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Bank segment (Tables)
 3 Months Ended
Mar. 31, 2019
Bank Subsidiary [Abstract]  
Schedule of statements of income data Statements of Income Data
 
 
Three months ended March 31
(in thousands)
 
2019
 
2018
Interest and dividend income
 
 

 
 

Interest and fees on loans
 
$
57,860

 
$
52,800

Interest and dividends on investment securities
 
10,628

 
9,202

Total interest and dividend income
 
68,488

 
62,002

Interest expense
 
 

 
 

Interest on deposit liabilities
 
4,252

 
2,957

Interest on other borrowings
 
528

 
496

Total interest expense
 
4,780

 
3,453

Net interest income
 
63,708

 
58,549

Provision for loan losses
 
6,870

 
3,541

Net interest income after provision for loan losses
 
56,838

 
55,008

Noninterest income
 
 

 
 

Fees from other financial services
 
4,562

 
4,654

Fee income on deposit liabilities
 
5,078

 
5,189

Fee income on other financial products
 
1,593

 
1,654

Bank-owned life insurance
 
2,259

 
871

Mortgage banking income
 
614

 
613

Other income, net
 
458

 
436

Total noninterest income
 
14,564

 
13,417

Noninterest expense
 
 

 
 

Compensation and employee benefits
 
25,512

 
24,440

Occupancy
 
4,670

 
4,280

Data processing
 
3,738

 
3,464

Services
 
2,426

 
3,047

Equipment
 
2,064

 
1,728

Office supplies, printing and postage
 
1,360

 
1,507

Marketing
 
990

 
645

FDIC insurance
 
626

 
713

Other expense
 
3,854

 
4,101

Total noninterest expense
 
45,240

 
43,925

Income before income taxes
 
26,162

 
24,500

Income taxes
 
5,323

 
5,540

Net income
 
$
20,839

 
$
18,960




Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
 
 
Three months ended March 31
(in thousands)
 
2019
 
2018
Interest and dividend income
 
$
68,488

 
$
62,002

Noninterest income
 
14,564

 
13,417

*Revenues-Bank
 
83,052

 
75,419

Total interest expense
 
4,780

 
3,453

Provision for loan losses
 
6,870

 
3,541

Noninterest expense
 
45,240

 
43,925

Less: Retirement defined benefits gain (expense)—other than service costs
 
40

 
(387
)
*Expenses-Bank
 
56,930

 
50,532

*Operating income-Bank
 
26,122

 
24,887

Add back: Retirement defined benefits gain (expense)—other than service costs
 
(40
)
 
387

Income before income taxes
 
$
26,162

 
$
24,500
Schedule of statements of comprehensive income data Statements of Comprehensive Income Data
 
 
Three months ended March 31
(in thousands)
 
2019
 
2018
Net income
 
$
20,839

 
$
18,960

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 $(3,455) and $4,867, respectively
 
9,439

 
(13,297
)
Retirement benefit plans:
 
 

 
 

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of (taxes) benefits of $(1,166) and $694, respectively
 
(3,187
)
 
1,222

Other comprehensive income (loss), net of taxes
 
6,252

 
(12,075
)
Comprehensive income
 
$
27,091

 
$
6,885
Schedule of balance sheets data Balance Sheets Data
(in thousands)
 
March 31, 2019
 
December 31, 2018
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
136,585

 
 

 
$
122,059

Interest-bearing deposits
 
 
 
31,703

 
 
 
4,225

Investment securities
 
 
 
 
 
 
 
 
Available-for-sale, at fair value
 
 

 
1,348,263

 
 

 
1,388,533

Held-to-maturity, at amortized cost (fair value of $142,333 and $142,057, respectively)
 
 
 
140,203

 
 
 
141,875

Stock in Federal Home Loan Bank, at cost
 
 

 
9,434

 
 

 
9,958

Loans held for investment
 
 

 
4,858,180

 
 

 
4,843,021

Allowance for loan losses
 
 

 
(54,297
)
 
 

 
(52,119
)
Net loans
 
 

 
4,803,883

 
 

 
4,790,902

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

 
8,136

 
 

 
1,805

Other
 
 

 
501,970

 
 

 
486,347

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
7,062,367

 
 

 
$
7,027,894

Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,879,244

 
 

 
$
1,800,727

Deposit liabilities—interest-bearing
 
 

 
4,326,415

 
 

