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Bank segment (Tables)
 6 Months Ended
Jun. 30, 2016
Bank subsidiary  
Schedule of statements of income data
Statements of Income Data
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2016
 
2015
 
2016
 
2015
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
49,690

 
$
46,035

 
$
98,127

 
$
91,233

Interest and dividends on investment securities
 
4,443

 
3,306

 
9,460

 
6,357

Total interest and dividend income
 
54,133

 
49,341

 
107,587

 
97,590

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
1,691

 
1,266

 
3,283

 
2,526

Interest on other borrowings
 
1,467

 
1,487

 
2,952

 
2,953

Total interest expense
 
3,158

 
2,753

 
6,235

 
5,479

Net interest income
 
50,975

 
46,588

 
101,352

 
92,111

Provision for loan losses
 
4,753

 
1,825

 
9,519

 
2,439

Net interest income after provision for loan losses
 
46,222

 
44,763

 
91,833

 
89,672

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
5,701

 
5,550

 
11,200

 
10,905

Fee income on deposit liabilities
 
5,262

 
5,424

 
10,418

 
10,739

Fee income on other financial products
 
2,207

 
2,103

 
4,412

 
3,992

Bank-owned life insurance
 
1,006

 
1,058

 
2,004

 
2,041

Mortgage banking income
 
1,554

 
2,068

 
2,749

 
3,890

Gains on sale of investment securities, net
 
598

 
—

 
598

 
—

Other income, net
 
288

 
239

 
621

 
974

Total noninterest income
 
16,616

 
16,442

 
32,002

 
32,541

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
21,919

 
22,319

 
44,353

 
44,085

Occupancy
 
4,115

 
4,009

 
8,253

 
8,122

Data processing
 
3,277

 
2,953

 
6,449

 
6,069

Services
 
2,755

 
2,833

 
5,666

 
5,174

Equipment
 
1,771

 
1,690

 
3,434

 
3,391

Office supplies, printing and postage
 
1,583

 
1,303

 
2,948

 
2,786

Marketing
 
899

 
844

 
1,760

 
1,685

FDIC insurance
 
913

 
773

 
1,797

 
1,584

Other expense
 
5,382

 
4,755

 
9,357

 
8,960

Total noninterest expense
 
42,614

 
41,479

 
84,017

 
81,856

Income before income taxes
 
20,224

 
19,726

 
39,818

 
40,357

Income taxes
 
6,939

 
6,875

 
13,860

 
14,031

Net income
 
$
13,285

 
$
12,851

 
$
25,958

 
$
26,326
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2016
 
2015
 
2016
 
2015
Net income
 
$
13,285

 
$
12,851

 
$
25,958

 
$
26,326

Other comprehensive income (loss), net of taxes:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on available-for-sale investment securities:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of (taxes) benefits of ($1,925), $2,439, ($6,830) and $161 for the respective periods
 
2,915

 
(3,694
)
 
10,344

 
(243
)
Less: reclassification adjustment for net realized gains included in net income, net of taxes of $238, nil, $238 and nil for the respective periods
 
(360
)
 
—

 
(360
)
 
—

Retirement benefit plans:
 
 

 
 

 
 

 
 

Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $140, $255, $277 and $514 for the respective periods
 
211

 
387

 
419

 
779

Other comprehensive income (loss), net of taxes
 
2,766

 
(3,307
)
 
10,403

 
536

Comprehensive income
 
$
16,051

 
$
9,544

 
$
36,361

 
$
26,862
Schedule of balance sheets data
Balance Sheets Data
(in thousands)
 
June 30, 2016
 
December 31, 2015
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
111,738

 
 

 
$
127,201

Interest-bearing deposits
 
 
 
62,850

 
 
 
93,680

Available-for-sale investment securities, at fair value
 
 

 
894,021

 
 

 
820,648

Stock in Federal Home Loan Bank, at cost
 
 

 
11,218

 
 

 
10,678

Loans receivable held for investment
 
 

 
4,754,954

 
 

 
4,615,819

Allowance for loan losses
 
 

 
(55,331
)
 
 

 
(50,038
)
Net loans
 
 

 
4,699,623

 
 

 
4,565,781

Loans held for sale, at lower of cost or fair value
 
 

