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Bank segment (Tables)
 3 Months Ended
Mar. 31, 2017
Bank subsidiary  
Schedule of statements of income data
Statements of Income Data (unaudited)
 
 
Three months ended March 31
(in thousands)
 
2017
 
2016
Interest and dividend income
 
 

 
 

Interest and fees on loans
 
$
50,742

 
$
48,437

Interest and dividends on investment securities
 
6,980

 
5,017

Total interest and dividend income
 
57,722

 
53,454

Interest expense
 
 

 
 

Interest on deposit liabilities
 
2,103

 
1,592

Interest on other borrowings
 
816

 
1,485

Total interest expense
 
2,919

 
3,077

Net interest income
 
54,803

 
50,377

Provision for loan losses
 
3,907

 
4,766

Net interest income after provision for loan losses
 
50,896

 
45,611

Noninterest income
 
 

 
 

Fees from other financial services
 
5,610

 
5,499

Fee income on deposit liabilities
 
5,428

 
5,156

Fee income on other financial products
 
1,866

 
2,205

Bank-owned life insurance
 
983

 
998

Mortgage banking income
 
789

 
1,195

Other income, net
 
458

 
333

Total noninterest income
 
15,134

 
15,386

Noninterest expense
 
 

 
 

Compensation and employee benefits
 
23,237

 
22,434

Occupancy
 
4,154

 
4,138

Data processing
 
3,280

 
3,172

Services
 
2,360

 
2,911

Equipment
 
1,748

 
1,663

Office supplies, printing and postage
 
1,535

 
1,365

Marketing
 
517

 
861

FDIC insurance
 
728

 
884

Other expense
 
4,311

 
3,975

Total noninterest expense
 
41,870

 
41,403

Income before income taxes
 
24,160

 
19,594

Income taxes
 
8,347

 
6,921

Net income
 
$
15,813

 
$
12,673
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data (unaudited)
 
 
Three months ended March 31
(in thousands)
 
2017
 
2016
Net income
 
$
15,813

 
$
12,673

Other comprehensive income, net of taxes:
 
 

 
 

Net unrealized gains on available-for-sale investment securities:
 
 

 
 

Net unrealized gains on available-for-sale investment securities arising during the period, net of taxes of $148 and $4,905, respectively
 
223

 
7,429

Retirement benefit plans:
 
 

 
 

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $404 and $137, respectively
 
612

 
208

Other comprehensive income, net of taxes
 
835

 
7,637

Comprehensive income
 
$
16,648

 
$
20,310
Schedule of balance sheets data
Balance Sheets Data (unaudited)
(in thousands)
 
March 31, 2017
 
December 31, 2016
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
125,901

 
 

 
$
137,083

Interest-bearing deposits
 
 
 
94,573

 
 
 
52,128

Restricted cash
 
 
 
—

 
 
 
1,764

Available-for-sale investment securities, at fair value
 
 

 
1,228,922

 
 

 
1,105,182

Stock in Federal Home Loan Bank, at cost
 
 

 
11,706

 
 

 
11,218

Loans receivable held for investment
 
 

 
4,725,271

 
 

 
4,738,693

Allowance for loan losses
 
 

 
(55,997
)
 
 

 
(55,533
)
Net loans
 
 

 
4,669,274

 
 

 
4,683,160

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

 
10,454

 
 

 
18,817

Other
 
 

 
336,626

 
 

 
329,815

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
6,559,646

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,696,390

 
 

 
$
1,639,051

Deposit liabilities—interest-bearing
 
 

 
3,978,700

 
 

 
3,909,878

Other borrowings
 
 

 
200,154

 
 

 
192,618

Other
 
 

 
98,223

 
 

 
101,635

Total liabilities
 
 

 
5,973,467

 
 

 
5,843,182

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid in capital
 
 
 
343,435

 
 
 
342,704

Retained earnings
 
 

 
264,381

 
 

 
257,943

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(7,708
)
 
 

 
$
(7,931
)
 
 

Retirement benefit plans
 
(13,930
)
 
(21,638
)
 
(14,542
)
 
(22,473
)
Total shareholder’s equity
 
 

 
586,179

 
 

 
578,175

Total liabilities and shareholder’s equity
 
 

 
$
6,559,646

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
144,661

 
 

 
$
143,197

Premises and equipment, net
 
 

 
94,865

 
 

 
90,570

Prepaid expenses
 
 

 
4,031

 
 

 
3,348

Accrued interest receivable
 
 

 
16,508

 
 

 
16,824

Mortgage-servicing rights
 
 