 
4,358,125

Other borrowings
 
 

 
89,870

 
 

 
110,040

Other
 
 

 
122,651

 
 

 
124,613

Total liabilities
 
 

 
6,418,180

 
 

 
6,393,505

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid-in capital
 
 
 
347,877

 
 
 
347,170

Retained earnings
 
 

 
328,125

 
 

 
325,286

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(14,984
)
 
 

 
$
(24,423
)
 
 

Retirement benefit plans
 
(16,832
)
 
(31,816
)
 
(13,645
)
 
(38,068
)
Total shareholder’s equity
 
 

 
644,187

 
 

 
634,389

Total liabilities and shareholder’s equity
 
 

 
$
7,062,367

 
 

 
$
7,027,894

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
150,705

 
 

 
$
151,172

Premises and equipment, net
 
 

 
208,309

 
 

 
214,415

Accrued interest receivable
 
 

 
20,654

 
 

 
20,140

Mortgage-servicing rights
 
 

 
7,897

 
 

 
8,062

Low-income housing equity investments
 
 
 
65,428

 
 
 
67,626

Real estate acquired in settlement of loans, net
 
 

 
—

 
 

 
406

Real estate held for sale
 
 
 
9,014

 
 
 
—

Other
 
 

 
39,963

 
 

 
24,526

 
 
 

 
$
501,970

 
 

 
$
486,347

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
36,067

 
 

 
$
54,084

Federal and state income taxes payable
 
 

 
5,391

 
 

 
2,012

Cashier’s checks
 
 

 
27,432

 
 

 
26,906

Advance payments by borrowers
 
 

 
5,956

 
 

 
10,183

Other
 
 

 
47,805

 
 

 
31,428

 
 
 

 
$
122,651

 
 

 
$
124,613
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, 2019
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
142,179

 
$
93

 
$
(1,428
)
 
$
140,844

 
2

 
$
10,022

 
$
(7
)
 
20

 
$
117,499

 
$
(1,421
)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
1,149,167

 
1,318

 
(21,498
)
 
1,128,987

 
3

 
13,792

 
(10
)
 
161

 
1,010,168

 
(21,488
)
Corporate bonds
 
49,417

 
1,045

 
—

 
50,462

 
—

 
—

 
—

 
—

 
—

 
—

Mortgage revenue bonds
 
27,970

 
—

 
—

 
27,970

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,368,733

 
$
2,456

 
$
(22,926
)
 
$
1,348,263

 
5

 
$
23,814

 
$
(17
)
 
181

 
$
1,127,667

 
$
(22,909
)
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
$
140,203

 
$
2,528

 
$
(398
)
 
$
142,333

 
—

 
$
—

 
$
—

 
3

 
$
39,027

 
$
(398
)
 
 
$
140,203

 
$
2,528

 
$
(398
)
 
$
142,333

 
—

 
$
—

 
$
—

 
3

 
$
39,027

 
$
(398
)
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
156,694

 
$
62

 
$
(2,407
)
 
$
154,349

 
5

 
$
25,882

 
$
(208
)
 
19

 
$
118,405

 
$
(2,199
)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
1,192,169

 
789

 
(31,542
)
 
1,161,416

 
22

 
129,011

 
(1,330
)
 
145

 
947,890

 
(30,212
)
Corporate bonds
 
49,398

 
103

 
(369
)
 
49,132

 
6

 
23,175

 
(369
)
 
—

 
—

 
—

Mortgage revenue bonds
 
23,636

 
—

 
—

 
23,636

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,421,897

 
$
954

 
$
(34,318
)
 
$
1,388,533

 
33

 
$
178,068

 
$
(1,907
)
 
164

 
$
1,066,295

 
$
(32,411
)
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
$
141,875

 
$
1,446

 
$
(1,264
)
 
$
142,057

 
3

 
$
29,814

 
$
(400
)
 
2

 
$
31,505

 
$
(864
)
 
 
$
141,875

 
$
1,446

 
$
(1,264
)
 
$
142,057

 
3

 
$
29,814

 
$
(400
)
 
2

 
$
31,505

 
$
(864
)
Schedule of contractual maturities of available-for-sale securities The contractual maturities of investment securities were as follows:
March 31, 2019
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Available-for-sale
 
 
 
 
Due in one year or less
 
$
15,000

 
$
14,960

Due after one year through five years
 
133,142

 
133,294

Due after five years through ten years
 
55,997

 
55,595

Due after ten years
 
15,427

 
15,427

 
 
