FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2014

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and Liabilities Measured on a Recurring Basis: Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at September 30, 2014 Using:
	September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities’ securities	$	231,639	$	—	$	231,639	$	—
Mortgage-backed GSE securities: residential		275,486		—		275,486		—
Interest rate caps		268		—		—		268
Purchased certificate of deposit option		557		—		557		—
Liabilities
Written certificate of deposit option		557		—		557		—

			Fair Value Measurements at December 31, 2013 Using:
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities’ securities	$	222,293	$	—	$	222,293	$	—
Equity securities		445		445		—		—
Mortgage-backed GSE securities: residential		288,268		—		288,268		—
Interest rate caps		546		—		—		546
Purchased certificate of deposit option		155		—		155		—
Liabilities
Written certificate of deposit option		155		—		155		—

Reconciliation of All Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 and 2013:

	Interest Rate Caps
	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	546		$	436
Total gains (losses) for the period
Included in other income		111			547
Included in other comprehensive income		—			—
Purchases		—			—
Amortization		(389	)		(389	)
Sales		—			—
Balance of recurring Level 3 assets at end of period	$	268		$	594

Quantitative Information About Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Nonrecurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at September 30, 2014:

		Fair Value	Valuation Technique(s)	Unobservable Input(s)	Range (Average)
		(Dollars in thousands)
Impaired loans:
Permanent real estate loans	$	2,751	Sales comparison approach	Adjustment for differences between comparable sales	5.00%-20.00% (12.50%)
			Income approach	Adjustment for differences in net operating income Capitalization rate	4.70%-11.94% (9.50%)
Construction loans		1,899	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-20.00% (10.00%)
Consumer loans		249	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.00% (5.00%)
Other real estate owned, net:
Permanent real estate loans		1,073	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-51.10% (26.83%)
Construction loans		1,698	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-53.10% (22.20%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2013:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Average)
		(Dollars in thousands)
Impaired loans:
Permanent real estate loans	$	2,219	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-56.90% (11.78%)
			Income approach	Adjustment for differences in net operating income Capitalization rate	3.95%-14.62% (9.41%)
Construction loans		1,587	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-25.00% (11.90%)
Consumer loans		339	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.00% (5.00%)
Other real estate owned, net:
Permanent real estate loans		1,939	Sales comparison approach	Adjustment for differences between comparable sales	6.00%-46.53% (17.76%)
Construction loans		2,310	Sales comparison approach	Adjustment for differences between comparable sales	6.54%-26.63% (9.24%)

Assets and Liabilities Measured on Non-recurring Basis

Assets and Liabilities Measured on a Non-Recurring Basis: Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements at September 30, 2014 Using:
	September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Permanent real estate loans	$	2,751	$	—	$	—	$	2,751
Construction loans		1,899		—		—		1,899
Consumer loans		249		—		—		249
Mortgage servicing assets		228		—		228		—
Other real estate owned, net:
Permanent real estate		1,073		—		—		1,073
Construction		1,698		—		—		1,698

			Fair Value Measurements at December 31, 2013 Using:
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Permanent real estate loans	$	2,219	$	—	$	—	$	2,219
Construction loans		1,587		—		—		1,587
Consumer loans		339		—		—		339
Other real estate owned, net:
Permanent real estate loans		1,939		—		—		1,939
Construction loans		2,310		—		—		2,310

Carrying Value and Estimated Fair Values of Financial Instruments

In accordance with U.S. GAAP, the carrying value and estimated fair values of financial instruments at September 30, 2014 and December 31, 2013, were as follows:

				Fair Value Measurements at September 30, 2014 Using:
	September 30, 2014 Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	29,590		$	29,590		$	—		$	—
Available for sale securities		507,125			—			507,125			—
Loans held for sale		10,567			—			10,873			—
Loans, net		1,119,955			—			—			1,131,377
FHLB stock		18,068			n/a			n/a			n/a
Accrued interest receivable		5,256			—			1,941			3,315
Interest rate caps		268			—			—			268
Purchased certificate of deposit option		557			—			557			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(899,603	)		(899,603	)		—			—
Certificates of deposit		(446,774	)		—			(452,727	)		—
FHLB advances		(138,000	)		—			(141,993	)		—
Repurchase agreements and other		(60,563	)		—			(64,335	)		—
Advance payments by borrowers for taxes and insurance		(13,350	)		(13,350	)		—			—
Accrued interest payable		(380	)		—			(380	)		—
Written certificate of deposit option		(557	)		—			(557	)		—

				Fair Value Measurements at December 31, 2013 Using:
	December 31, 2013 Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	77,331		$	77,331		$	—		$	—
Available for sale securities		511,006			445			510,561			—
Loans held for sale		4,838			—			4,866			—
Loans, net		1,029,192			—			—			1,031,491
FHLB stock		26,464			n/a			n/a			n/a
Accrued interest receivable		5,694			—			2,584			3,110
Interest rate caps		546			—			—			546
Purchased certificate of deposit option		155			—			155			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(899,481	)		(899,481	)		—			—
Certificates of deposit		(492,271	)		—			(500,651	)		—
FHLB advances		(50,000	)		—			(55,327	)		—
Repurchase agreements and other		(90,578	)		—			(98,462	)		—
Advance payments by borrowers for taxes and insurance		(20,060	)		(20,060	)		—			—
Accrued interest payable		(550	)		—			(550	)		—
Written certificate of deposit option		(155	)		—			(155	)		—

Interest Rate Caps [Member]

Quantitative Information About Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Nonrecurring Basis

The following table presents quantitative information about recurring Level 3 fair value measurements at September 30, 2014:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
	(Dollars in thousands)
Interest rate caps	$	268	Discounted cash flow	Discount rate	0.40%-1.18%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2013:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
	(Dollars in thousands)
Interest rate caps	$	546	Discounted cash flow	Discount rate	0.35%-1.18%