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Bank segment (Tables)
 6 Months Ended
Jun. 30, 2019
Bank Subsidiary [Abstract]  
Schedule of statements of income data
Statements of Income Data
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2019
 
2018
 
2019
 
2018
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
58,620

 
$
54,633

 
$
116,480

 
$
107,433

Interest and dividends on investment securities
 
7,535

 
8,628

 
18,163

 
17,830

Total interest and dividend income
 
66,155

 
63,261

 
134,643

 
125,263

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
4,287

 
3,284

 
8,539

 
6,241

Interest on other borrowings
 
411

 
393

 
939

 
889

Total interest expense
 
4,698

 
3,677

 
9,478

 
7,130

Net interest income
 
61,457

 
59,584

 
125,165

 
118,133

Provision for loan losses
 
7,688

 
2,763

 
14,558

 
6,304

Net interest income after provision for loan losses
 
53,769

 
56,821

 
110,607

 
111,829

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
4,798

 
4,744

 
9,360

 
9,398

Fee income on deposit liabilities
 
5,004

 
5,138

 
10,082

 
10,327

Fee income on other financial products
 
1,830

 
1,675

 
3,423

 
3,329

Bank-owned life insurance
 
2,390

 
1,133

 
4,649

 
2,004

Mortgage banking income
 
976

 
617

 
1,590

 
1,230

Other income, net
 
534

 
536

 
992

 
972

Total noninterest income
 
15,532

 
13,843

 
30,096

 
27,260

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
25,750

 
23,655

 
51,262

 
48,095

Occupancy
 
5,479

 
4,194

 
10,149

 
8,474

Data processing
 
3,852

 
3,540

 
7,590

 
7,004

Services
 
2,606

 
3,028

 
5,032

 
6,075

Equipment
 
2,189

 
1,874

 
4,253

 
3,602

Office supplies, printing and postage
 
1,663

 
1,491

 
3,023

 
2,998

Marketing
 
1,323

 
1,085

 
2,313

 
1,730

FDIC insurance
 
628

 
727

 
1,254

 
1,440

Other expense
 
4,519

 
4,556

 
8,373

 
8,657

Total noninterest expense
 
48,009

 
44,150

 
93,249

 
88,075

Income before income taxes
 
21,292

 
26,514

 
47,454

 
51,014

Income taxes
 
4,276

 
5,953

 
9,599

 
11,493

Net income
 
$
17,016

 
$
20,561

 
$
37,855

 
$
39,521




Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2019
 
2018
 
2019
 
2018
Interest and dividend income
 
66,155

 
63,261

 
$
134,643

 
$
125,263

Noninterest income
 
15,532

 
13,843

 
30,096

 
27,260

*Revenues-Bank
 
81,687

 
77,104

 
164,739

 
152,523

Total interest expense
 
4,698

 
3,677

 
9,478

 
7,130

Provision for loan losses
 
7,688

 
2,763

 
14,558

 
6,304

Noninterest expense
 
48,009

 
44,150

 
93,249

 
88,075

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

 
(403
)
 
80

 
(790
)
*Expenses-Bank
 
60,435

 
50,187

 
117,365

 
100,719

*Operating income-Bank
 
21,252

 
26,917

 
47,374

 
51,804

Add back: Retirement defined benefits (gain) expense—other than service costs
 
(40
)
 
403

 
(80
)
 
790

Income before income taxes
 
$
21,292

 
$
26,514

 
$
47,454

 
$
51,014
Schedule of statements of comprehensive income data
Statements of Comprehensive Income Data
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2019
 
2018
 
2019
 
2018
Net income
 
$
17,016

 
$
20,561

 
$
37,855

 
$
39,521

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 $(5,182), $1,592, $(8,637) and $6,459, respectively
 
14,154

 
(4,348
)
 
23,593

 
(17,645
)
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 $44, $133, $(1,122), and $827, respectively
 
121

 
366

 
(3,066
)
 
1,588

Other comprehensive income (loss), net of taxes
 
14,275

 
(3,982
)
 
20,527

 
(16,057
)
Comprehensive income
 
$
31,291

 
$
16,579

 
$
58,382

 
$
23,464
Schedule of balance sheets data
Balance Sheets Data
(in thousands)
 
June 30, 2019
 
December 31, 2018
Assets
 
 

 
 

 
 

 
 

Cash and due from banks
 
 

 
$
115,214

 
 

