Fair value measurements (Tables)

3 Months Ended

Mar. 31, 2015

Schedule of estimated fair values of certain of the Company's financial instruments

The following table presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments. For stock in Federal Home Loan Bank of Seattle, the carrying amount is a reasonable estimate of fair value. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, the carrying amount is a reasonable estimate of fair value as these liabilities have no stated maturity.



			Estimated fair value
	Carrying amount		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)	Carrying amount		(Level 1)		(Level 2)		(Level 3)		Total
March 31, 2015
Financial assets
Money market funds	$	10	$	—	$	10	$	—	$	10
Available-for-sale investment securities	590,648		—		590,648		—		590,648
Stock in Federal Home Loan Bank of Seattle	63,711		—		63,711		—		63,711
Loans receivable, net	4,411,410		—		—		4,616,814		4,616,814
Derivative assets	851		—		851		—		851
Financial liabilities
Deposit liabilities	4,751,328		—		4,752,331		—		4,752,331
Short-term borrowings—other than bank	30,500		—		30,500		—		30,500
The Utilities’ short-term borrowings (included in amount above)	30,000		—		30,000		—		30,000
Other bank borrowings	312,094		—		320,329		—		320,329
Long-term debt, net—other than bank	1,506,546		—		1,645,545		—		1,645,545
The Utilities’ long-term debt, net (included in amount above)	1,206,546		—		1,336,267		—		1,336,267
Derivative liabilities	281		249		32		—		281
December 31, 2014
Financial assets
Money market funds	$	10	$	—	$	10	$	—	$	10
Available-for-sale investment securities	550,394		—		550,394		—		550,394
Stock in Federal Home Loan Bank of Seattle	69,302		—		69,302		—		69,302
Loans receivable, net	4,397,457		—		—		4,578,822		4,578,822
Derivative assets	398		—		398		—		398
Financial liabilities
Deposit liabilities	4,623,415		—		4,623,773		—		4,623,773
Short-term borrowings—other than bank	118,972		—		118,972		—		118,972
Other bank borrowings	290,656		—		298,837		—		298,837
Long-term debt, net—other than bank	1,506,546		—		1,622,736		—		1,622,736
The Utilities’ long-term debt, net (included in amount above)	1,206,546		—		1,313,893		—		1,313,893
Derivative liabilities	114		71		43		—		114

Schedule of assets measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis were as follows:



	March 31, 2015						December 31, 2014
	Fair value measurements using						Fair value measurements using
(in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds (“other” segment)	$	—	$	10	$	—	$	—	$	10	$	—
Available-for-sale investment securities (bank segment)
Mortgage-related securities-FNMA, FHLMC and GNMA	$	—	$	450,421	$	—	$	—	$	430,834	$	—
U.S. Treasury and federal agency obligations	—		140,227		—		—		119,560		—
	$	—	$	590,648	$	—	$	—	$	550,394	$	—
Derivative assets ¹
Interest rate lock commitments	$	—	$	836	$	—	$	—	$	393	$	—
Forward commitments	—		15		—		—		5		—
	$	—	$	851	$	—	$	—	$	398	$	—
Derivative liabilities ¹
Interest rate lock commitments	$	—	$	1	$	—	$	—	$	3	$	—
Forward commitments	249		31		—		71		40		—
	$	249	$	32	$	—	$	71	$	43	$	—

¹ Derivatives are carried at fair value with changes in value reflected in the balance sheet in other assets or other liabilities and included in mortgage banking income.

Schedule of assets measured at fair value on a nonrecurring basis

Assets measured at fair value on a nonrecurring basis were as follows:



			Fair value measurements
(in thousands)	Balance		Level 1		Level 2		Level 3
March 31, 2015
Loans	$	2,494	$	—	$	—	$	2,494
Real estate acquired in settlement of loans	665		—		—		665
December 31, 2014
Loans	2,445		—		—		2,445
Real estate acquired in settlement of loans	288		—		—		288

Schedule of significant unobservable inputs used in the fair value measurement

Key assumptions used in estimating the fair value of the bank’s mortgage servicing rights were as follows:



(dollars in thousands)	March 31, 2015			December 31, 2014
Unpaid principal balance	$	1,414,990		$	1,391,030
Weighted average note rate	4.06		%	4.07		%
Weighted average discount rate	9.6		%	9.6		%
Weighted average prepayment speed	10.6		%	9.5		%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:



					Significant unobservable input value ¹
($ in thousands)	Fair value		Valuation technique	Significant unobservable input	Range	Weighted Average
March 31, 2015
Residential loans	$	2,377	Fair value of property or collateral	Appraised value less 7% selling costs	39-99%	78%
Home equity lines of credit	3		Fair value of property or collateral	Appraised value less 7% selling costs		7%
Commercial loans	114		Fair value of property or collateral	Fair value of business assets		88%
Total loans	$	2,494
Real estate acquired in settlement of loans	$	665	Fair value of property or collateral	Appraised value less 7% selling costs	100%	100%
December 31, 2014
Residential loans	$	2,297	Fair value of property or collateral	Appraised value less 7% selling costs	39-99%	83%
Home equity lines of credit	3		Fair value of property or collateral	Appraised value less 7% selling costs		7%
Commercial loans	145		Fair value of property or collateral	Fair value of business assets		91%
Total loans	$	2,445
Real estate acquired in settlement of loans	$	288	Fair value of property or collateral	Appraised value less 7% selling cost	100%	100%

¹ Represent percent of outstanding principal balance.

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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