219,566

 
219,276

Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
1,149,167

 
1,128,987

Total available-for-sale securities
 
$
1,368,733

 
$
1,348,263

Held-to-maturity
 
 
 
 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
$
140,203

 
$
142,333

Total held-to-maturity securities
 
$
140,203

 
$
142,333
Schedule of components of loans receivable The components of loans were summarized as follows:
 
March 31, 2019
 
December 31, 2018
(in thousands)
 

 
 

Real estate:
 

 
 

Residential 1-4 family
$
2,159,886

 
$
2,143,397

Commercial real estate
737,489

 
748,398

Home equity line of credit
995,624

 
978,237

Residential land
12,941

 
13,138

Commercial construction
98,734

 
92,264

Residential construction
10,924

 
14,307

Total real estate
4,015,598

 
3,989,741

Commercial
576,235

 
587,891

Consumer
266,437

 
266,002

Total loans
4,858,270

 
4,843,634

Less: Deferred fees and discounts
(90
)
 
(613
)
          Allowance for loan losses
(54,297
)
 
(52,119
)
Total loans, net
$
4,803,883

 
$
4,790,902
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
 
Total
Three months ended March 31, 2019
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
1,976

 
$
14,505

 
$
6,371

 
$
479

 
$
2,790

 
$
4

 
$
9,225

 
$
16,769

 
$
52,119

Charge-offs
 
(14
)
 
—

 
—

 
—

 
—

 
—

 
(618
)
 
(5,559
)
 
(6,191
)
Recoveries
 
609

 
—

 
5

 
7

 
—

 
—

 
180

 
698

 
1,499

Provision
 
(660
)
 
320

 
117

 
(61
)
 
53

 
(1
)
 
2,027

 
5,075

 
6,870

Ending balance
 
$
1,911

 
$
14,825

 
$
6,493

 
$
425

 
$
2,843

 
$
3

 
$
10,814

 
$
16,983

 
$
54,297

March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
771

 
$
7

 
$
491

 
$
4

 
$
—

 
$
—

 
$
2,965

 
$
4

 
$
4,242

Ending balance: collectively evaluated for impairment
 
$
1,140

 
$
14,818

 
$
6,002

 
$
421

 
$
2,843

 
$
3

 
$
7,849

 
$
16,979

 
$
50,055

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,159,886

 
$
737,489

 
$
995,624

 
$
12,941

 
$
98,734

 
$
10,924

 
$
576,235

 
$
266,437

 
$
4,858,270

Ending balance: individually evaluated for impairment
 
$
17,403

 
$
902

 
$
14,046

 
$
2,065

 
$
—

 
$
—

 
$
15,895

 
$
88

 
$
50,399

Ending balance: collectively evaluated for impairment
 
$
2,142,483

 
$
736,587

 
$
981,578

 
$
10,876

 
$
98,734

 
$
10,924

 
$
560,340

 
$
266,349

 
$
4,807,871

Three months ended March 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,902

 
$
15,796

 
$
7,522

 
$
896

 
$
4,671

 
$
12

 
$
10,851

 
$
10,987

 
$
53,637

Charge-offs
 
(31
)
 
—

 
—

 
(8
)
 
—

 
—

 
(602
)
 
(4,232
)
 
(4,873
)
Recoveries
 
54

 
—

 
14

 
5

 
—

 
—

 
1,170

 
347

 
1,590

Provision
 
(400
)
 
163

 
446

 
(219
)
 
(310
)
 
(8
)
 
(1,064
)
 
4,933

 
3,541

Ending balance
 
$
2,525

 
$
15,959

 
$
7,982

 
$
674

 
$
4,361

 
$
4

 
$
10,355

 
$
12,035

 
$
53,895

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
876

 
$
7

 
$
701

 
$
6

 
$
—

 
$
—

 
$
628

 
$
4

 
$
2,222

Ending balance: collectively evaluated for impairment
 
$
1,100

 
$
14,498

 
$
5,670

 
$
473

 
$
2,790

 
$
4

 
$
8,597

 
$
16,765

 
$
49,897

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,143,397

 
$
748,398

 
$
978,237

 
$
13,138

 
$
92,264

 
$
14,307

 
$
587,891

 
$
266,002

 
$
4,843,634

Ending balance: individually evaluated for impairment
 
$
16,494

 
$
915

 
$
14,800

 
$
2,059

 
$
—

 
$
—

 
$
5,340

 
$
89

 
$
39,697

Ending balance: collectively evaluated for impairment
 
$
2,126,903

 
$
747,483

 
$
963,437

 
$
11,079

 
$
92,264

 
$
14,307

 
$
582,551

 
$
265,913

 
$
4,803,937
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, 2019
 
December 31, 2018
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Total
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Total
Grade:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Pass
 
