XML 40 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Bank segment (Tables)
 9 Months Ended
Sep. 30, 2017
Bank Subsidiary [Abstract]  
Schedule of statements of income data
Statements of Income Data
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
52,210

 
$
50,444

 
$
155,269

 
$
148,571

Interest and dividends on investment securities
 
6,850

 
4,759

 
20,593

 
14,219

Total interest and dividend income
 
59,060

 
55,203

 
175,862

 
162,790

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
2,444

 
1,871

 
6,858

 
5,154

Interest on other borrowings
 
470

 
1,464

 
2,110

 
4,416

Total interest expense
 
2,914

 
3,335

 
8,968

 
9,570

Net interest income
 
56,146

 
51,868

 
166,894

 
153,220

Provision for loan losses
 
490

 
5,747

 
7,231

 
15,266

Net interest income after provision for loan losses
 
55,656

 
46,121

 
159,663

 
137,954

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
5,635

 
5,599

 
17,055

 
16,799

Fee income on deposit liabilities
 
5,533

 
5,627

 
16,526

 
16,045

Fee income on other financial products
 
1,904

 
2,151

 
5,741

 
6,563

Bank-owned life insurance
 
1,257

 
1,616

 
4,165

 
3,620

Mortgage banking income
 
520

 
2,347

 
1,896

 
5,096

Gains on sale of investment securities, net
 
—

 
—

 
—

 
598

Other income, net
 
380

 
1,165

 
1,229

 
1,786

Total noninterest income
 
15,229

 
18,505

 
46,612

 
50,507

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
23,724

 
22,844

 
71,703

 
67,197

Occupancy
 
4,284

 
3,991

 
12,623

 
12,244

Data processing
 
3,262

 
3,150

 
9,749

 
9,599

Services
 
2,863

 
2,427

 
7,989

 
8,093

Equipment
 
1,814

 
1,759

 
5,333

 
5,193

Office supplies, printing and postage
 
1,444

 
1,483

 
4,506

 
4,431

Marketing
 
934

 
747

 
2,290

 
2,507

FDIC insurance
 
746

 
907

 
2,296

 
2,704

Other expense
 
5,050

 
4,591

 
14,066

 
13,948

Total noninterest expense
 
44,121

 
41,899

 
130,555

 
125,916

Income before income taxes
 
26,764

 
22,727

 
75,720

 
62,545

Income taxes
 
9,172

 
7,623

 
25,582

 
21,483

Net income
 
$
17,592

 
$
15,104

 
$
50,138

 
$
41,062
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Net income
 
$
17,592

 
$
15,104

 
$
50,138

 
$
41,062

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 $(137), $1,417, $(1,619) and $(5,413), respectively
 
208

 
(2,147
)
 
2,452

 
8,197

Reclassification adjustment for net realized gains included in net income, net of taxes of nil, nil, nil and $238, respectively
 
—

 
—

 
—

 
(360
)
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 $138, $144, $675 and $421, respectively
 
209

 
219

 
1,023

 
638

Other comprehensive income (loss), net of taxes
 
417

 
(1,928
)
 
3,475

 
8,475

Comprehensive income
 
$
18,009

 
$
13,176

 
$
53,613

 
$
49,537
Schedule of balance sheets data
Balance Sheets Data
(in thousands)
 
September 30, 2017
 
December 31, 2016
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
120,492

 
 

 
$
137,083

Interest-bearing deposits
 
 
 
69,223

 
 
 
52,128

Restricted cash
 
 
 
—

 
 
 
1,764

Available-for-sale investment securities, at fair value
 
 

 
1,320,110

 
 

 
1,105,182

Stock in Federal Home Loan Bank, at cost
 
 

 
9,706

 
 

 
11,218

Loans receivable held for investment
 
 

 
4,676,281

 
 

 
4,738,693

Allowance for loan losses
 
 

 
(53,047
)
 
 

 
(55,533
)
Net loans
 
 

 
4,623,234

 
 

 
4,683,160

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

 
15,728

 
 

 
18,817

Other
 
 

 
378,224

 
 