 
6,217

 
 

 
4,631

Other
 
 

 
320,233

 
 

 
309,946

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
6,188,090

 
 

 
$
6,014,755

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,583,420

 
 

 
$
1,520,374

Deposit liabilities—interest-bearing
 
 

 
3,648,783

 
 

 
3,504,880

Other borrowings
 
 

 
272,887

 
 

 
328,582

Other
 
 

 
103,396

 
 

 
101,029

Total liabilities
 
 

 
5,608,486

 
 

 
5,454,865

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid in capital
 
 
 
341,849

 
 
 
340,496

Retained earnings
 
 

 
244,622

 
 

 
236,664

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities
 
$
8,111

 
 

 
$
(1,872
)
 
 

Retirement benefit plans
 
(14,979
)
 
(6,868
)
 
(15,399
)
 
(17,271
)
Total shareholder’s equity
 
 

 
579,604

 
 

 
559,890

Total liabilities and shareholder’s equity
 
 

 
$
6,188,090

 
 

 
$
6,014,755

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
140,176

 
 

 
$
138,139

Premises and equipment, net
 
 

 
91,256

 
 

 
88,077

Prepaid expenses
 
 

 
4,715

 
 

 
3,550

Accrued interest receivable
 
 

 
15,749

 
 

 
15,192

Mortgage-servicing rights
 
 

 
9,016

 
 

 
8,884

Low-income housing equity investments
 
 
 
41,080

 
 
 
37,793

Real estate acquired in settlement of loans, net
 
 

 
446

 
 

 
1,030

Other
 
 

 
17,795

 
 

 
17,281

 
 
 

 
$
320,233

 
 

 
$
309,946

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
30,569

 
 

 
$
30,705

Federal and state income taxes payable
 
 

 
16,761

 
 

 
13,448

Cashier’s checks
 
 

 
21,497

 
 

 
21,768

Advance payments by borrowers
 
 

 
10,851

 
 

 
10,311

Other
 
 

 
23,718

 
 

 
24,797

 
 
 

 
$
103,396

 
 

 
$
101,029
Schedule of the book value and aggregate fair value by major security type
The major components of investment securities were as follows:
 
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair
value
 
 
 
Gross unrealized losses
 
 
 
 
 
 
Less than 12 months
 
12 months or longer
(dollars in thousands)
 
 
 
 
 
Number of issues
 
Fair 
value
 
Amount
 
Number of issues
 
Fair 
value
 
Amount
June 30, 2016
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
194,048

 
$
4,131

 
$
(20
)
 
$
198,159

 
—

 
$
—

 
$
—

 
1

 
$
3,842

 
$
(20
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
686,506

 
10,022

 
(666
)
 
695,862

 
3

 
20,608

 
(65
)
 
14

 
63,466

 
(601
)
 
 
$
880,554

 
$
14,153

 
$
(686
)
 
$
894,021

 
3

 
$
20,608

 
$
(65
)
 
15

 
$
67,308

 
$
(621
)
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
213,234

 
$
1,025

 
$
(1,300
)
 
$
212,959

 
13

 
$
83,053

 
$
(866
)
 
3

 
$
17,378

 
$
(434
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
610,522

 
3,564

 
(6,397
)
 
607,689

 
38

 
305,785

 
(2,866
)
 
25

 
125,817

 
(3,531
)
 
 
$
823,756

 
$
4,589

 
$
(7,697
)
 
$
820,648

 
51

 
$
388,838

 
$
(3,732
)
 
28

 
$
143,195

 
$
(3,965
)
Schedule of contractual maturities of available-for-sale securities
The contractual maturities of available-for-sale investment securities were as follows:
June 30, 2016
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Due in one year or less
 
$
9,991

 
$
10,001

Due after one year through five years
 
81,303

 
83,162

Due after five years through ten years
 
81,439

 
83,406

Due after ten years
 
21,315

 
21,590

 
 
194,048

 
198,159

Mortgage-related securities-FNMA,FHLMC and GNMA
 
686,506

 
695,862

Total available-for-sale securities
 
$
880,554

 
$
894,021
Schedule of allowance for loan losses
The allowance for loan losses (balances and changes) and financing receivables were as follows:
(in thousands)
 
