FAIR VALUE MEASUREMENT (Tables)

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	March 31,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Trading securities	$	666	$	235	$	431	$	—
Available for sale securities
U.S. Treasury and agency securities		97,093		—		97,093		—
States and municipalities		31,310		—		31,310		—
Corporate debt securities		2,026		—		2,026		—
Collateralized mortgage obligations		33,569		—		33,569		—
Mortgage-backed securities		73,423		—		73,423		—
Loans held for sale, at fair value		77,676		—		11,880		65,796
Purchased certificate of deposit option		328		—		328		—
Interest rate swaps		81		—		81		—
Liabilities
Written certificate of deposit option		328		—		328		—
Interest rate swaps		90		—		90		—

			Fair Value Measurements at December 31, 2018 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Trading securities	$	364	$	364		—		—
Available for sale securities
U.S. Treasury and agency securities		95,581		—		95,581		—
States and municipalities		47,746		—		47,746		—
Corporate debt securities		2,004		—		2,004		—
Collateralized mortgage obligations		22,108		—		22,108		—
Mortgage-backed securities		74,204		—		74,204		—
Loans held for sale, at fair value		91,472		—		11,221		80,251
Purchased certificate of deposit option		261		—		261		—
Interest rate swaps		56		—		56		—
Liabilities
Written certificate of deposit option		261		—		261		—
Interest rate swaps		62		—		62		—

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 three months ended March 31, 2019 and 2018.  

	Loans Held for Sale, At Fair Value
	For the Three Months Ended March 31,
	2019			2018
	(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	80,251		$	65,016
Total gains (losses) for the period
Included in change in fair value of loans held for sale		1,069			(2,158	)
Included in other comprehensive income		—			—
Originations/Draws on construction perm loans		23,097			26,811
Amortization		—			—
Sales		(38,621	)		(25,117	)
Balance of recurring Level 3 assets at end of period	$	65,796		$	64,552

Assets and Liabilities Measured at Fair Value 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 March 31, 2019 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	March 31,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans
Nonresidential	$	1,527	$	—	$	—	$	1,527
Secured Commercial		310		—		—		310
Residential loans
One-to four-family residential		241		—		—		241
Consumer loans
Auto		8		—		—		8
Marine		105		—		—		105
Recreational vehicle		342		—		—		342
Mortgage servicing rights		3,126		—		3,126		—
Other real estate owned, net
Commercial loans
Construction loans		73		—		—		73
Residential loans
One-to four-family residential		102		—		—		102

			Fair Value Measurements at December 31, 2018 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans
Secured	$	419	$	—	$	—	$	419
Residential loans
One-to four-family residential		540		—		—		540
Consumer loans
Auto		8		—		—		8
Mortgage servicing rights		2,990		—		2,990		—
Other real estate owned, net
Commercial loans
Auto		181		—		—		181
Residential loans
One-to four-family residential		121		—		—		121

Fair Value Option for Newly Originated Residential Mortgage and Permanent Construction Loans Held for Sale

The Company has elected the fair value option for newly originated residential mortgage and permanent construction loans held for sale.  These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans.  Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.  None of these loans are 90 or more days past due nor on nonaccrual status as of March 31, 2019 and December 31, 2018.  

	March 31, 2019		December 31, 2018
	(Dollars in thousands)
Aggregate fair value	$	77,676	$	91,472
Contractual balance		72,856		87,731
Gain		4,820		3,741

Amount of Gains and Losses from Changes in Fair Value Included in Earnings

The total amount of gains and losses from changes in fair value included in earnings for the three months ended March 31, 2019 and 2018 for loans held for sale, at fair value were:

	For the Three Months Ended
	March 31, 2019		March 31, 2018
	(Dollars in thousands)
Interest  income	$	—	$	—
Interest expense		—		—
Change in fair value		1,079		(2,482	)
Total change in fair value	$	1,079	$	(2,482	)

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 March 31, 2019 and December 31, 2018, were as follows:

				Fair Value Measurements at March 31, 2019 Using:
	March 31,
	2019
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	77,197		$	77,197		$	—		$	—
Trading securities		666			235			431			—
Available for sale securities		237,421			—			237,421			—
Held to maturity securities		75,760			—			70,862			3,886
Loans held for sale, at fair value		77,676			—			11,880			65,796
Loans, net		2,215,549			—			—			2,183,520
Purchased certificate of deposit option		328			—			328			—
Interest rate swaps		81			—			81			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,398,123	)		(1,398,123	)		—			—
Certificates of deposit		(891,680	)		—			(888,509	)		—
FHLB advances		(204,000	)		—			(204,000	)		—
Repurchase agreements and other		(254	)		—			(250	)		—
Written certificate of deposit option		(328	)		—			(328	)		—
Interest rate swaps		(90	)		—			(90	)		—

				Fair Value Measurements at December 31, 2018 Using:
	December 31,
	2018
	Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	60,985		$	60,985		$	—		$	—
Trading securities		364			364			—			—
Available for sale securities		241,643			—			241,643			—
Held to maturity securities		77,491			—			71,206			3,869
Loans held for sale, at fair value		91,472			—			11,221			80,251
Loans, net		2,176,842			—			—			2,138,319
Purchased certificate of deposit option		261			—			261			—
Interest rate swaps		56						56			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,305,439	)		(1,305,439	)		—			—
Certificates of deposit		(907,781	)		—			(904,198	)		—
FHLB advances		(243,000	)		—			(243,000	)		—
Repurchase agreements and other		(224	)		—			(213	)		—
Written certificate of deposit option		(261	)		—			(261	)		—
Interest rate swaps		(62	)		—			(62	)		—

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]

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

The following table presents quantitative information about recurring Level 3 fair value measurements at March 31, 2019:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Construction loans held for sale	$	65,796	Comparable sales	Time discount	0.00-1.13%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2018:

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Construction loans held for sale	$	80,251	Comparable sales	Time discount	0.00-1.05%

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]

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

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at March 31, 2019:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired loans:
Commercial loans
Nonresidential	$	1,527	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00%  (15.00%)
Secured Commercial		310	Sales comparison approach	Adjustment for differences between comparable sales	0.00-35.00%  (15.00%)
Residential loans
One-to four-family residential		241	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.77%  (4.27%)
Consumer loans
Auto		8	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85%  (8.93%)
Marine		105	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85%  (8.93%)
Recreational vehicle		342	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-17.85%  (8.93%)
Other real estate owned, net
Commercial loans
Construction loans		73	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-50.00%  (45.85%)
Residential loans
One-to four-family residential		102	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-14.22%  (14.22%)

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, 2018:

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Impaired loans:
Commercial loans
Secured		419	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-64.00%  (16.00%)
Residential loans
One-to four-family residential		540	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.77%  (4.27%)
Other real estate owned:
Commercial loans
Construction loans		181	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-52.90%  (52.41%)
Residential loans
One-to four-family residential		121	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-13.43%  (13.43%)