$
659,853

 
$
96,445

 
$
534,127

 
$
1,290,425

 
$
658,288

 
$
89,974

 
$
547,640

 
$
1,295,902

Special mention
 
7,960

 
—

 
11,148

 
19,108

 
32,871

 
—

 
11,598

 
44,469

Substandard
 
69,676

 
2,289

 
30,960

 
102,925

 
57,239

 
2,290

 
28,653

 
88,182

Doubtful
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Loss
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
737,489

 
$
98,734

 
$
576,235

 
$
1,412,458

 
$
748,398

 
$
92,264

 
$
587,891

 
$
1,428,553
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, 2019
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
2,625

 
$
2,954

 
$
3,866

 
$
9,445

 
$
2,150,441

 
$
2,159,886

 
$
—

Commercial real estate
 
2,225

 
—

 
—

 
2,225

 
735,264

 
737,489

 
—

Home equity line of credit
 
1,244

 
251

 
2,726

 
4,221

 
991,403

 
995,624

 
—

Residential land
 
818

 
488

 
9

 
1,315

 
11,626

 
12,941

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
98,734

 
98,734

 
—

Residential construction
 
—

 
—

 
—

 
—

 
10,924

 
10,924

 
—

Commercial
 
3,167

 
570

 
337

 
4,074

 
572,161

 
576,235

 
—

Consumer
 
4,173

 
2,551

 
2,458

 
9,182

 
257,255

 
266,437

 
—

Total loans
 
$
14,252

 
$
6,814

 
$
9,396

 
$
30,462

 
$
4,827,808

 
$
4,858,270

 
$
—

December 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
3,757

 
$
2,773

 
$
2,339

 
$
8,869

 
$
2,134,528

 
$
2,143,397

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
748,398

 
748,398

 
—

Home equity line of credit
 
1,139

 
681

 
2,720

 
4,540

 
973,697

 
978,237

 
—

Residential land
 
9

 
—

 
319

 
328

 
12,810

 
13,138

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
92,264

 
92,264

 
—

Residential construction
 
—

 
—

 
—

 
—

 
14,307

 
14,307

 
—

Commercial
 
315

 
281

 
548

 
1,144

 
586,747

 
587,891

 
—

Consumer
 
5,220

 
3,166

 
2,702

 
11,088

 
254,914

 
266,002

 
—

Total loans
 
$
10,440

 
$
6,901

 
$
8,628

 
$
25,969

 
$
4,817,665

 
$
4,843,634

 
$
—
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 troubled debt restructuring (TDR) loans was as follows:
(in thousands)
 
March 31, 2019
 
December 31, 2018
Real estate:
 
 

 
 

Residential 1-4 family
 
$
13,878

 
$
12,037

Commercial real estate
 
—

 
—

Home equity line of credit
 
6,888

 
6,348

Residential land
 
452

 
436

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
14,447

 
4,278

Consumer
 
4,542

 
4,196

  Total nonaccrual loans
 
$
40,207

 
$
27,295

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
 
$
10,145

 
$
10,194

Commercial real estate
 
902

 
915

Home equity line of credit
 
11,013

 
11,597

Residential land
 
1,613

 
1,622

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
1,622

 
1,527

Consumer
 
61

 
62

     Total troubled debt restructured loans not included above
 
$
25,356

 
$
25,917
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, 2019
 
Three months ended March 31, 2019
(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
 
$
9,208

 
$
9,833

 
$
—

 
$
7,991

 
$
160

Commercial real estate
 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
2,508

 
2,778

 
—

 
2,534

 
12

Residential land
 
2,036

 
2,235

 
—

 
2,036

 
26

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
4,736

 
5,897

 
—

 
3,973

 
—

Consumer
 
31

 
31

 
—

 
31

 
—

 
 
$
18,519

 
$
20,774

 
$
—

 
$
16,565

 
$
198

With an allowance recorded
 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
8,195