 
$
122,059

Interest-bearing deposits
 
 
 
52,415

 
 
 
4,225

Investment securities
 
 
 
 
 
 
 
 
Available-for-sale, at fair value
 
 

 
1,298,010

 
 

 
1,388,533

Held-to-maturity, at amortized cost (fair value of $141,231 and $142,057, respectively)
 
 
 
137,029

 
 
 
141,875

Stock in Federal Home Loan Bank, at cost
 
 

 
8,434

 
 

 
9,958

Loans held for investment
 
 

 
5,008,489

 
 

 
4,843,021

Allowance for loan losses
 
 

 
(58,425
)
 
 

 
(52,119
)
Net loans
 
 

 
4,950,064

 
 

 
4,790,902

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

 
9,196

 
 

 
1,805

Other
 
 

 
511,502

 
 

 
486,347

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
7,164,054

 
 

 
$
7,027,894

Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,883,044

 
 

 
$
1,800,727

Deposit liabilities—interest-bearing
 
 

 
4,374,339

 
 

 
4,358,125

Other borrowings
 
 

 
111,485

 
 

 
110,040

Other
 
 

 
134,162

 
 

 
124,613

Total liabilities
 
 

 
6,503,030

 
 

 
6,393,505

Commitments and contingencies
 
 

 


 
 

 


Common stock
 
 

 
1

 
 

 
1

Additional paid-in capital
 
 
 
348,423

 
 
 
347,170

Retained earnings
 
 

 
330,141

 
 

 
325,286

Accumulated other comprehensive loss, net of tax benefits
 
 

 
 

 
 

 
 

Net unrealized losses on securities
 
$
(830
)
 
 

 
$
(24,423
)
 
 

Retirement benefit plans
 
(16,711
)
 
(17,541
)
 
(13,645
)
 
(38,068
)
Total shareholder’s equity
 
 

 
661,024

 
 

 
634,389

Total liabilities and shareholder’s equity
 
 

 
$
7,164,054

 
 

 
$
7,027,894

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
151,607

 
 

 
$
151,172

Premises and equipment, net
 
 

 
208,956

 
 

 
214,415

Accrued interest receivable
 
 

 
20,675

 
 

 
20,140

Mortgage-servicing rights
 
 

 
8,103

 
 

 
8,062

Low-income housing equity investments
 
 
 
71,484

 
 
 
67,626

Real estate acquired in settlement of loans, net
 
 

 
—

 
 

 
406

Real estate held for sale
 
 
 
9,014

 
 
 
—

Other
 
 

 
41,663

 
 

 
24,526

 
 
 

 
$
511,502

 
 

 
$
486,347

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
42,129

 
 

 
$
54,084

Federal and state income taxes payable
 
 

 
7,176

 
 

 
2,012

Cashier’s checks
 
 

 
25,135

 
 

 
26,906

Advance payments by borrowers
 
 

 
11,080

 
 

 
10,183

Other
 
 

 
48,642

 
 

 
31,428

 
 
 

 
$
134,162

 
 

 
$
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
June 30, 2019
 
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 
 
 

 
 

Available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and federal agency obligations
 
$
130,810

 
$
736

 
$
(340
)
 
$
131,206

 
—

 
$
—

 
$
—

 
8

 
$
55,125

 
$
(340
)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
1,090,729

 
4,083

 
(7,325
)
 
1,087,487

 
1

 
1,071

 
(3
)
 
113

 
628,194

 
(7,322
)
Corporate bonds
 
49,438

 
1,713

 
—

 
51,151

 
—

 
—

 
—

 
—

 
—

 
—

Mortgage revenue bonds
 
28,166

 
—

 
—

 
28,166

 
—

 
—

 
—

 
—

 
—

 
—

 
 
$
1,299,143

 
$
6,532

 
$
(7,665
)
 
$
1,298,010

 
1

 
$
1,071

 
$
(3
)
 
121

 
$
683,319

 
$
(7,662
)
Held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
$
137,029

 
$
4,202

 
$
—

 
$
141,231

 
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

 
 
$
137,029

 
$
4,202

 
$
—

 
$
141,231

 
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

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:
June 30, 2019
 
Amortized cost
 
Fair value
(in thousands)
 
 
 
 
Available-for-sale
 
 
 
 
Due in one year or less
 
$
12,062

 
$
12,076

Due after one year through five years
 
126,045

 
127,461

Due after five years through ten years
 
54,880

 
55,559

Due after ten years
 
15,427

 
15,427

 
 
