FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2018

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, 2018 Using:
				Quoted
				Prices in
				Active		Significant
				Markets for		Other			Significant
				Identical		Observable			Unobservable
	September 30,			Assets		Inputs			Inputs
	2018			(Level 1)		(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities'    securities	$	119,288		$	—	$	119,288		$	—
States of the U.S. and political subdivisions		47,023			—		47,023			—
Mortgage-backed GSE securities: residential		75,795			—		75,795			—
Loans held for sale, at fair value		95,235			—		14,308			80,927
Purchased certificate of deposit option		459			—		459			—
Interest rate swaps		21			—		21			—
Liabilities
Written certificate of deposit option		(459	)		—		(459	)		—
Interest rate swaps		(25	)		—		(25	)		—

				Fair Value Measurements at December 31, 2017 Using:
				Quoted
				Prices in
				Active		Significant
				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
U.S. 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	)		—

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 September 30, 2018 and 2017.  

	Loans Held for Sale, At Fair Value
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	76,690		$	69,995		$	65,016		$	53,761
Total gains (losses) for the period
Included in change in fair value of loans held for sale		(77	)		1,145			(2,216	)		3,557
Included in other comprehensive income		—			—			—			—
Originations/Draws on construction perm loans		32,581			28,864			94,908			80,109
Amortization		—			—			—			—
Sales		(28,267	)		(29,766	)		(76,781	)		(67,189	)
Balance of recurring Level 3 assets at end of period	$	80,927		$	70,238		$	80,927		$	70,238

Assets and Liabilities Measured at Fair Value 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, 2018 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans
Multifamily	$	247	$	—	$	—	$	247
Residential loans
One-to four-family residential		130		—		—		130
Consumer loans
Auto		16		—		—		16
Marine		38		—		—		38
Mortgage servicing rights		282		—		282		—
Other real estate owned, net
Commercial loans
Construction loans		197		—		—		197
Residential loans
One-to four-family residential		145		—		—		145

			Fair Value Measurements at December 31, 2017 Using:
			Quoted
			Prices in
			Active		Significant
			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 Option for Newly Originated Residential Mortgage and Permanent Construction Loans Held for Sale

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

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 September 30, 2018 and December 31, 2017.  

	September 30, 2018		December 31, 2017
	(Dollars in thousands)
Aggregate fair value	$	95,235	$	83,541
Contractual balance		94,151		79,898
Gain		1,084		3,643

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, 2018 and 2017 for loans held for sale, at fair value were:

	For the Three Months Ended					For the Nine Months Ended
	September 30, 2018			September 30, 2017		September 30, 2018			September 30, 2017
	(Dollars in thousands)
Interest  income	$	—		$	—	$	—		$	—
Interest expense		—			—		—			—
Change in fair value		(362	)		1,088		(2,559	)		3,988
Total change in fair value	$	(362	)	$	1,088	$	(2,559	)	$	3,988

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, 2018 and December 31, 2017, were as follows:

				Fair Value Measurements at September 30, 2018 Using:
	September 30,
	2018
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	54,265		$	54,265		$	—		$	—
Available for sale securities		242,106			—			242,106			—
Held to maturity securities		78,700			—			74,812			—
Loans held for sale, at fair value		95,235			—			14,308			80,927
Loans, net		2,148,942			—			—			2,117,982
FHLB stock		19,144		n/a			n/a			n/a
Accrued interest receivable		8,551			—			1,582			6,969
Purchased certificate of deposit option		459			—			459			—
Interest rate swaps		21			—			21			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,313,932	)		(1,313,932	)		—			—
Certificates of deposit		(1,038,544	)		—			(1,034,803	)		—
FHLB advances		(95,025	)		—			(94,949	)		—
Repurchase agreements and other		(238	)		—			(224	)		—
Advance payments by borrowers for taxes and insurance		(16,494	)		(16,494	)		—			—
Accrued interest payable		(1,177	)		—			(1,177	)		—
Written certificate of deposit option		(459	)		—			(459	)		—
Interest rate swaps		(25	)		—			(25	)		—

				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	)		—

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 September 30, 2018:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Loans held for sale, at fair value	$	80,927	Comparable sales	Time discount	0.00-2.00%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2017:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Construction loans held for sale	$	65,016	Comparable sales	Time discount	0.00-1.96%

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 September 30, 2018:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired loans:
Commercial loans
Multifamily	$	247	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00%  (15.00%)
Residential loans
One-to four-family residential		130	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.77%  (4.27%)
Consumer loans
Auto		16	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85%  (8.93%)
Marine		38	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85%  (8.93%)
Other real estate owned, net
Commercial loans
Construction loans		197	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-60.00%  (57.67%)
Residential loans
One-to four-family residential		145	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-22.15%  (16.36%)

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 (Weighted Average)
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:
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%)