 
$
8,248

 
$
771

 
$
8,394

 
$
83

Commercial real estate
 
902

 
902

 
7

 
906

 
10

Home equity line of credit
 
11,538

 
11,577

 
491

 
11,823

 
130

Residential land
 
29

 
29

 
4

 
29

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
11,159

 
11,159

 
2,965

 
4,750

 
26

Consumer
 
57

 
57

 
4

 
57

 
1

 
 
$
31,880

 
$
31,972

 
$
4,242

 
$
25,959

 
$
250

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
17,403

 
$
18,081

 
$
771

 
$
16,385

 
$
243

Commercial real estate
 
902

 
902

 
7

 
906

 
10

Home equity line of credit
 
14,046

 
14,355

 
491

 
14,357

 
142

Residential land
 
2,065

 
2,264

 
4

 
2,065

 
26

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
15,895

 
17,056

 
2,965

 
8,723

 
26

Consumer
 
88

 
88

 
4

 
88

 
1

 
 
$
50,399

 
$
52,746

 
$
4,242

 
$
42,524

 
$
448


 
 
December 31, 2018
 
Three months ended March 31, 2018
(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
 
$
7,822

 
$
8,333

 
$
—

 
$
8,496

 
$
107

Commercial real estate
 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
2,743

 
3,004

 
—

 
1,700

 
5

Residential land
 
2,030

 
2,228

 
—

 
1,168

 
5

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
3,722

 
4,775

 
—

 
2,357

 
10

Consumer
 
32

 
32

 
—

 
7

 
—

 
 
$
16,349

 
$
18,372

 
$
—

 
$
13,728

 
$
127

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
8,672

 
$
8,875

 
$
876

 
$
9,129

 
$
93

Commercial real estate
 
915

 
915

 
7

 
1,008

 
11

Home equity line of credit
 
12,057

 
12,086

 
701

 
7,741

 
81

Residential land
 
29

 
29

 
6

 
77

 
2

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
1,618

 
1,618

 
628

 
1,957

 
36

Consumer
 
57

 
57

 
4

 
58

 
1

 
 
$
23,348

 
$
23,580

 
$
2,222

 
$
19,970

 
$
224

Total
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
16,494

 
$
17,208

 
$
876

 
$
17,625

 
$
200

Commercial real estate
 
915

 
915

 
7

 
1,008

 
11

Home equity line of credit
 
14,800

 
15,090

 
701

 
9,441

 
86

Residential land
 
2,059

 
2,257

 
6

 
1,245

 
7

Commercial construction
 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

Commercial
 
5,340

 
6,393

 
628

 
4,314

 
46

Consumer
 
89

 
89

 
4

 
65

 
1

 
 
$
39,697

 
$
41,952

 
$
2,222

 
$
33,698

 
$
351

*
Since loan was classified as impaired.
Schedule of loan modifications Loan modifications that occurred during the first quarters of 2019 and 2018 were as follows:
Loans modified as a TDR
 
Three months ended March 31, 2019
 
Three months ended March 31, 2018
(dollars in thousands)
 
Number of contracts
 
Outstanding recorded 
investment
 (as of period end)1
 
Related allowance
(as of period end)
 
Number of contracts
 
Outstanding recorded 
investment
 (as of period end)1
 
Related allowance
(as of period end)
Troubled debt restructurings
 
 

 
 

 
 
 
 
 
 
 
 
Real estate:
 
 

 
 

 
 
 
 
 
 
 
 
Residential 1-4 family
 
8

 
$
1,048

 
$
5

 
1

 
$
345

 
$
107

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
2

 
264

 
23

 
18

 
2,155

 
417

Residential land
 
1

 
335

 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
1

 
195

 
17

 
5

 
2,213

 
—

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
 
12

 
$
1,842

 
$
45

 
24

 
$
4,713

 
$
524

Loans modified in TDRs that experienced a payment default of 90 days or more during the first quarters of 2019 and 2018, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended March 31, 2019
 
Three months ended March 31, 2018
(dollars in thousands)
 
Number of contracts
 
Outstanding
 recorded 
investment
(as of period end)1
 
Number of contracts
 
Outstanding 
recorded 
investment
 (as of period end)1
TDRs that defaulted during the period within twelve months of their modification date
 
 
 
 

 
 

 
 
Real estate:
 
 
 
 

 
 

 
 