Residential
1-4 family
 
Commercial real
estate
 
Home
equity line of credit
 
Residential land
 
Commercial construction
 
Residential construction
 
Commercial loans
 
Consumer loans
 
Unallo-cated
 
Total
Three months ended June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,593

 
$
11,806

 
$
7,172

 
$
1,740

 
$
6,164

 
$
12

 
$
16,991

 
$
3,848

 
$
—

 
$
52,326

Charge-offs
 
(15
)
 
—

 
—

 
—

 
—

 
—

 
(962
)
 
(1,528
)
 
—

 
(2,505
)
Recoveries
 
35

 
—

 
16

 
16

 
—

 
—

 
425

 
265

 
—

 
757

Provision
 
(229
)
 
1,755

 
648

 
(67
)
 
829

 
—

 
631

 
1,186

 
—

 
4,753

Ending balance
 
$
4,384

 
$
13,561

 
$
7,836

 
$
1,689

 
$
6,993

 
$
12

 
$
17,085

 
$
3,771

 
$
—

 
$
55,331

Three months ended June 30, 2015
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,921

 
$
11,228

 
$
6,523

 
$
2,286

 
$
2,837

 
$
21

 
$
14,580

 
$
3,399

 
$
—

 
$
45,795

Charge-offs
 
(58
)
 
—

 
(17
)
 
—

 
—

 
—

 
(756
)
 
(983
)
 
—

 
(1,814
)
Recoveries
 
55

 
—

 
8

 
136

 
—

 
—

 
106

 
254

 
—

 
559

Provision
 
(627
)
 
(808
)
 
99

 
(319
)
 
(262
)
 
(3
)
 
3,539

 
206

 
—

 
1,825

Ending balance
 
$
4,291

 
$
10,420

 
$
6,613

 
$
2,103

 
$
2,575

 
$
18

 
$
17,469

 
$
2,876

 
$
—

 
$
46,365

Six months ended June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,186

 
$
11,342

 
$
7,260

 
$
1,671

 
$
4,461

 
$
13

 
$
17,208

 
$
3,897

 
$
—

 
$
50,038

Charge-offs
 
(60
)
 
—

 
—

 
—

 
—

 
—

 
(2,305
)
 
(3,098
)
 
—

 
(5,463
)
Recoveries
 
52

 
—

 
31

 
119

 
—

 
—

 
560

 
475

 
—

 
1,237

Provision
 
206

 
2,219

 
545

 
(101
)
 
2,532

 
(1
)
 
1,622

 
2,497

 
—

 
9,519

Ending balance
 
$
4,384

 
$
13,561

 
$
7,836

 
$
1,689

 
$
6,993

 
$
12

 
$
17,085

 
$
3,771

 
$
—

 
$
55,331

June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,709

 
$
172

 
$
826

 
$
819

 
$
—

 
$
—

 
$
2,647

 
$
7

 
 
 
$
6,180

Ending balance: collectively evaluated for impairment
 
$
2,675

 
$
13,389

 
$
7,010

 
$
870

 
$
6,993

 
$
12

 
$
14,438

 
$
3,764

 
$
—

 
$
49,151

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,064,343

 
$
740,322

 
$
860,522

 
$
18,447

 
$
134,642

 
$
16,004

 
$
772,565

 
$
153,212

 
 
 
$
4,760,057

Ending balance: individually evaluated for impairment
 
$
22,279

 
$
3,630

 
$
4,646

 
$
4,453

 
$
—

 
$
—

 
$
24,153

 
$
12

 
 
 
$
59,173

Ending balance: collectively evaluated for impairment
 
$
2,042,064

 
$
736,692

 
$
855,876

 
$
13,994

 
$
134,642

 
$
16,004

 
$
748,412

 
$
153,200

 
 
 
$
4,700,884

Six months ended June 30, 2015
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,662

 
$
8,954

 
$
6,982

 
$
1,875

 
$
5,471

 
$
28

 
$
14,017

 
$
3,629

 
$
—

 
$
45,618

Charge-offs
 
(214
)
 
—

 
(20
)
 
—

 
—

 
—

 
(802
)
 
(1,925
)
 