208,414

 
210,523

Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
1,090,729

 
1,087,487

Total available-for-sale securities
 
$
1,299,143

 
$
1,298,010

Held-to-maturity
 
 
 
 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies
 
$
137,029

 
$
141,231

Total held-to-maturity securities
 
$
137,029

 
$
141,231
Schedule of components of loans receivable The components of loans were summarized as follows:
 
June 30, 2019
 
December 31, 2018
(in thousands)
 

 
 

Real estate:
 

 
 

Residential 1-4 family
$
2,189,976

 
$
2,143,397

Commercial real estate
790,174

 
748,398

Home equity line of credit
1,036,985

 
978,237

Residential land
14,696

 
13,138

Commercial construction
68,676

 
92,264

Residential construction
8,165

 
14,307

Total real estate
4,108,672

 
3,989,741

Commercial
626,524

 
587,891

Consumer
272,949

 
266,002

Total loans
5,008,145

 
4,843,634

Less: Deferred fees and discounts
344

 
(613
)
          Allowance for loan losses
(58,425
)
 
(52,119
)
Total loans, net
$
4,950,064

 
$
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 June 30, 2019
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
1,911

 
$
14,825

 
$
6,493

 
$
425

 
$
2,843

 
$
3

 
$
10,814

 
$
16,983

 
$
54,297

Charge-offs
 
(5
)
 
—

 
(19
)
 
(4
)
 
—

 
—

 
(494
)
 
(5,102
)
 
(5,624
)
Recoveries
 
8

 
—

 
4

 
7

 
—

 
—

 
1,281

 
764

 
2,064

Provision
 
101

 
986

 
403

 
109

 
(797
)
 
(1
)
 
1,472

 
5,415

 
7,688

Ending balance
 
$
2,015

 
$
15,811

 
$
6,881

 
$
537

 
$
2,046

 
$
2

 
$
13,073

 
$
18,060

 
$
58,425

Three months ended June 30, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
2,525

 
$
15,959

 
$
7,982

 
$
674

 
$
4,361

 
$
4

 
$
10,355

 
$
12,035

 
$
53,895

Charge-offs
 
—

 
—

 
(144
)
 
(9
)
 
—

 
—

 
(540
)
 
(3,888
)
 
(4,581
)
Recoveries
 
14

 
—

 
13

 
46

 
—

 
—

 
280

 
373

 
726

Provision
 
400

 
(661
)
 
(517
)
 
(69
)
 
255

 
—

 
66

 
3,289

 
2,763

Ending balance
 
$
2,939

 
$
15,298

 
$
7,334

 
$
642

 
$
4,616

 
$
4

 
$
10,161

 
$
11,809

 
$
52,803

Six months ended June 30, 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
 
(19
)
 
—

 
(19
)
 
(4
)
 
—

 
—

 
(1,112
)
 
(10,661
)
 
(11,815
)
Recoveries
 
617

 
—

 
9

 
14

 
—

 
—

 
1,461

 
1,462

 
3,563

Provision
 
(559
)
 
1,306

 
520

 
48

 
(744
)
 
(2
)
 
3,499

 
10,490

 
14,558

Ending balance
 
$
2,015

 
$
15,811

 
$
6,881

 
$
537

 
$
2,046

 
$
2

 
$
13,073

 
$
18,060

 
$
58,425

June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
904

 
$
7

 
$
465

 
$
—

 
$
—

 
$
—

 
$
4,983

 
$
501

 
$
6,860

Ending balance: collectively evaluated for impairment
 
$
1,111

 
$
15,804

 
$
6,416

 
$
537

 
$
2,046

 
$
2

 
$
8,090

 
$
17,559

 
$
51,565

Financing Receivables:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
2,189,976

 
$
790,174

 
$
1,036,985

 
$
14,696

 
$
68,676

 
$
8,165

 
$
626,524

 
$
272,949

 
$
5,008,145

Ending balance: individually evaluated for impairment
 
$
17,537

 
$
890

 
$
13,376

 
$
2,869

 
$
—

 
$
—

 
$
16,033

 
$
586

 
$
51,291

Ending balance: collectively evaluated for impairment
 
$
2,172,439

 
$
789,284

 
$
1,023,609

 
$
11,827

 
$
68,676

 
$
8,165

 
$
610,491

 
$
272,363

 
$
4,956,854

Six months ended June 30, 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
)
 