 
329,815

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
6,618,907

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,710,698

 
 

 
$
1,639,051

Deposit liabilities—interest-bearing
 
 

 
4,041,628

 
 

 
3,909,878

Other borrowings
 
 

 
153,552

 
 

 
192,618

Other
 
 

 
107,558

 
 

 
101,635

Total liabilities
 
 

 
6,013,436

 
 

 
5,843,182

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid in capital
 
 
 
344,512

 
 
 
342,704

Retained earnings
 
 

 
279,956

 
 

 
257,943

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(5,479
)
 
 

 
$
(7,931
)
 
 

Retirement benefit plans
 
(13,519
)
 
(18,998
)
 
(14,542
)
 
(22,473
)
Total shareholder’s equity
 
 

 
605,471

 
 

 
578,175

Total liabilities and shareholder’s equity
 
 

 
$
6,618,907

 
 

 
$
6,421,357

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
147,391

 
 

 
$
143,197

Premises and equipment, net
 
 

 
123,326

 
 

 
90,570

Prepaid expenses
 
 

 
5,356

 
 

 
3,348

Accrued interest receivable
 
 

 
17,488

 
 

 
16,824

Mortgage-servicing rights
 
 

 
9,070

 
 

 
9,373

Low-income housing equity investments
 
 
 
54,515

 
 
 
47,081

Real estate acquired in settlement of loans, net
 
 

 
1,183

 
 

 
1,189

Other
 
 

 
19,895

 
 

 
18,233

 
 
 

 
$
378,224

 
 

 
$
329,815

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
41,698

 
 

 
$
36,754

Federal and state income taxes payable
 
 

 
6,829

 
 

 
4,728

Cashier’s checks
 
 

 
27,448

 
 

 
24,156

Advance payments by borrowers
 
 

 
4,867

 
 

 
10,335

Other
 
 

 
26,716

 
 

 
25,662

 
 
 

 
$
107,558

 
 

 
$
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
September 30, 2017
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
182,535

 
$
882

 
$
(1,299
)
 
$
182,118

 
15

 
$
91,203

 
$
(1,064
)
 
2

 
$
13,072

 
$
(235
)
Mortgage-related securities- FNMA, FHLMC and GNMA
 
1,131,245

 
2,127

 
(10,807
)
 
1,122,565

 
84

 
686,186

 
(7,709
)
 
29

 
138,051

 
(3,098
)
Mortgage revenue bond
 
15,427

 
—

 
—

 
15,427

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,329,207

 
$
3,009

 
$
(12,106
)
 
$
1,320,110

 
99

 
$
777,389

 
$
(8,773
)
 
31

 
$
151,123

 
$
(3,333
)
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:
September 30, 2017
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Due in one year or less
 
$
9,998

 
$
9,999

Due after one year through five years
 
77,138

 
77,331

Due after five years through ten years
 
81,464

 
81,170

Due after ten years
 
29,362

 
29,045

 
 
197,962

 
197,545

Mortgage-related securities-FNMA, FHLMC and GNMA
 
1,131,245

 
1,122,565

Total available-for-sale securities
 
$
1,329,207

 
$
1,320,110
Schedule of components of loans receivable
The components of loans receivable were summarized as follows:
 
September 30, 2017
 
December 31, 2016
(in thousands)
 

 
 

Real estate:
 

 
 

Residential 1-4 family
$
2,066,023

 
$
2,048,051

Commercial real estate
745,583

 
800,395

Home equity line of credit
905,249

 
863,163

Residential land
18,611

 
18,889

Commercial construction
128,407

 
126,768

Residential construction
13,031

 
16,080

Total real estate
3,876,904

 
3,873,346

Commercial
589,669

 
692,051

Consumer
211,571

 
178,222

Total loans
4,678,144

 
4,743,619

Less: Deferred fees and discounts
(1,863
)
 
(4,926
)
          Allowance for loan losses
(53,047
)
 
(55,533
)
Total loans, net
$
4,623,234

 
$
4,683,160
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 September 30, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
3,130