—

 
(2,961
)
Recoveries
 
67

 
—

 
39

 
185

 
—

 
—

 
447

 
531

 
—

 
1,269

Provision
 
(224
)
 
1,466

 
(388
)
 
43

 
(2,896
)
 
(10
)
 
3,807

 
641

 
—

 
2,439

Ending balance
 
$
4,291

 
$
10,420

 
$
6,613

 
$
2,103

 
$
2,575

 
$
18

 
$
17,469

 
$
2,876

 
$
—

 
$
46,365

December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,453

 
$
—

 
$
442

 
$
891

 
$
—

 
$
—

 
$
3,527

 
$
7

 
 
 
$
6,320

Ending balance: collectively evaluated for impairment
 
$
2,733

 
$
11,342

 
$
6,818

 
$
780

 
$
4,461

 
$
13

 
$
13,681

 
$
3,890

 
$
—

 
$
43,718

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,069,665

 
$
690,561

 
$
846,294

 
$
18,229

 
$
100,796

 
$
14,089

 
$
758,659

 
$
123,775

 
 
 
$
4,622,068

Ending balance: individually evaluated for impairment
 
$
22,457

 
$
1,188

 
$
3,225

 
$
5,683

 
$
—

 
$
—

 
$
21,119

 
$
13

 
 
 
$
53,685

Ending balance: collectively evaluated for impairment
 
$
2,047,208

 
$
689,373

 
$
843,069

 
$
12,546

 
$
100,796

 
$
14,089

 
$
737,540

 
$
123,762

 
 
 
$
4,568,383
Schedule of credit risk profile by internally assigned grade for loans
The credit risk profile by internally assigned grade for loans was as follows:
 
 
June 30, 2016
 
December 31, 2015
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
664,731

 
$
107,552

 
$
712,020

 
$
642,410

 
$
86,991

 
$
703,208

Special mention
 
43,607

 
—

 
12,607

 
7,710

 
13,805

 
7,029

Substandard
 
31,984

 
27,090

 
47,698

 
40,441

 
—

 
47,975

Doubtful
 
—

 
—

 
240

 
—

 
—

 
447

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
740,322

 
$
134,642

 
$
772,565

 
$
690,561

 
$
100,796

 
$
758,659
Schedule of credit risk profile based on payment activity for loans
The credit risk profile based on payment activity for loans was as follows:
(in thousands)
 
30-59
days
past due
 
60-89
days
past due
 
Greater
than
90 days
 
Total
past due
 
Current
 
Total
financing
receivables
 
Recorded
investment>
90 days and
accruing
June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
5,421

 
$
1,860

 
$
10,526

 
$
17,807

 
$
2,046,536

 
$
2,064,343

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
740,322

 
740,322

 
—

Home equity line of credit
 
878

 
445

 
602

 
1,925

 
858,597

 
860,522

 
—

Residential land
 
—

 
—

 
148

 
148

 
18,299

 
18,447

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
134,642

 
134,642

 
—

Residential construction
 
—

 
—

 
—

 
—

 
16,004

 
16,004

 
—

Commercial
 
438

 
111

 
308

 
857

 
771,708

 
772,565

 
—

Consumer
 
1,354

 
692

 
476

 
2,522

 
150,690

 
153,212

 
—

Total loans
 
$
8,091

 
$
3,108

 
$
12,060

 
$
23,259

 
$
4,736,798

 
$
4,760,057

 
$
—

December 31, 2015
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
4,967

 
$
3,289

 
$
11,503

 
$
19,759

 
$
2,049,906

 
$
2,069,665

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
690,561

 
690,561

 
—

Home equity line of credit
 
896

 
706

 
477

 
2,079

 
844,215

 
846,294

 
—

Residential land
 
—

 
—

 
415

 
415

 
17,814

 
18,229

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
100,796

 
100,796

 
—

Residential construction
 
—

 
—

 
—

 
—

 
14,089

 
14,089

 
—

Commercial
 
125

 
223

 
878

 
1,226

 
757,433

 
758,659

 
—

Consumer
 
1,383

 
593

 
644

 
2,620

 
121,155

 
123,775

 
—

Total loans
 
$
7,371

 
$
4,811

 
$
13,917

 
$
26,099

 
$
4,595,969

 
$
4,622,068

 
$
—
Schedule of credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due
The credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due and TDR loans was as follows:
(in thousands)
 
