FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Measurements Tables

Schedule of significant unobservable inputs used to measure fair value

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

Direct annual servicing cost per loan	$60
Direct annual servicing cost per loan in process of foreclosure	$600
Weighted average prepayment speed: CPR	21.51%
Weighted average prepayment speed: PSA	437.79%
Weighted average cash flow discount rate	7.92%
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, 2014:
Securities available for sale:
U.S. Treasury and agency debentures	$	997	$	—	$	997	$	—
U.S. agency issued residential MBS and CMO		71,396		—		71,396		—
Privately issued residential MBS and CMO		38		—		38		—
Solomon Hess SBA loan fund (CDFI Fund)		950		—		950		—
Other equity securities		47		—		—		47
Total securities available for sale		73,428		—		73,381		47
Loans held for sale		239		—		239		—
Mortgage rate lock commitments		26		—		26		—
Interest rate swap agreements		262		—		262		—
Total assets	$	73,955	$	—	$	73,908	$	47
Liabilities – Interest rate swap agreements	$	667	$	—	$	667	$	—
Assets measured at fair value on a recurring basis at December 31, 2013:
Securities available for sale:
U.S. Treasury and agency debentures	$	999	$	—	$	999	$	—
Obligations of states and political subdivisions		159				159		—
U.S. agency issued residential MBS and CMO		59,390		—		59,390		—
Privately issued residential MBS and CMO		105		—		105		—
Solomon Hess SBA loan fund (CDFI Fund)		950				950		—
Other equity securities		47		—		—		47
Total securities available for sale		61,650		—		61,603		47
Loans held for sale		150		—		150		—
Mortgage rate lock commitments		14		—		14		—
Interest rate swap agreements		276		—		276		—
Total assets	$	62,090	$	—	$	62,043	$	47
Liabilities – Interest rate swap agreements	$	714	$	—	$	714	$	—

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, 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	$	—
Balance at January 1, 2014	$	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, 2014	$	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, 2014	$	—

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, 2014:
Impaired loans	$	1,169	$	—	$	—	$	1,169
Foreclosed assets		1,677		—		792		885
Mortgage servicing rights		1,707		—		—		1,707
Total assets	$	4,553	$	—	$	792	$	3,761
Assets measured at fair value on a nonrecurring basis at December 31, 2013:
Impaired loans	$	1,720	$	—	$	—	$	1,720
Foreclosed assets		1,750		—		792		958
Mortgage servicing rights		1,696		—		—		1,696
Total assets	$	5,166	$	—	$	792	$	4,374

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, 2014:

	March 31, 2014
	Carrying		Estimated		Fair Value Hierarchy Level
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets ($000s):
Cash and cash equivalents	$	22,620	$	22,620	$	22,620	$	—	$	—
Securities		144,295		145,002		—		143,154		1,848
Other investments		3,924		3,971		—		—		3,971
Net loans receivable and loans held for sale		488,341		491,468		—		239		491,229
Accrued interest receivable		2,256		2,256		—		—		2,256
Mortgage servicing rights		1,707		1,707		—		—		1,707
Mortgage rate lock commitments		26		26		—		26		—
FHLB stock		2,556		2,556		—		—		2,556
Cash surrender value of life insurance		12,925		12,925		—		12,925		—
Interest rate swap agreements		262		262		—		262		—
Financial liabilities ($000s):
Deposits	$	567,314	$	568,171	$	—	$	—	$	568,171
FHLB advances		30,119		30,389		—		30,389		—
Other borrowings		20,419		21,141		—		14,242		6,899
Senior subordinated notes		4,000		3,514		—		—		3,514
Junior subordinated debentures		7,732		7,120		—		—		7,120
Interest rate swap agreements		667		667		—		667		—
Accrued interest payable		426		426		—		—		426

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

	December 31, 2013
	Carrying		Estimated		Fair Value Hierarchy Level
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets ($000s):
Cash and cash equivalents	$	31,522	$	31,522	$	31,522	$	—	$	—
Securities		133,279		133,322		—		131,479		1,843
Bank certificates of deposit		2,236		2,280		—		—		2,280
Net loans receivable and loans held for sale		510,030		514,309		—		150		514,159
Accrued interest receivable		2,076		2,076		—		—		2,076
Mortgage servicing rights		1,696		1,696		—		—		1,696
Mortgage rate lock commitments		14		14		—		14		—
FHLB stock		2,556		2,556		—		—		2,556
Cash surrender value of life insurance		12,826		12,826		—		12,826		—
Interest rate swap agreements		276		276		—		276		—
Financial liabilities ($000s):
Deposits	$	577,514	$	578,387	$	—	$	—	$	578,387
FHLB advances		38,049		38,511		—		38,511		—
Other borrowings		20,441		21,251		—		14,364		6,887
Senior subordinated notes		4,000		3,489		—		—		3,489
Junior subordinated debentures		7,732		7,085		—		—		7,085
Interest rate swap agreements		714		714		—		714		—
Accrued interest payable		477		477		—		—		477