—

 
(144
)
 
(17
)
 
—

 
—

 
(1,142
)
 
(8,120
)
 
(9,454
)
Recoveries
 
68

 
—

 
27

 
51

 
—

 
—

 
1,450

 
720

 
2,316

Provision
 
—

 
(498
)
 
(71
)
 
(288
)
 
(55
)
 
(8
)
 
(998
)
 
8,222

 
6,304

Ending balance
 
$
2,939

 
$
15,298

 
$
7,334

 
$
642

 
$
4,616

 
$
4

 
$
10,161

 
$
11,809

 
$
52,803

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:
 
 
June 30, 2019
 
December 31, 2018
(in thousands)
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Total
 
Commercial
real estate
 
Commercial
construction
 
Commercial
 
Total
Grade:
 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 
Pass
 
$
703,028

 
$
66,387

 
$
570,099

 
$
1,339,514

 
$
658,288

 
$
89,974

 
$
547,640

 
$
1,295,902

Special mention
 
11,012

 
—

 
28,263

 
39,275

 
32,871

 
—

 
11,598

 
44,469

Substandard
 
76,134

 
2,289

 
19,336

 
97,759

 
57,239

 
2,290

 
28,653

 
88,182

Doubtful
 
—

 
—

 
8,826

 
8,826

 
—

 
—

 
—

 
—

Loss
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
790,174

 
$
68,676

 
$
626,524

 
$
1,485,374

 
$
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
June 30, 2019
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
4,125

 
$
661

 
$
3,763

 
$
8,549

 
$
2,181,427

 
$
2,189,976

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
790,174

 
790,174

 
—

Home equity line of credit
 
1,444

 
813

 
1,798

 
4,055

 
1,032,930

 
1,036,985

 
—

Residential land
 
—

 
—

 
376

 
376

 
14,320

 
14,696

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
68,676

 
68,676

 
—

Residential construction
 
—

 
—

 
—

 
—

 
8,165

 
8,165

 
—

Commercial
 
410

 
305

 
2,264

 
2,979

 
623,545

 
626,524

 
—

Consumer
 
4,583

 
2,536

 
2,276

 
9,395

 
263,554

 
272,949

 
—

Total loans
 
$
10,562

 
$
4,315

 
$
10,477

 
$
25,354

 
$
4,982,791

 
$
5,008,145

 
$
—

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)
 
June 30, 2019
 
December 31, 2018
Real estate:
 
 

 
 

Residential 1-4 family
 
$
13,087

 
$
12,037

Commercial real estate
 
—

 
—

Home equity line of credit
 
7,506

 
6,348

Residential land
 
818

 
436

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
13,595

 
4,278

Consumer
 
4,362

 
4,196

  Total nonaccrual loans
 
$
39,368

 
$
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
 
$
10,269

 
$
10,194

Commercial real estate
 
890

 
915

Home equity line of credit
 
11,116

 
11,597

Residential land
 
2,402

 
1,622

Commercial construction
 
—

 
—

Residential construction
 
—

 
—

Commercial
 
2,611

 
1,527

Consumer
 
59

 
62

     Total troubled debt restructured loans not included above
 
$
27,347

 
$
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:
 
 
June 30, 2019
 
Three months ended June 30, 2019
 
Six months ended June 30, 2019
(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
 
$
9,208

 
$
9,833

 
$
—

 
$
8,993

 
$
87

 
$
8,492

 
$
247

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
1,787

 
2,073

 
—

 
1,940

 
54

 
2,238

 
66

Residential land
 
2,869

 
3,072

 
—

 
2,280

 
24

 
2,158

 
50

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
4,553

 
5,774

 
—

 
4,626

 
—

 
4,299

 
—

Consumer
 
30

 
30

 
—

 
31

 
—

 
31

 
—

 
 
$
18,447

 
$
20,782

 
$
—

 
$
17,870

 
$
165

 
$
17,218

 
$
363

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
8,329

 
$
8,382

 
$
904

 
$
8,440

 
$
96

 
$
8,417

 
$
179

Commercial real estate
 
890

 
890

 
7

 
894

 
9

 
900

 
19

Home equity line of credit
 
11,589

 
11,623

 
465

 
11,665

 
152

 
11,743

 
282

Residential land
 
—

 
—

 
—

 
79

 
—

 
54

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
11,480

 
11,584

 
4,983

 
10,997

 
30

 
7,874

 
56

Consumer
 
556

 
556

 
501

 
288

 
1

 
173

 
2

 
 