 
$
18,840

 
$
5,527

 
$
1,264

 
$
4,706

 
$
9

 
$
14,552

 
$
8,328

 
$
—

 
$
56,356

Charge-offs
 
(522
)
 
—

 
—

 
—

 
—

 
—

 
(1,215
)
 
(3,160
)
 
—

 
(4,897
)
Recoveries
 
33

 
—

 
164

 
259

 
—

 
—

 
326

 
316

 
—

 
1,098

Provision
 
347

 
(2,800
)
 
(36
)
 
(141
)
 
370

 
2

 
(595
)
 
3,343

 
—

 
490

Ending balance
 
$
2,988

 
$
16,040

 
$
5,655

 
$
1,382

 
$
5,076

 
$
11

 
$
13,068

 
$
8,827

 
$
—

 
$
53,047

Three months ended September 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
4,384

 
$
13,561

 
$
7,836

 
$
1,689

 
$
6,993

 
$
12

 
$
17,085

 
$
3,771

 
$
—

 
$
55,331

Charge-offs
 
(373
)
 
—

 
(108
)
 
—

 
—

 
—

 
(833
)
 
(1,879
)
 
—

 
(3,193
)
Recoveries
 
92

 
—

 
15

 
187

 
—

 
—

 
347

 
211

 
—

 
852

Provision
 
154

 
1,289

 
(248
)
 
23

 
179

 
(2
)
 
2,457

 
1,895

 
—

 
5,747

Ending balance
 
$
4,257

 
$
14,850

 
$
7,495

 
$
1,899

 
$
7,172

 
$
10

 
$
19,056

 
$
3,998

 
$
—

 
$
58,737

Nine months ended September 30, 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
 
(528
)
 
—

 
(14
)
 
(92
)
 
—

 
—

 
(3,477
)
 
(8,360
)
 
—

 
(12,471
)
Recoveries
 
91

 
—

 
294

 
477

 
—

 
—

 
922

 
970

 
—

 
2,754

Provision
 
552

 
36

 
336

 
(741
)
 
(1,373
)
 
(1
)
 
(995
)
 
9,417

 
—

 
7,231

Ending balance
 
$
2,988

 
$
16,040

 
$
5,655

 
$
1,382

 
$
5,076

 
$
11

 
$
13,068

 
$
8,827

 
$
—

 
$
53,047

September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
1,317

 
$
72

 
$
409

 
$
373

 
$
—

 
$
—

 
$
667

 
$
30

 
 
 
$
2,868

Ending balance: collectively evaluated for impairment
 
$
1,671

 
$
15,968

 
$
5,246

 
$
1,009

 
$
5,076

 
$
11

 
$
12,401

 
$
8,797

 
$
—

 
$
50,179

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,066,023

 
$
745,583

 
$
905,249

 
$
18,611

 
$
128,407

 
$
13,031

 
$
589,669

 
$
211,571

 
 
 
$
4,678,144

Ending balance: individually evaluated for impairment
 
$
19,757

 
$
1,281

 
$
7,078

 
$
2,385

 
$
—

 
$
—

 
$
5,486

 
$
67

 
 
 
$
36,054

Ending balance: collectively evaluated for impairment
 
$
2,046,266

 
$
744,302

 
$
898,171

 
$
16,226

 
$
128,407

 
$
13,031

 
$
584,183

 
$
211,504

 
 
 
$
4,642,090

Nine months ended September 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
 
(433
)
 
—

 
(108
)
 
—

 
—

 
—

 
(3,138
)
 
(4,977
)
 
—

 
(8,656
)
Recoveries
 
144

 
—

 
46

 
306

 
—

 
—

 
907

 
686

 
—

 
2,089

Provision
 
360

 
3,508

 
297

 
(78
)
 
2,711

 
(3
)
 
4,079

 
4,392

 
—

 
15,266

Ending balance
 
$
4,257

 
$
14,850

 
$
7,495

 
$
1,899

 
$
7,172

 
$
10

 
$
19,056

 
$
3,998

 
$
—

 
$
58,737

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:
 
 
September 30, 2017
 
December 31, 2016
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Commercial
real estate
 
