FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements Tables

Schedule of significant unobservable inputs used to measure fair value

Significant unobservable inputs at March 31, 2013 used to measure fair value included:

Direct annual servicing cost per loan	$	50
Direct annual servicing cost per loan in process of foreclosure	$	500
Weighted average prepayment speed: CPR		54.51%
Weighted average prepayment speed: PSA		1,053.81%
Weighted average discount rate		8.09%
Asset reinvestment rate		4.00%
Short-term cost of funds		0.25%
Escrow inflation adjustment		1.00%
Servicing cost inflation adjustment		1.00%

Schedule of fair value measured on a recurring basis

			Recurring Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(dollars in thousands)			(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis at March 31, 2013:
Securities available for sale:
U.S. Treasury and agency debentures	$	7,014	$	—	$	7,014	$	—
U.S. agency issued residential MBS and CMO		59,416		—		59,416		—
Privately issued residential MBS and CMO		150		—		150		—
Nonrated commercial paper		1,500		—		1,500		—
Nonrated SBA loan fund (CDFI Fund)		950		—		950		—
Other equity securities		47		—		—		47
Total securities available for sale		69,077		—		69,030		47
Mortgage rate lock commitments		59		—		59		—
Interest rate swap agreements		589		—		589		—
Total assets	$	69,725	$	—	$	69,678	$	47
Liabilities – Interest rate swap agreements	$	1,234	$	—	$	1,234	$	—
Assets measured at fair value on a recurring basis at December 31, 2012:
Securities available for sale:
U.S. Treasury and agency debentures	$	10,027	$	—	$	10,027	$	—
U.S. agency issued residential MBS and CMO		59,640		—		59,640		—
Privately issued residential MBS and CMO		173		—		173		—
Nonrated commercial paper		5,500		—		5,500		—
Other equity securities		47		—		—		47
Total securities available for sale		75,387		—		75,340		47
Loans held for sale		884		—		884		—
Mortgage rate lock commitments		91		—		91		—
Interest rate swap agreements		673		—		673		—
Total assets	$	77,035	$	—	$	76,988	$	47
Liabilities – Interest rate swap agreements	$	1,372	$	—	$	1,372	$	—

Reconciliation of fair value measurements using significant unobservable inputs

Reconciliation of fair value measurements using significant unobservable inputs:

	Securities
	Available
(dollars in thousands)	For Sale
Balance at January 1, 2012:	$	47
Total realized/unrealized gains and (losses):
Included in earnings		—
Included in other comprehensive income		—
Purchases, maturities, and sales		—
Transferred from Level 2 to Level 3		—
Transferred to held to maturity classification		—
Balance at March 31, 2012	$	47
Total gains or (losses) for the period included in earnings attributable to the
change in unrealized gains or losses relating to assets still held at March 31, 2012	$	—
Balance at January 1, 2013	$	47
Total realized/unrealized gains and (losses):
Included in earnings		—
Included in other comprehensive income		—
Purchases, maturities, and sales		—
Transferred from Level 2 to Level 3		—
Transferred to held to maturity classification		—
Balance at March 31, 2013	$	47
Total gains or (losses) for the period included in earnings attributable to the
change in unrealized gains or losses relating to assets still held at March 31, 2013	$	—

Schedule of fair value measured on a nonrecurring basis

			Nonrecurring Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	($000s)		(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a nonrecurring basis at March 31, 2013:
Impaired loans	$	3,075	$	—	$	869	$	2,206
Foreclosed assets		1,822		—		797		1,025
Mortgage servicing rights		1,443		—		—		1,443
Total assets	$	6,340	$	—	$	1,666	$	4,674
Assets measured at fair value on a nonrecurring basis at December 31, 2012:
Impaired loans	$	2,973	$	—	$	328	$	2,645
Foreclosed assets		1,774		—		752		1,022
Mortgage servicing rights		1,233		—		—		1,233
Total assets	$	5,980	$	—	$	1,080	$	4,900

Schedule of carrying value and estimated fair values of Financial Instruments

The carrying amounts and fair values of PSB’s financial instruments consisted of the following at March 31, 2013:

	March 31, 2013
	Carrying		Estimated		Fair Value Hierarchy Level
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets ($000s):
Cash and cash equivalents	$	12,852	$	12,852	$	12,852	$	—	$	—
Securities		140,565		142,838		—		140,996		1,842
Bank certificates of deposit		4,465		4,539		—		—		4,539
Net loans receivable and loans held for sale		492,588		497,603		—		869		496,734
Accrued interest receivable		2,389		2,389		—		—		2,389
Mortgage servicing rights		1,443		1,443		—		—		1,443
Mortgage rate lock commitments		59		59		—		59		—
FHLB stock		2,906		2,906		—		—		2,906
Cash surrender value of life insurance		11,911		11,911		11,911		—		—
Interest rate swap agreements		589		589		—		589		—
Financial liabilities ($000s):
Deposits	$	531,173	$	533,436	$	—	$	—	$	533,436
FHLB advances		58,124		59,348		—		59,348		—
Other borrowings		23,129		24,289		—		14,771		9,518
Senior subordinated notes		4,000		3,481		—		—		3,481
Junior subordinated debentures		7,732		4,801		—		—		4,801
Interest rate swap agreements		1,234		1,234		—		1,234		—
Accrued interest payable		475		475		—		—		475

The carrying amounts and fair values of PSB’s financial instruments consisted of the following at December 31, 2012:

	December 31, 2012
	Carrying		Estimated		Fair Value Hierarchy Level
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets ($000s):
Cash and cash equivalents	$	48,847	$	48,847	$	48,847	$	—	$	—
Securities		145,209		147,751		—		145,795		1,956
Bank certificates of deposit		4,465		4,538		—		—		4,538
Net loans receivable and loans held for sale		478,875		484,925		—		1,212		483,713
Accrued interest receivable		2,157		2,157		—		—		2,157
Mortgage servicing rights		1,233		1,233		—		—		1,233
Mortgage rate lock commitments		91		91		—		91		—
FHLB stock		2,506		2,506		—		—		2,506
Cash surrender value of life insurance		11,813		11,813		11,813		—		—
Interest rate swap agreements		673		673		—		673		—
Financial liabilities ($000s):
Deposits	$	565,442	$	568,014	$	—	$	—	$	568,014
FHLB advances		50,124		51,590		—		51,590		—
Other borrowings		20,728		22,118		—		14,890		7,228
Senior subordinated notes		7,000		7,000		—		—		7,000
Junior subordinated debentures		7,732		4,911		—		—		4,911
Interest rate swap agreements		1,372		1,372		—		1,372		—
Accrued interest payable		697		697		—		—		697