$
32,844

 
$
33,035

 
$
6,860

 
$
32,363

 
$
288

 
$
29,161

 
$
538

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
17,537

 
$
18,215

 
$
904

 
$
17,433

 
$
183

 
$
16,909

 
$
426

Commercial real estate
 
890

 
890

 
7

 
894

 
9

 
900

 
19

Home equity line of credit
 
13,376

 
13,696

 
465

 
13,605

 
206

 
13,981

 
348

Residential land
 
2,869

 
3,072

 
—

 
2,359

 
24

 
2,212

 
50

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
16,033

 
17,358

 
4,983

 
15,623

 
30

 
12,173

 
56

Consumer
 
586

 
586

 
501

 
319

 
1

 
204

 
2

 
 
$
51,291

 
$
53,817

 
$
6,860

 
$
50,233

 
$
453

 
$
46,379

 
$
901


 
 
December 31, 2018
 
Three months ended June 30, 2018
 
Six months ended June 30, 2018
(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
 
$
7,822

 
$
8,333

 
$
—

 
$
8,900

 
$
50

 
$
8,699

 
$
157

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
2,743

 
3,004

 
—

 
2,374

 
7

 
2,037

 
12

Residential land
 
2,030

 
2,228

 
—

 
1,132

 
5

 
1,150

 
10

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
3,722

 
4,775

 
—

 
3,026

 
10

 
2,691

 
20

Consumer
 
32

 
32

 
—

 
15

 
—

 
11

 
—

 
 
$
16,349

 
$
18,372

 
$
—

 
$
15,447

 
$
72

 
$
14,588

 
$
199

With an allowance recorded
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
8,672

 
$
8,875

 
$
876

 
$
8,778

 
$
97

 
$
8,953

 
$
190

Commercial real estate
 
915

 
915

 
7

 
997

 
10

 
1,003

 
21

Home equity line of credit
 
12,057

 
12,086

 
701

 
10,420

 
96

 
9,080

 
177

Residential land
 
29

 
29

 
6

 
40

 
1

 
58

 
3

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
1,618

 
1,618

 
628

 
1,738

 
30

 
1,848

 
66

Consumer
 
57

 
57

 
4

 
58

 
1

 
58

 
2

 
 
$
23,348

 
$
23,580

 
$
2,222

 
$
22,031

 
$
235

 
$
21,000

 
$
459

Total
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential 1-4 family
 
$
16,494

 
$
17,208

 
$
876

 
$
17,678

 
$
147

 
$
17,652

 
$
347

Commercial real estate
 
915

 
915

 
7

 
997

 
10

 
1,003

 
21

Home equity line of credit
 
14,800

 
15,090

 
701

 
12,794

 
103

 
11,117

 
189

Residential land
 
2,059

 
2,257

 
6

 
1,172

 
6

 
1,208

 
13

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
5,340

 
6,393

 
628

 
4,764

 
40

 
4,539

 
86

Consumer
 
89

 
89

 
4

 
73

 
1

 
69

 
2

 
 
$
39,697

 
$
41,952

 
$
2,222

 
$
37,478

 
$
307

 
$
35,588

 
$
658

*
Since loan was classified as impaired.
Schedule of loan modifications
Loan modifications that occurred during the second quarters and first six months of 2019 and 2018 were as follows:
Loans modified as a TDR
 
Three months ended June 30, 2019
 
Six months ended June 30, 2019
(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
 
1

 
$
469

 
$
154

 
9

 
$
1,501

 
$
161

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
2

 
311

 
59

 
3

 
432

 
83

Residential land
 
2

 
825

 
—

 
2

 
825

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
2

 
1,317

 
133

 
3

 
1,507

 
150

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
 
7

 
$
2,922

 
$
346

 
17

 
$
4,265

 
$
394

 
 
 
 
 
 
 
 
 
 
 
 
 
Loans modified as a TDR
 
Three months ended June 30, 2018
 
Six months ended June 30, 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
 
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

 
—

 
—

Home equity line of credit
 
20

 
3,260

 
578

 
37

 
5,293

 
953

Residential land
 
—

 
—

 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

 
—

 
—

Commercial
 
2

 
43

 
43

 
7

 
2,200

 
43

Consumer
 
—

 
—

 
—

 
—

 
—

 
—

 
 
22

 
$
3,303

 
$
621

 
44

 
$
7,493

 
$
996


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.