 
9,294

 
 

 
9,373

Low-income housing equity investments
 
 
 
46,782

 
 
 
47,081

Real estate acquired in settlement of loans, net
 
 

 
1,242

 
 

 
1,189

Other
 
 

 
19,243

 
 

 
18,233

 
 
 

 
$
336,626

 
 

 
$
329,815

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
32,324

 
 

 
$
36,754

Federal and state income taxes payable
 
 

 
10,642

 
 

 
4,728

Cashier’s checks
 
 

 
23,777

 
 

 
24,156

Advance payments by borrowers
 
 

 
6,134

 
 

 
10,335

Other
 
 

 
25,346

 
 

 
25,662

 
 
 

 
$
98,223

 
 

 
$
101,635
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
March 31, 2017
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
189,420

 
$
928

 
$
(1,991
)
 
$
188,357

 
14

 
$
97,572

 
$
(1,855
)
 
1

 
$
3,492

 
$
(136
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
1,036,872

 
1,719

 
(13,453
)
 
1,025,138

 
96

 
792,672

 
(11,920
)
 
13

 
45,025

 
(1,533
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,241,719

 
$
2,647

 
$
(15,444
)
 
$
1,228,922

 
110

 
$
890,244

 
$
(13,775
)
 
14

 
$
48,517

 
$
(1,669
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
193,515

 
$
920

 
$
(2,154
)
 
$
192,281

 
18

 
$
123,475

 
$
(2,010
)
 
1

 
$
3,485

 
$
(144
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
909,408

 
1,742

 
(13,676
)
 
897,474

 
88

 
709,655

 
(12,143
)
 
13

 
47,485

 
(1,533
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,118,350

 
$
2,662

 
$
(15,830
)
 
$
1,105,182

 
106

 
$
833,130

 
$
(14,153
)
 
14

 
$
50,970

 
$
(1,677
)
Schedule of contractual maturities of available-for-sale securities
The contractual maturities of available-for-sale investment securities were as follows:
March 31, 2017
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Due in one year or less
 
$
9,986

 
$
9,993

Due after one year through five years
 
77,165

 
77,274

Due after five years through ten years
 
78,014

 
77,582

Due after ten years
 
39,682

 
38,935

 
 
204,847

 
203,784

Mortgage-related securities-FNMA, FHLMC and GNMA
 
1,036,872

 
1,025,138

Total available-for-sale securities
 
$
1,241,719

 
$
1,228,922
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 March 31, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,873

 
$
16,004

 
$
5,039

 
$
1,738

 
$
6,449

 
$
12

 
$
16,618

 
$
6,800

 
$
—

 
$
55,533

Charge-offs
 
(6
)
 
—

 
(14
)
 
—

 
—

 
—

 
(1,510
)
 
(2,810
)
 
—

 
(4,340
)
Recoveries
 
9

 
—

 
91

 
203

 
—

 
—

 
297

 
297

 
—

 
897

Provision
 
(95
)
 
500

 
301

 
(462
)
 
808

 
(1
)
 
(503
)
 
3,359

 
—

 
3,907

Ending balance
 
$
2,781

 
$
16,504

 
$
5,417

 
$
1,479

 
$
7,257

 
$
11

 
$
14,902

 
$
7,646

 
$
—

 
$
55,997

March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,386

 
$
74

 
$
228

 
$
660

 
$
—

 
$
—

 
$
1,318

 
$
34

 
 
 
$
3,700

Ending balance: collectively evaluated for impairment
 
$
1,395

 
$
16,430

 
$
5,189

 
$
819

 
$
7,257

 
$
11

 
$
13,584

 
$
7,612

 
$
—

 
$
52,297

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,058,202

 
$
790,191

 
$
866,880

 
$
16,888

 
$
130,808

 
$
13,694

 
$
661,016

 
$
192,113

 
 
 
$
4,729,792

Ending balance: individually evaluated for impairment
 
$
19,340

 
$
1,515

 
$
6,803

 
$
2,863

 
$
—

 
$
—

 
$
9,175

 
$
69

 
 
 
$
39,765

Ending balance: collectively evaluated for impairment
 
$
2,038,862

 
$
788,676

 
$
860,077

 
$
14,025

 
$
130,808

 
$
13,694

 
$
651,841

 
$
192,044

 
 
 
$
4,690,027

Three months ended March 31, 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
 
(45
)
 
—

 
—

 
—

 
—

 
—

 
(1,343
)
 
(1,570
)
 