Commercial
construction
 
Commercial
Grade:
 
 

 
 

 
 

 
 

 
 

 
 

Pass
 
$
647,599

 
$
103,892

 
$
539,336

 
$
701,657

 
$
102,955

 
$
614,139

Special mention
 
44,088

 
22,500

 
25,053

 
65,541

 
—

 
25,229

Substandard
 
53,896

 
2,015

 
23,130

 
33,197

 
23,813

 
52,683

Doubtful
 
—

 
—

 
2,150

 
—

 
—

 
—

Loss
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
745,583

 
$
128,407

 
$
589,669

 
$
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
September 30, 2017
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
3,905

 
$
1,513

 
$
4,452

 
$
9,870

 
$
2,056,153

 
$
2,066,023

 
$
—

Commercial real estate
 
5,414

 
—

 
—

 
5,414

 
740,169

 
745,583

 
—

Home equity line of credit
 
1,936

 
177

 
1,367

 
3,480

 
901,769

 
905,249

 
—

Residential land
 
498

 
984

 
497

 
1,979

 
16,632

 
18,611

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
128,407

 
128,407

 
—

Residential construction
 
—

 
—

 
—

 
—

 
13,031

 
13,031

 
—

Commercial
 
1,095

 
218

 
648

 
1,961

 
587,708

 
589,669

 
—

Consumer
 
2,508

 
1,465

 
1,178

 
5,151

 
206,420

 
211,571

 
—

Total loans
 
$
15,356

 
$
4,357

 
$
8,142

 
$
27,855

 
$
4,650,289

 
$
4,678,144

 
$
—

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)
 
September 30, 2017
 
December 31, 2016
Real estate:
 
 

 
 

Residential 1-4 family
 
$
12,853

 
$
11,154

Commercial real estate
 
—

 
223

Home equity line of credit
 
4,000

 
3,080

Residential land
 
1,022

 
878

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
3,691

 
6,708

Consumer
 
1,791

 
1,282

  Total nonaccrual loans
 
$
23,357

 
$
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
 
$
11,592

 
$
14,450

Commercial real estate
 
1,281

 
1,346

Home equity line of credit
 
5,250

 
4,934

Residential land
 
1,555

 
2,751

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
2,052

 
14,146

Consumer
 
67

 
10

     Total troubled debt restructured loans not included above
 
$
21,797

 
$
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:
 
 
September 30, 2017
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2017
(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
 
$
9,987

 
$
10,541

 
$
—

 
$
9,650

 
$
70

 
$
9,503

 
$
230

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
121

 
11

Home equity line of credit
 
1,565

 
1,889

 
—

 
1,918

 
32

 
2,108

 
97

Residential land
 
1,134

 
1,425

 
—

 
1,209

 
73

 
1,080

 
107

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
2,901

 
6,257

 
—

 
1,808

 
29

 
2,888

 
37

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
15,587

 
$
20,112

 
$
—

 
$
14,585

 
$
204

 
$
15,700

 
$
482

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
9,770

 
$
9,972

 
$
1,317

 
$
9,788

 
$
97

 
$
9,963

 
$
333

Commercial real estate
 
1,281

 
1,281

 
72

 
1,284

 
13

 
1,292

 
41

Home equity line of credit
 
5,513

 
5,543

 
409

 
5,076

 
68

 
4,670

 
164

Residential land
 
1,251

 
1,251

 
373

 
1,251

 
12

 
1,620

 
73

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
2,585

 
2,595

 
667

 
2,482

 
225

 
4,104

 
694

Consumer
 
67

 
67

 
30

 
67

 
1

 
55

 
2

 
 
$
20,467

 
$
20,709

 
$
2,868

 
$
19,948

 
$
416

 
$
21,704

 
$
1,307

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,757

 
$
20,513

 
$
1,317

 
$
19,438

 
$
167

 
$
19,466

 
$
563

Commercial real estate
 
1,281

 
1,281

 
72

 
1,284

 
13

 
1,413

 
52

Home equity line of credit
 
7,078

 
7,432

 
409

 
6,994

 
100

 
6,778

 
261

Residential land
 
2,385

 
2,676

 
373

 
2,460

 
85

 
2,700

 
180

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
5,486

 
8,852

 
667

 
4,290

 
254

 
6,992

 
731

Consumer
 
67

 
67

 
30

 
67

 
1

 
55

 
2

 
 
