FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of significant unobservable inputs used to measure fair value

Significant unobservable inputs at June 30, 2014, 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	22.01%
Weighted average prepayment speed: PSA	448.85%
Weighted average cash flow discount rate	7.91%
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

Interest rate swap agreements – Fair values for interest rate swap agreements are based on the amounts required to settle the contracts based on valuations provided by third-party dealers in the contracts, which is considered a Level 2 fair value measurement, and are 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 June 30, 2014:
Securities available for sale:
U.S. agency issued residential MBS and CMO	$	72,873		—	$	72,873		$–
Privately issued residential MBS and CMO		33		—		33		—
Solomon Hess SBA loan fund (CDFI Fund)		950		—		950		—
Other equity securities		47		—		—		47
Total securities available for sale		73,903		—		73,856		47
Mortgage rate lock commitments		6		—		6		—
Interest rate swap agreements		267		—		267		—
Total assets	$	74,176		—	$	74,129	$	47
Liabilities – Interest rate swap agreements	$	672	$	—	$	672	$	—

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 June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 2014:
Impaired loans	$	2,070	$	—	$	644	$	1,426
Foreclosed assets		1,266		—		319		947
Mortgage servicing rights		1,698		—		—		1,698
Other intangible assets		321		—		—		321
Total assets	$	5,355	$	—	$	963	$	4,392
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 June 30, 2014:

	June 30, 2014
	Carrying		Estimated		Fair Value Hierarchy Level
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets ($000s):
Cash and cash equivalents	$	20,930	$	20,930	$	20,930	$	—	$	—
Securities		144,241		145,341		—		143,494		1,847
Bank certificates of deposit		3,672		3,712		—		—		3,712
Net loans receivable and loans held for sale		521,824		525,688		—		644		525,044
Accrued interest receivable		2,072		2,072		—		—		2,072
Mortgage servicing rights		1,698		1,698		—		—		1,698
Mortgage rate lock commitments		6		6		—		6		—
FHLB stock		2,556		2,556		—		—		2,556
Cash surrender value of life insurance		13,025		13,025		—		13,025		—
Interest rate swap agreements		267		267		—		267		—
Financial liabilities ($000s):
Deposits	$	598,340	$	599,291	$	—	$	—	$	599,291
FHLB advances		27,879		28,028		—		28,028		—
Other borrowings		22,559		23,201		—		14,153		9,048
Senior subordinated notes		4,000		3,559		—		—		3,559
Junior subordinated debentures		7,732		7,185		—		—		7,185
Interest rate swap agreements		672		672		—		672		—
Accrued interest payable		431		431		—		—		431

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