—

 
(2,958
)
Recoveries
 
17

 
—

 
15

 
103

 
—

 
—

 
135

 
210

 
—

 
480

Provision
 
435

 
464

 
(103
)
 
(34
)
 
1,703

 
(1
)
 
991

 
1,311

 
—

 
4,766

Ending balance
 
$
4,593

 
$
11,806

 
$
7,172

 
$
1,740

 
$
6,164

 
$
12

 
$
16,991

 
$
3,848

 
$
—

 
$
52,326

December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,352

 
$
80

 
$
215

 
$
789

 
$
—

 
$
—

 
$
1,641

 
$
6

 
 
 
$
4,083

Ending balance: collectively evaluated for impairment
 
$
1,521

 
$
15,924

 
$
4,824

 
$
949

 
$
6,449

 
$
12

 
$
14,977

 
$
6,794

 
$
—

 
$
51,450

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,048,051

 
$
800,395

 
$
863,163

 
$
18,889

 
$
126,768

 
$
16,080

 
$
692,051

 
$
178,222

 
 
 
$
4,743,619

Ending balance: individually evaluated for impairment
 
$
19,854

 
$
1,569

 
$
6,158

 
$
3,629

 
$
—

 
$
—

 
$
20,539

 
$
10

 
 
 
$
51,759

Ending balance: collectively evaluated for impairment
 
$
2,028,197

 
$
798,826

 
$
857,005

 
$
15,260

 
$
126,768

 
$
16,080

 
$
671,512

 
$
178,212

 
 
 
$
4,691,860
Schedule of credit risk profile by internally assigned grade for loans
The credit risk profile by internally assigned grade for loans was as follows:
 
 
March 31, 2017
 
December 31, 2016
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
669,117

 
$
84,495

 
$
605,256

 
$
701,657

 
$
102,955

 
$
614,139

Special mention
 
89,370

 
22,500

 
22,568

 
65,541

 
—

 
25,229

Substandard
 
31,704

 
23,813

 
33,192

 
33,197

 
23,813

 
52,683

Doubtful
 
—

 
—

 
—

 
—

 
—

 
—

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
790,191

 
$
130,808

 
$
661,016

 
$
800,395

 
$
126,768

 
$
692,051
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
March 31, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
3,557

 
$
2,982

 
$
3,419

 
$
9,958

 
$
2,048,244

 
$
2,058,202

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
790,191

 
790,191

 
—

Home equity line of credit
 
594

 
571

 
1,532

 
2,697

 
864,183

 
866,880

 
—

Residential land
 
—

 
318

 
79

 
397

 
16,491

 
16,888

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
130,808

 
130,808

 
—

Residential construction
 
—

 
—

 
—

 
—

 
13,694

 
13,694

 
—

Commercial
 
1,255

 
928

 
847

 
3,030

 
657,986

 
661,016

 
—

Consumer
 
1,809

 
917

 
908

 
3,634

 
188,479

 
192,113

 
—

Total loans
 
$
7,215

 
$
5,716

 
$
6,785

 
$
19,716

 
$
4,710,076

 
$
4,729,792

 
$
—

December 31, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
5,467

 
$
2,338

 
$
3,505

 
$
11,310

 
$
2,036,741

 
$
2,048,051

 
$
—

Commercial real estate
 
2,416

 
—

 
—

 
2,416

 
797,979

 
800,395

 
—

Home equity line of credit
 
1,263

 
381

 
1,342

 
2,986

 
860,177

 
863,163

 
—

Residential land
 
—

 
—

 
255

 
255

 
18,634

 
18,889

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
126,768

 
126,768

 
—

Residential construction
 
—

 
—

 
—

 
—

 
16,080

 
16,080

 
—

Commercial
 
413

 
510

 
1,303

 
2,226

 
689,825

 
692,051

 
—

Consumer
 
1,945

 
1,001

 
963

 
3,909

 
174,313

 
178,222

 
—

Total loans
 
$
11,504

 
$
4,230

 
$
7,368

 
$
23,102

 
$
4,720,517

 
$
4,743,619

 
$
—
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)
 
March 31, 2017
 
December 31, 2016
Real estate:
 
 

 
 

Residential 1-4 family
 
$
11,709

 
$
11,154

Commercial real estate
 
218

 
223

Home equity line of credit
 
3,340

 
3,080

Residential land
 
695

 
878

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
2,016

 
6,708

Consumer
 
1,410

 
1,282

  Total nonaccrual loans
 
$
19,388

 
$
23,325

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
 
$
13,661

 
$
14,450

Commercial real estate
 
1,297

 
1,346

Home equity line of credit
 
4,894

 
4,934

Residential land
 
2,246

 
2,751

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
7,234

 
14,146

Consumer
 
69

 
10

     Total troubled debt restructured loans not included above
 
$
29,401

 
$
37,637
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:
 