June 30, 2016
 
December 31, 2015
Real estate:
 
 

 
 

Residential 1-4 family
 
$
21,056

 
$
20,554

Commercial real estate
 
3,630

 
1,188

Home equity line of credit
 
3,331

 
2,254

Residential land
 
693

 
970

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
18,827

 
20,174

Consumer
 
807

 
895

  Total nonaccrual loans
 
$
48,344

 
$
46,035

Real estate:
 
 
 
 
Residential 1-4 family
 
$
—

 
$
—

Commercial real estate
 
—

 
—

Home equity line of credit
 
—

 
—

Residential land
 
—

 
—

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
—

 
—

Consumer
 
—

 
—

     Total accruing loans 90 days or more past due
 
$
—

 
$
—

Real estate:
 
 
 
 
Residential 1-4 family
 
$
13,450

 
$
13,962

Commercial real estate
 
—

 
—

Home equity line of credit
 
3,400

 
2,467

Residential land
 
3,760

 
4,713

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
5,420

 
1,104

Consumer
 
—

 
—

     Total troubled debt restructured loans not included above
 
$
26,030

 
$
22,246
Schedule of the carrying amount and the total unpaid principal balance of impaired loans, with and without recorded allowance for loans losses
The total carrying amount and the total unpaid principal balance of impaired loans were as follows:
 
 
June 30, 2016
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
Allowance
 
Average
recorded
investment
 
Interest
income
recognized*
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,262

 
$
11,381

 
$
—

 
$
10,672

 
$
152

 
$
10,532

 
$
203

Commercial real estate
 
1,144

 
1,422

 
—

 
1,152

 
—

 
1,163

 
—

Home equity line of credit
 
1,020

 
1,288

 
—

 
1,038

 
9

 
943

 
9

Residential land
 
1,482

 
2,178

 
—

 
1,484

 
15

 
1,537

 
31

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
15,430

 
16,776

 
—

 
8,369

 
7

 
5,818

 
13

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
29,338

 
$
33,045

 
$
—

 
$
22,715

 
$
183

 
$
19,993

 
$
256

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
12,017

 
$
12,220

 
$
1,709

 
$
11,982

 
$
115

 
$
12,000

 
$
237

Commercial real estate
 
2,486

 
2,526

 
172

 
2,519

 
—

 
1,686

 
—

Home equity line of credit
 
3,626

 
3,699

 
826

 
3,299

 
28

 
3,122

 
55

Residential land
 
2,971

 
2,971

 
819

 
2,977

 
54

 
3,177

 
121

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
8,723

 
8,904

 
2,647

 
16,821

 
180

 
16,896

 
210

Consumer
 
12

 
12

 
7

 
12

 
—

 
12

 
—

 
 
$
29,835

 
$
30,332

 
$
6,180

 
$
37,610

 
$
377

 
$
36,893

 
$
623

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
22,279

 
$
23,601

 
$
1,709

 
$
22,654

 
$
267

 
$
22,532

 
$
440

Commercial real estate
 
3,630

 
3,948

 
172

 
3,671

 
—

 
2,849

 
—

Home equity line of credit
 
4,646

 
4,987

 
826

 
4,337

 
37

 
4,065

 
64

Residential land
 
4,453

 
5,149

 
819

 
4,461

 
69

 
4,714

 
152

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
24,153

 
25,680

 
2,647

 
25,190

 
187

 
22,714

 
223

Consumer
 
12

 
12

 
7

 
12

 
—

 
12

 
—

 
 
$
59,173

 
$
63,377

 
$
6,180

 
$
60,325

 
$
560

 
$
56,886

 
$
879


 
 
December 31, 2015
 
Three months ended June 30, 2015
 
Six months ended June 30, 2015
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
allowance
 
Average
recorded
investment
 
Interest
income
recognized*
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,596