There were no loans modified in TDRs that experienced a payment default of 90 days or more during the second quarter and first six months of 2019. Loans modified in TDRs that experienced a payment default of 90 days or more during the second quarter and first six months of 2018, and for which the payment of default occurred within one year of the modification, were as follows:
 
 
Three months ended June 30, 2018
 
Six months ended June 30, 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
 
—

 
$
—

 
—

 
$
—

Commercial real estate
 
—

 
—

 
—

 
—

Home equity line of credit
 
1

 
100

 
2

 
181

Residential land
 
—

 
—

 
—

 
—

Commercial construction
 
—

 
—

 
—

 
—

Residential construction
 
—

 
—

 
—

 
—

Commercial
 
1

 
291

 
1

 
291

Consumer
 
—

 
—

 
—

 
—

 
 
2

 
$
391

 
3

 
$
472

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
June 30, 2019
 
$
19,418

 
$
(11,315
)
 
$
—

 
$
8,103

December 31, 2018
 
18,556

 
(10,494
)
 
—

 
8,062



Changes related to MSRs were as follows:
 
 
Three months ended June 30
 
Six months ended June 30
(in thousands)
 
2019
 
2018
 
2019
 
2018
Mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
$
7,897

 
$
8,541

 
$
8,062

 
$
8,639

Amount capitalized
 
632

 
392

 
862

 
727

Amortization
 
(426
)
 
(424
)
 
(821
)
 
(857
)
Other-than-temporary impairment
 
—

 
—

 
—

 
—

Carrying amount before valuation allowance
 
8,103

 
8,509

 
8,103

 
8,509

Valuation allowance for mortgage servicing rights
 
 
 
 
 
 
 
 
Beginning balance
 
—

 
—

 
—

 
—

Provision (recovery)
 
—

 
—

 
—

 
—

Other-than-temporary impairment
 
—

 
—

 
—

 
—

Ending balance
 
—

 
—

 
—

 
—

Net carrying value of mortgage servicing rights
 
$
8,103

 
$
8,509

 
$
8,103

 
$
8,509
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)
 
June 30, 2019

 
December 31, 2018

Unpaid principal balance
 
$
1,200,017

 
$
1,188,514

Weighted average note rate
 
4.01
%
 
3.98
%
Weighted average discount rate
 
9.3
%
 
10.0
%
Weighted average prepayment speed
 
10.3
%
 
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
June 30, 2019
 
 
 
 
 
 
 
 
 
 
Home equity line of credit
 
$
199

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Residential land
 
25

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Total loans
 
$
224

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 
June 30, 2019

 
December 31, 2018

Prepayment rate:
 
 
 
 
  25 basis points adverse rate change
 
$
(843
)
 
$
(250
)
  50 basis points adverse rate change
 
(1,786
)
 
(566
)
Discount rate:
 
 
 
 
  25 basis points adverse rate change
 
(108
)
 
(139
)
  50 basis points adverse rate change
 
(215
)
 
(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
 
 

 
 

 
 

June 30, 2019
 
$
111

 
$
—

 
$
111

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
 
 
 
 
 
 
June 30, 2019
 
$
111

 
$
128

 
$
—

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:
 
 
June 30, 2019
 
December 31, 2018
(in thousands)
 
Notional amount
 
Fair value
 
Notional amount
 
Fair value
Interest rate lock commitments
 
$
40,392

 
$
473

 
$
10,180

 
$
91

Forward commitments
 
41,640

 
(115
)
 
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
 
June 30, 2019
 
December 31, 2018
(in thousands)
 
 Asset derivatives
 
 Liability
derivatives
 
 Asset derivatives
 
 Liability
derivatives
Interest rate lock commitments
 
$
473

 
$
—

 
$
91

 
$
—

Forward commitments
 
10

 
125

 
—

 
43

 
 
$
483

 
$
125

 
$
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 June 30
 
Six months ended June 30
(in thousands)
 
 
2019
 
2018
 
2019
 
2018
Interest rate lock commitments
 
Mortgage banking income
 
$
11

 
$
(7
)
 
$
382

 
$
117

Forward commitments
 
Mortgage banking income
 
46

 
(2
)
 
(72
)
 
(38
)
 
 
 
 
$
57

 
$
(9
)
 
$
310

 
$
79