 
March 31, 2017
 
Three months ended March 31, 2017
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
Allowance
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,145

 
$
9,980

 
$
—

 
$
9,555

 
$
84

Commercial real estate
 
218

 
227

 
—

 
220

 
—

Home equity line of credit
 
2,376

 
2,829

 
—

 
2,004

 
14

Residential land
 
954

 
1,401

 
—

 
957

 
26

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
2,315

 
5,391

 
—

 
4,907

 
6

Consumer
 
—

 
—

 
—

 
—

 
—

 
 
$
15,008

 
$
19,828

 
$
—

 
$
17,643

 
$
130

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,195

 
$
10,398

 
$
1,386

 
$
10,048

 
$
119

Commercial real estate
 
1,297

 
1,297

 
74

 
1,300

 
14

Home equity line of credit
 
4,427

 
4,443

 
228

 
4,562

 
49

Residential land
 
1,909

 
1,909

 
660

 
2,076

 
37

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
6,860

 
6,860

 
1,318

 
7,268

 
401

Consumer
 
69

 
69

 
34

 
30

 
—

 
 
$
24,757

 
$
24,976

 
$
3,700

 
$
25,284

 
$
620

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,340

 
$
20,378

 
$
1,386

 
$
19,603

 
$
203

Commercial real estate
 
1,515

 
1,524

 
74

 
1,520

 
14

Home equity line of credit
 
6,803

 
7,272

 
228

 
6,566

 
63

Residential land
 
2,863

 
3,310

 
660

 
3,033

 
63

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
9,175

 
12,251

 
1,318

 
12,175

 
407

Consumer
 
69

 
69

 
34

 
30

 
—

 
 
$
39,765

 
$
44,804

 
$
3,700

 
$
42,927

 
$
750


 
 
December 31, 2016
 
Three months ended March 31, 2016
(in thousands)
 
Recorded
investment
 
Unpaid
principal
balance
 
Related
allowance
 
Average
recorded
investment
 
Interest
income
recognized*
With no related allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,571

 
$
10,400

 
$
—

 
$
10,392

 
$
51

Commercial real estate
 
223

 
228

 
—

 
1,173

 
—

Home equity line of credit
 
1,500

 
1,900

 
—

 
849

 
—

Residential land
 
1,218

 
1,803

 
—

 
1,590

 
16

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
6,299

 
8,869

 
—

 
4,999

 
6

Consumer
 
—

 
—

 
—

 
—

 
—

 
 
$
18,811

 
$
23,200

 
$
—

 
$
19,003

 
$
73

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,283

 
$
10,486

 
$
1,352

 
$
12,018

 
$
122

Commercial real estate
 
1,346

 
1,346

 
80

 
854

 
—

Home equity line of credit
 
4,658

 
4,712

 
215

 
2,944

 
27

Residential land
 
2,411

 
2,411

 
789

 
3,378

 
67

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
14,240

 
14,240

 
1,641

 
16,970

 
30

Consumer
 
10

 
10

 
6

 
13

 
—

 
 
$
32,948

 
$
33,205

 
$
4,083

 
$
36,177

 
$
246

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,854

 
$
20,886

 
$
1,352

 
$
22,410

 
$
173

Commercial real estate
 
1,569

 
1,574

 
80

 
2,027

 
—

Home equity line of credit
 
6,158

 
6,612

 
215

 
3,793

 
27

Residential land
 
3,629

 
4,214

 
789

 
4,968

 
83

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
20,539

 
23,109

 
1,641

 
21,969

 
36

Consumer
 
10

 
10

 
6

 
13

 
—

 
 
$
51,759

 
$
56,405

 
$
4,083

 
$
55,180

 
$
319

*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred during the first quarters of 2017 and 2016 and the impact on the allowance for loan losses were as follows:
 
 
Three months ended March 31, 2017
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 

 
 
Real estate:
 
 

 
 

 
 

 
 
Residential 1-4 family
 
3

 
$
512

 
$
520

 
$
45

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
8

 
226

 
212

 
34

Residential land
 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
1

 
342

 
342

 
—

Consumer
 
1

 
59

 
59

 
27

 
 
13

 
$
1,139

 
$
1,133

 
$
106


 
 
Three months ended March 31, 2016
 
 
Number of contracts
 
Outstanding recorded 
investment1
 
Net increase in allowance
(dollars in thousands)
 