Residential 1-4 family
 
—

 
$
—

 
1

 
$
49

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
—

 
—

 
1

 
86

Residential land
 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
1

 
19

 
—

 
—

Consumer
 
—

 
—

 
—

 
—

 
 
1

 
$
19

 
2

 
$
135


1
The period end balances reflect all paydowns and charge-offs since the modification period. TDRs fully paid off, charged-off, or foreclosed upon by period end are not included.
Schedule of amortized intangible assets Changes in the carrying value of MSRs were as follows:
(in thousands)
 
Gross
carrying amount
 
Accumulated amortization
 
Valuation allowance
 
Net
carrying amount
March 31, 2019
 
$
18,786

 
$
(10,889
)
 
$
—

 
$
7,897

December 31, 2018
 
18,556

 
(10,494
)
 
—

 
8,062



Changes related to MSRs were as follows:
 
 
Three months ended March 31
(in thousands)
 
2019
 
2018
Mortgage servicing rights
 
 
 
 
Beginning balance
 
$
8,062

 
$
8,639

Amount capitalized
 
230

 
335

Amortization
 
(395
)
 
(433
)
Other-than-temporary impairment
 
—

 
—

Carrying amount before valuation allowance
 
7,897

 
8,541

Valuation allowance for mortgage servicing rights
 
 
 
 
Beginning balance
 
—

 
—

Provision (recovery)
 
—

 
—

Other-than-temporary impairment
 
—

 
—

Ending balance
 
—

 
—

Net carrying value of mortgage servicing rights
 
$
7,897

 
$
8,541
Schedule of key assumptions used in estimating fair value Key assumptions used in estimating the fair value of ASB’s MSRs used in the impairment analysis were as follows:
(dollars in thousands)
 
March 31, 2019

 
December 31, 2018

Unpaid principal balance
 
$
1,172,573

 
$
1,188,514

Weighted average note rate
 
3.99
%
 
3.98
%
Weighted average discount rate
 
10.0
%
 
10.0
%
Weighted average prepayment speed
 
7.4
%
 
6.5
%
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
 
 
2019

 
2018

Risk-free interest rate
 
2.48
%
 
2.29
%
Expected life in years
 
3

 
3

Expected volatility
 
15.8
%
 
17.0
%
Range of expected volatility for Peer Group
 
15.0% to 73.2%

 
15.1% to 26.2%

Grant date fair value (per share)
 
$41.07
 
$38.20
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, 2019
 
 
 
 
 
 
 
 
 
 
Residential loan
 
$
192

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Commercial loan
 
45

 
Fair value of property or collateral
 
Fair value of business assets
 
 
 
N/A (2)
Total loans
 
$
237

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Home equity line of credit
 
$
77

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Total loans
 
$
77

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
186

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
(1) Represent percent of outstanding principal balance.
(2) N/A - Not applicable. There is one asset 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, 2019

 
December 31, 2018

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(421
)
 
$
(250
)
  50 basis points adverse rate change
 
(962
)
 
(566
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(126
)
 
(139
)
  50 basis points adverse rate change
 
(251
)
 
(275
)
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 Sheets
 
Net amount of liabilities presented
in the Balance Sheets
Repurchase agreements
 
 

 
 

 
 

March 31, 2019
 
$
65

 
$
—

 
$
65

December 31, 2018
 
65

 
—

 
65

 
 
Gross amount not offset in the Balance Sheets
(in millions)
 
 Net amount of liabilities presented
in the Balance Sheets
 
Financial
instruments
 
Cash
collateral
pledged
Commercial account holders
 
 
 
 
 
 
March 31, 2019
 
$
65

 
$
90

 
$
—

December 31, 2018
 
65

 
92

 
—
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, 2019
 
December 31, 2018
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
31,406

 
$
462

 
$
10,180

 
$
91

Forward commitments
 
34,165

 
(161
)
 
10,132

 
(43
)
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, 2019
 
December 31, 2018
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
463

 
$
1

 
$
91

 
$
—

Forward commitments
 
9

 
170

 
—

 
43

 
 
$
472

 
$
171

 
$
91

 
$
43

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 Statements of Income
 
Three months ended March 31
(in thousands)
 
 
2019
 
2018
Interest rate lock commitments
 
Mortgage banking income
 
$
371

 
$
124

Forward commitments
 
Mortgage banking income
 
(118
)
 
(36
)
 
 
 
 
$
253

 
$
88