$
36,054

 
$
40,821

 
$
2,868

 
$
34,533

 
$
620

 
$
37,404

 
$
1,789


 
 
December 31, 2016
 
Three months ended September 30, 2016
 
Nine months ended September 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
 
$
9,571

 
$
10,400

 
$
—

 
$
10,069

 
$
65

 
$
10,378

 
$
268

Commercial real estate
 
223

 
228

 
—

 
1,206

 
—

 
1,177

 
—

Home equity line of credit
 
1,500

 
1,900

 
—

 
1,220

 
6

 
1,035

 
15

Residential land
 
1,218

 
1,803

 
—

 
1,521

 
16

 
1,532

 
47

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
6,299

 
8,869

 
—

 
14,352

 
141

 
9,240

 
154

Consumer
 
—

 
—

 
—

 
10

 
—

 
3

 
—

 
 
$
18,811

 
$
23,200

 
$
—

 
$
28,378

 
$
228

 
$
23,365

 
$
484

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
10,283

 
$
10,486

 
$
1,352

 
$
11,800

 
$
119

 
$
11,933

 
$
356

Commercial real estate
 
1,346

 
1,346

 
80

 
2,444

 
—

 
1,939

 
—

Home equity line of credit
 
4,658

 
4,712

 
215

 
4,165

 
36

 
3,470

 
91

Residential land
 
2,411

 
2,411

 
789

 
2,915

 
44

 
3,090

 
165

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
14,240

 
14,240

 
1,641

 
11,433

 
65

 
15,075

 
275

Consumer
 
10

 
10

 
6

 
11

 
—

 
12

 
—

 
 
$
32,948

 
$
33,205

 
$
4,083

 
$
32,768

 
$
264

 
$
35,519

 
$
887

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
19,854

 
$
20,886

 
$
1,352

 
$
21,869

 
$
184

 
$
22,311

 
$
624

Commercial real estate
 
1,569

 
1,574

 
80

 
3,650

 
—

 
3,116

 
—

Home equity line of credit
 
6,158

 
6,612

 
215

 
5,385

 
42

 
4,505

 
106

Residential land
 
3,629

 
4,214

 
789

 
4,436

 
60

 
4,622

 
212

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
20,539

 
23,109

 
1,641

 
25,785

 
206

 
24,315

 
429

Consumer
 
10

 
10

 
6

 
21

 
—

 
15

 
—

 
 
$
51,759

 
$
56,405

 
$
4,083

 
$
61,146

 
$
492

 
$
58,884

 
$
1,371

*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred during the third quarters and first nine months of 2017 and 2016 and the impact on the allowance for loan losses were as follows:
 
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2017
 
 
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

 
$
83

 
$
83

 
$
—

 
7

 
$
955

 
$
963

 
$
45

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
15

 
862

 
862

 
184

 
28

 
1,386

 
1,372

 
277

Residential land
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
1

 
330

 
330

 
38

 
2

 
672

 
672

 
38

Consumer
 
—

 
—

 
—

 
—

 
1

 
59

 
59

 
27

 
 
18

 
$
1,275

 
$
1,275

 
$
222

 
38

 
$
3,072

 
$
3,066

 
$
387

 
 
Three months ended September 30, 2016
 
Nine months ended September 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
 
2

 
$
251

 
$
251

 
$
46

 
11

 
$
2,239

 
$
2,351

 
$
305

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
12

 
1,268

 
1,268

 
237

 
30

 
2,705

 
2,705

 
492

Residential land
 
—

 
—

 
—

 
—

 
1

 
120

 
121

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
6

 
3,462

 
3,462

 
53

 
14

 
20,119

 
20,119

 
723

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
20

 
$
4,981

 
$
4,981

 
$
336

 
56

 
$
25,183

 
$
25,296

 
$
1,520


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 third quarters and first nine months of 2017 and 2016, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2017
(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
 