 
Pre-modification
 
Post-modification
 
(as of period end)
Troubled debt restructurings
 
 
 
 

 
 

 
 
Real estate:
 
 
 
 

 
 

 
 
Residential 1-4 family
 
4

 
$
1,097

 
$
1,215

 
$
161

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
10

 
669

 
669

 
74

Residential land
 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
3

 
16,200

 
16,200

 
525

Consumer
 
—

 
—

 
—

 
—

 
 
17

 
$
17,966

 
$
18,084

 
$
760


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 during the first quarters of 2017 and 2016, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended March 31, 2017
 
Three months ended March 31, 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
 
$
301

 
1
 
$
488

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
—
 
—

 
—
 
—

Consumer
 
—
 
—

 
—
 
—

 
 
1
 
$
301

 
1
 
$
488
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
March 31, 2017
 
$
17,707

 
$
(8,413
)
 
$
—

 
$
9,294

December 31, 2016
 
17,271

 
(7,898
)
 
—

 
9,373

1 Reflects the impact of loans paid in full.
Changes related to mortgage servicing rights were as follows:
(in thousands)
 
2017

 
2016

Mortgage servicing rights
 
 
 
 
Balance, January 1
 
$
9,373

 
$
8,884

Amount capitalized
 
436

 
455

Amortization
 
(515
)
 
(482
)
Other-than-temporary impairment
 
—

 
—

Carrying amount before valuation allowance, March 31
 
9,294

 
8,857

Valuation allowance for mortgage servicing rights
 
 
 
 
Balance, January 1
 
—

 
—

Provision (recovery)
 
—

 
—

Other-than-temporary impairment
 
—

 
—

Balance, March 31
 
—

 
—

Net carrying value of mortgage servicing rights
 
$
9,294

 
$
8,857
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)
 
March 31, 2017

 
December 31, 2016

Unpaid principal balance
 
$
1,205,197

 
$
1,188,380

Weighted average note rate
 
3.95
%
 
3.96
%
Weighted average discount rate
 
9.5
%
 
9.4
%
Weighted average prepayment speed
 
8.2
%
 
8.5
%
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, 2017
 
 
 
 
 
 
 
 
 
 
Residential loan
 
$
222

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Commercial loan
 
810

 
Sales price
 
Sales price
 
 
 
N/A (2)
Commercial loan
 
249

 
Fair value of property or collateral
 
Fair value of business assets
 
 
 
N/A (2)
Total loans
 
$
1,281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
2,468

 
Sales price
 
Sales price
 
95-100%
 
97%
Residential loans
 
287

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
42-65%
 
61%
Home equity lines of credit
 
12

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Total loans
 
$
2,767

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
1,189

 
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 MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
(dollars in thousands)
 
March 31, 2017

 
December 31, 2016

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(556
)
 
$
(567
)
  50 basis points adverse rate change
 
(1,144
)
 
(1,154
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(134
)
 
(128
)
  50 basis points adverse rate change
 
(266
)
 
(254
)
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
 
 
 
 
 
 
March 31, 2017
 
$100
 
$—
 
$100
December 31, 2016
 
93
 
—
 
93
 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
 Net amount of liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
March 31, 2017
 
 

 
 

 
 

Financial institution
 
$
—

 
$
—

 
$
—

Government entities
 
—

 
—

 
—

Commercial account holders
 
100

 
119

 
—

Total
 
$
100

 
$
119

 
$
—

December 31, 2016
 
 

 
 

 
 

Financial institution
 
$
—

 
$
—

 
$
—

Government entities
 
14

 
15

 
—

Commercial account holders
 
79

 
101

 
—

Total
 
$
93

 
$
116

 
$
—
Schedule of notional and fair value of derivatives
The notional amount and fair value of ASB’s derivative financial instruments were as follows:
 
 
March 31, 2017
 
December 31, 2016
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
21,771

 
$
317

 
$
25,883

 
$
421

Forward commitments
 
22,120

 
(104
)
 
30,813

 
(177
)
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
 
March 31, 2017
 
December 31, 2016
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
317

 
$
—

 
$
445

 
$
24

Forward commitments
 
—

 
104

 
8

 
185

 
 
$
317

 
$
104

 
$
453

 
$
209

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 March 31
(in thousands)
 
 
2017
 
2016
Interest rate lock commitments
 
Mortgage banking income
 
$
(104
)
 
$
271

Forward commitments
 
Mortgage banking income
 
73

 
(163
)
 
 
 
 
$
(31
)
 
$
108