 
$
11,805

 
$
—

 
$
11,193

 
$
66

 
$
11,373

 
$
155

Commercial real estate
 
1,188

 
1,436

 
—

 
530

 
—

 
543

 
—

Home equity line of credit
 
707

 
948

 
—

 
433

 
1

 
417

 
2

Residential land
 
1,644

 
2,412

 
—

 
3,026

 
44

 
2,831

 
96

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
5,671

 
6,333

 
—

 
5,432

 
139

 
6,363

 
141

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
19,806

 
$
22,934

 
$
—

 
$
20,614

 
$
250

 
$
21,527

 
$
394

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
11,861

 
$
11,914

 
$
1,453

 
$
11,794

 
$
130

 
$
11,651

 
$
256

Commercial real estate
 
—

 
—

 
—

 
1,474

 
—

 
2,978

 
—

Home equity line of credit
 
2,518

 
2,579

 
442

 
1,212

 
8

 
919

 
14

Residential land
 
4,039

 
4,117

 
891

 
4,142

 
84

 
4,666

 
167

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
15,448

 
16,073

 
3,527

 
9,358

 
36

 
7,170

 
86

Consumer
 
13

 
13

 
7

 
15

 
—

 
15

 
—

 
 
$
33,879

 
$
34,696

 
$
6,320

 
$
27,995

 
$
258

 
$
27,399

 
$
523

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
22,457

 
$
23,719

 
$
1,453

 
$
22,987

 
$
196

 
$
23,024

 
$
411

Commercial real estate
 
1,188

 
1,436

 
—

 
2,004

 
—

 
3,521

 
—

Home equity line of credit
 
3,225

 
3,527

 
442

 
1,645

 
9

 
1,336

 
16

Residential land
 
5,683

 
6,529

 
891

 
7,168

 
128

 
7,497

 
263

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
21,119

 
22,406

 
3,527

 
14,790

 
175

 
13,533

 
227

Consumer
 
13

 
13

 
7

 
15

 
—

 
15

 
—

 
 
$
53,685

 
$
57,630

 
$
6,320

 
$
48,609

 
$
508

 
$
48,926

 
$
917

 
*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred and the impact on the allowance for loan losses were as follows:
 
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Residential 1-4 family
 
5

 
$
891

 
$
885

 
$
98

 
9

 
$
1,988

 
$
2,100

 
$
259

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
8

 
768

 
768

 
181

 
18

 
1,437

 
1,437

 
255

Residential land
 
1

 
120

 
121

 
—

 
1

 
120

 
121

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
5

 
457

 
457

 
145

 
8

 
16,657

 
16,657

 
670

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
19

 
$
2,236

 
$
2,231

 
$
424

 
36

 
$
20,202

 
$
20,315

 
$
1,184


 
 
Three months ended June 30, 2015
 
Six months ended June 30, 2015
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 
Residential 1-4 family
 
2

 
$
318

 
$
318

 
$
—

 
7

 
$
1,195

 
$
1,213

 
$
47

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
13

 
690

 
690

 
105

 
22

 
1,119

 
1,119

 
160

Residential land
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
3

 
161

 
161

 
78

 
4

 
253

 
253

 
78

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
18

 
$
1,169

 
$
1,169

 
$
183

 
33

 
$
2,567

 
$
2,585

 
$
285


1
The reported balances include loans that became TDR during the period, and were fully paid-off, charged-off, or sold prior to period end.
Schedule of troubled debt restructuring on financing receivables that experienced default
Loans modified in TDRs that experienced a payment default of 90 days or more in the indicated periods, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
(dollars in thousands)
 
Number of contracts
 
Recorded investment
 
Number of contracts
 
Recorded investment
Troubled debt restructurings that
 subsequently defaulted
 
 
 
 
 
 
 
 
Real estate:
 
 
 
 

 
 
 
 

Residential 1-4 family
 
—
 
$
—

 
1
 
$
488

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
1
 
26

 
1
 
26

Consumer
 
—
 
—

 
—
 
—

 
 
1
 
$
26

 
2
 
$
514
Schedule of amortized intangible assets
Changes in the carrying value of mortgage servicing rights were as follows:
(in thousands)
 
Gross
carrying amount1
 
Accumulated amortization1
 
Valuation allowance
 
Net
carrying amount
June 30, 2016
 
$
15,652

 
$
(6,636
)
 
$
—

 
$
9,016

December 31, 2015
 
14,531

 
(5,647
)
 