$
222

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
—
 
—

 
—
 
—

Consumer
 
—
 
—

 
—
 
—

 
 
—
 
$
—

 
1
 
$
222


 
 
Three months ended September 30, 2016
 
Nine months ended September 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
 
$
239

 
1
 
$
239

Commercial real estate
 
—
 
—

 
—
 
—

Home equity line of credit
 
—
 
—

 
—
 
—

Residential land
 
—
 
—

 
—
 
—

Commercial construction
 
—
 
—

 
—
 
—

Residential construction
 
—
 
—

 
—
 
—

Commercial
 
—
 
—

 
1
 
25

Consumer
 
—
 
—

 
—
 
—

 
 
1
 
$
239

 
2
 
$
264
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
September 30, 2017
 
$
18,463

 
$
(9,393
)
 
$
—

 
$
9,070

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:
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands)
 
2017
 
2016
 
2017
 
2016
Mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
$
9,181

 
$
9,016

 
$
9,373

 
$
8,884

Amount capitalized
 
394

 
824

 
1,192

 
1,944

Amortization
 
(505
)
 
(649
)
 
(1,495
)
 
(1,637
)
Other-than-temporary impairment
 
—

 
—

 
—

 
—

Carrying amount before valuation allowance
 
9,070

 
9,191

 
9,070

 
9,191

Valuation allowance for mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
—

 
—

 
—

 
—

Provision (recovery)
 
—

 
—

 
—

 
—

Other-than-temporary impairment
 
—

 
—

 
—

 
—

Ending balance
 
—

 
—

 
—

 
—

Net carrying value of mortgage servicing rights
 
$
9,070

 
$
9,191

 
$
9,070

 
$
9,191
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)
 
September 30, 2017

 
December 31, 2016

Unpaid principal balance
 
$
1,212,730

 
$
1,188,380

Weighted average note rate
 
3.94
%
 
3.96
%
Weighted average discount rate
 
10.0
%
 
9.4
%
Weighted average prepayment speed
 
9.2
%
 
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
September 30, 2017
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
731

 
Fair value of collateral
 
Appraised value less 7% selling cost
 
50-91%
 
69%
Commercial loans
 
2,150

 
Fair value of collateral
 
Appraised value
 
72-76%
 
76%
Total loans
 
$
2,881

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
93

 
Sales price
 
Sales price less 7% selling cost
 

 
N/A (2)
 
 
 
 
 
 
 
 
 
 
 
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 or property 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)
 
September 30, 2017

 
December 31, 2016

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(878
)
 
$
(567
)
  50 basis points adverse rate change
 
(1,847
)
 
(1,154
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(111
)
 
(128
)
  50 basis points adverse rate change
 
(220
)
 
(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
 
 
 
 
 
 
September 30, 2017
 
$104
 
$—
 
$104
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
September 30, 2017
 
 

 
 

 
 

Financial institution
 
$
—

 
$
—

 
$
—

Government entities
 
—

 
—

 
—

Commercial account holders
 
104

 
165

 
—

Total
 
$
104

 
$
165

 
$
—

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:
 
 
September 30, 2017
 
December 31, 2016
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
385

 
$
7

 
$
25,883

 
$
421

Forward commitments
 
500

 
(2
)
 
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
 
September 30, 2017
 
December 31, 2016
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
7

 
$
—

 
$
445

 
$
24

Forward commitments
 
—

 
2

 
8

 
185

 
 
$
7

 
$
2

 
$
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 ASB’s 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 September 30
 
Nine months ended September 30
(in thousands)
 
 
2017
 
2016
 
2017
 
2016
Interest rate lock commitments
 
Mortgage banking income
 
$
(119
)
 
$
48

 
$
(414
)
 
$
459

Forward commitments
 
Mortgage banking income
 
(90
)
 
103

 
175

 
(134
)
 
 
 
 
$
(209
)
 
$
151

 
$
(239
)
 
$
325