—		—		86
Mortgage servicing rights		382		—		382		—
Other real estate owned, net
Commercial loans
Construction loans		354		—		—		354
Residential loans
One-to four-family residential		82		—		—		82

			Fair Value Measurements at December 31, 2016 Using:
			Quoted				Significant
			Prices in				Unobservable
			Active		Significant		Inputs
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans
Commercial loans
Nonresidential	$	2,257	$	—	$	—	$	2,257
Secured		284		—		—		284
Residential loans
One-to four-family residential		919		—		—		919
Consumer loans
Home Equity		228		—		—		228
Auto		177		—		—		177
Recreational vehicle		89		—		—		89
Other real estate owned, net
Commercial loans
Construction loans		748		—		—		748
Residential loans
One-to four-family residential		281		—		—		281

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

As of December 31, 2017 and 2016, the aggregate fair value, contractual balance and gain or loss was as follows:

	December 31, 2017		December 31, 2016
	(Dollars in thousands)		(Dollars in thousands)
Aggregate fair value	$	83,541	$	62,593
Contractual balance		79,898		62,843
Gain (loss)		3,643		(250	)

Carrying Value and Estimated Fair Values of Financial Instruments

The carrying value and estimated fair values of financial instruments at December 31, 2017 and December 31, 2016, were as follows:

				Fair Value Measurements at December 31, 2017 Using:
	December 31,
	2017
	Carrying
	Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	46,880		$	46,880		$	—		$	—
Available for sale securities		270,561			—			270,561			—
Held to maturity securities		82,911			—			82,126			—
Loans held for sale at lower of cost or market		211			—			217			—
Loans held for sale at fair value		83,541			—			18,525			65,016
Loans, net		1,999,877			—			—			1,990,289
FHLB stock		19,324		n/a			n/a			n/a
Accrued interest receivable		8,190			—			2,244			5,946
Purchased certificate of deposit option		809			—			809			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,251,398	)		(1,251,398	)		—			—
Certificates of deposit		(705,341	)		—			(705,238	)		—
FHLB advances		(356,536	)		—			(356,521	)		—
Repurchase agreements and other		(197	)		—			(190	)		—
Advance payments by borrowers for taxes and insurance		(25,038	)		(25,038	)		—			—
Accrued interest payable		(1,097	)		—			(1,097	)		—
Written certificate of deposit option		(809	)		—			(809	)		—

				Fair Value Measurements at December 31, 2016 Using:
	December 31,
	2016
	Carrying
	Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	45,887		$	45,887		$	—		$	—
Available for sale securities		343,284			—			343,284			—
Held to maturity securities		97,519			—			92,940			3,210
Loans held for sale at lower of cost or market		165			—			169			—
Loans held for sale at fair value		62,593			—			8,832			53,761
Loans, net		1,503,577			—			—			1,494,534
FHLB stock		18,068		n/a			n/a			n/a
Accrued interest receivable		6,900			—			2,624			4,276
Purchased certificate of deposit option		882			—			882			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,026,565	)		(1,026,565	)		—			—
Certificates of deposit		(488,426	)		—			(491,278	)		—
FHLB advances		(390,756	)		—			(390,750	)		—
Repurchase agreements and other		(512	)		—			(513	)		—
Advance payments by borrowers for taxes and insurance		(23,812	)		(23,812	)		—			—
Accrued interest payable		(145	)		—			(145	)		—
Written certificate of deposit option		(882	)		—			(882	)		—

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 December 31, 2017:

Fair Value

Valuation Technique

Unobservable Inputs

Range

(Dollars in thousands)

Construction loans held for sale

65,016

Comparable

sales

Time discount

using the 60 day forward contract

0.00%-1.96%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2016:

Fair Value

Valuation Technique

Unobservable Inputs

Range

(Dollars in thousands)

Construction loans held for sale

53,761

Comparable

sales

Time discount

using the 60 day forward contract

0.00%-1.80%

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 December 31, 2017:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
	(Dollars in thousands)
Impaired loans
Commercial loans
Multifamily	$	247	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00% (15.00%)
Nonresidential		2	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00% (15.00%)
Secured		40	Sales comparison approach	Adjustment for differences between comparable sales	0.00-64.00% (16.00%)
Residential loans
One-to four-family residential		1,010	Sales comparison approach	Adjustment for differences between comparable sales	0.00-10.77% (4.27%)
Consumer loans
Home Equity		89	Sales comparison approach	Adjustment for differences between comparable sales	0.00-17.85% (8.93%)
Other real estate owned, net
Commercial loans
Construction loans		354	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-52.90% (52.41%)
Residential loans
One-to four-family residential		82	Sales comparison approach	Adjustment for differences between comparable sales	0.00-13.43% (13.43%)

Auto and recreational vehicle loans were excluded from the table above as their value is considered immaterial.

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, 2016:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
	(Dollars in thousands)
Impaired loans
Commercial loans
Nonresidential	$	2,257	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00% (15.00%)
Secured		284	Sales comparison approach	Adjustment for differences between comparable sales	0.00-64.00% (16.00%)
Residential loans
One-to four-family residential		919	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.77% (4.27%)
Consumer loans
Home Equity		228	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85% (8.93%)
Other real estate owned, net
Commercial loans
Construction loans		748	Sales comparison approach Cost approach	Adjustment for differences between comparable sales Adjustment for differences in cost	0.00-90.40% (27.46%) 0.00-33.33% (16.67%)
Residential loans
One-to four-family residential		281	Sales comparison approach	Adjustment for differences between comparable sales	0.00-27.00% (7.74%)

- 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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