—

 
8,884

1 Reflects the impact of loans paid in full.

Changes related to mortgage servicing rights were as follows:
(in thousands)
2016

 
2015

Mortgage servicing rights
 
 
 
Balance, January 1
$
8,884

 
$
11,749

Amount capitalized
1,120

 
2,001

Amortization
(988
)
 
(1,444
)
Other-than-temporary impairment
—

 
(4
)
Carrying amount before valuation allowance, June 30
9,016

 
12,302

Valuation allowance for mortgage servicing rights
 
 
 
Balance, January 1
—

 
209

Provision (recovery)
—

 
(168
)
Other-than-temporary impairment
—

 
(4
)
Balance, June 30
—

 
37

Net carrying value of mortgage servicing rights
$
9,016

 
$
12,265
Schedule of key assumptions used in estimating fair value
Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
(dollars in thousands)
 
June 30, 2016

 
December 31, 2015

Unpaid principal balance
 
$
1,137,226

 
$
1,097,314

Weighted average note rate
 
4.03
%
 
4.05
%
Weighted average discount rate
 
9.4
%
 
9.6
%
Weighted average prepayment speed
 
11.4
%
 
9.3
%
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
June 30, 2016
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
313

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
42-94%
 
78%
Real estate acquired in settlement of loans
 
$
446

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
100%
 
100%
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
50

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
 
 
N/A (2)
Home equity lines of credit
 
128

 
Fair value of property or collateral
 
Appraised value less 7% selling costs
 
 
 
N/A (2)
Total loans
 
$
178

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
1,030

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
100%
 
100%
(1) Represent percent of outstanding principal balance.
(2)
N/A - Not applicable. There is one loan in each fair value measurement type.
Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets
The sensitivity analysis of fair value of MSR to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
(dollars in thousands)
 
June 30, 2016

 
December 31, 2015

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(567
)
 
$
(561
)
  50 basis points adverse rate change
 
(1,037
)
 
(1,104
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(97
)
 
(111
)
  50 basis points adverse rate change
 
(192
)
 
(220
)
Schedule of securities sold under agreements to repurchase
The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:
(in millions)
 
Gross amount of
recognized liabilities
 
Gross amount offset in
the Balance Sheet
 
Net amount of liabilities presented
in the Balance Sheet
Repurchase agreements
 
 
 
 
 
 
June 30, 2016
 
$173
 
$—
 
$173
December 31, 2015
 
229
 
—
 
229
 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
 
Liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
June 30, 2016
 
 

 
 

 
 

Financial institution
 
$
50

 
$
57

 
$
—

Government entities
 
27

 
42

 
—

Commercial account holders
 
96

 
117

 
—

Total
 
$
173

 
$
216

 
$
—

December 31, 2015
 
 

 
 

 
 

Financial institution
 
$
50

 
$
56

 
$
—

Government entities
 
56

 
61

 
—

Commercial account holders
 
123

 
144

 
—

Total
 
$
229

 
$
261

 
$
—
Schedule of notional and fair value of derivatives
The notional amount and fair value of ASB’s derivative financial instruments were as follows:
 
 
June 30, 2016
 
December 31, 2015
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
34,277

 
$
795

 
$
22,241

 
$
384

Forward commitments
 
31,228

 
(266
)
 
23,644

 
(29
)
Schedule of derivative financial instruments
ASB’s derivative financial instruments, their fair values, and balance sheet location were as follows:
Derivative Financial Instruments Not Designated as Hedging Instruments 1
 
June 30, 2016
 
December 31, 2015
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
795

 
$
—

 
$
384

 
$
—

Forward commitments
 
4

 
270

 
1

 
30

 
 
$
799

 
$
270

 
$
385

 
$
30

1 Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the balance sheets.
Schedule of derivative financial instruments and net gain or loss
The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in the statements of income:
Derivative Financial Instruments Not Designated as Hedging Instruments
Location of net gains (losses) recognized in the Statement of Income
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2016
 
2015
 
2016
 
2015
Interest rate lock commitments
Mortgage banking income
 
$
140

 
$
(389
)
 
$
411

 
$
56

Forward commitments
Mortgage banking income
 
(74
)
 
258

 
(237
)
 
99

 
 
 
$
66

 
$
(131
)
 
$
174

 
$
155