Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

The table below presents the financial instruments carried at fair value by the valuation hierarchy (as described above):



	Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2015
Financial assets
Investment securities available for sale:
U.S. government sponsored and federal agency obligations	$	—	$	3,181	$	—	$	3,181
Government sponsored agency mortgage-backed securities	—		203,946		—		203,946
GNMA mortgage-backed securities	—		134,361		—		134,361
Other securities	3		24		—		27
Loans held for sale	—		8,408		—		8,408
Other assets:
Interest rate lock commitments	—		473		—		473
Forward contracts to sell mortgage loans	—		—		—		—
Interest rate swap contracts	—		1,833		—		1,833
Total	$	3	$	352,226	$	—	$	352,229
Financial liabilities
Other liabilities:
Interest rate lock commitments	$	—	$	1	$	—	$	1
Forward contracts to sell mortgage loans	—		380		—		380
Interest rate swap contracts	—		1,833		—		1,833
Total	$	—	$	2,214	$	—	$	2,214



	Level 1		Level 2		Level 3		Total
	(In thousands)
December 31, 2014
Financial assets
Investment securities available for sale:
U.S. government sponsored and federal agency obligations	$	—	$	3,261	$	—	$	3,261
Government sponsored agency mortgage-backed securities	—		120,621		—		120,621
GNMA mortgage-backed securities	—		170,687		—		170,687
Other securities	3		27		—		30
Loans held for sale	—		6,594		—		6,594
Other assets:
Interest rate lock commitments	—		154		—		154
Forward contracts to sell mortgage loans	—		2		—		2
Total	$	3	$	301,346	$	—	$	301,349
Financial liabilities
Other liabilities:
Interest rate lock commitments	$	—	$	14	$	—	$	14
Forward contracts to sell mortgage loans	—		174		—		174
Total	$	—	$	188	$	—	$	188

The significant inputs used to price GNMA mortgage-backed securities are as follows:



	September 30, 2015						December 31, 2014
	From		To		Weighted Average		From		To		Weighted Average
Coupon rate	2.0	%	4.6	%	2.5	%	2.0	%	4.6	%	2.5	%
Duration (in years)	0.1		5.3		3.3		0.5		5.4		3.5
PSA prepayment speed (in months)	208		325		268		142		399		259

The following table presents such assets carried on the Consolidated Balance Sheet by caption and by level within the fair value hierarchy:



	Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2015
Impaired loans, with an allowance recorded, net	$	—	$	—	$	24,654	$	24,654
Mortgage servicing rights	—		—		5,879		5,879
Other real estate owned	—		—		24,612		24,612
Total assets at fair value	$	—	$	—	$	55,145	$	55,145
December 31, 2014
Impaired loans, with an allowance recorded, net	$	—	$	—	$	32,331	$	32,331
Mortgage servicing rights	—		—		18,918		18,918
Other real estate owned	—		—		35,491		35,491
Total assets at fair value	$	—	$	—	$	86,740	$	86,740

The significant inputs for those assets measured at fair value on a nonrecurring basis are as follows:



	September 30, 2015
	Method	Inputs
Impaired loans, with an allowance recorded, net	Appraised Values	External appraised values- adjustments made to values due to management factors including age of appraisal, age of comparables, known changes in the market and in the collateral and selling and commission cost of 15 % to 35%.

Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment speed 11.27%; weighted average discount rate 11.36%.

Other real estate owned	Appraised Values	External appraised values- adjustments made to values due to management factors including age of appraisal, age of comparables, known changes in the market and in the collateral and selling and commission cost of 15 % to 35%.

The carrying amount and fair value of the Company’s financial instruments consist of the following:



	September 30, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	155,888	$	155,888	$	147,273	$	147,273
Investment securities available for sale	341,515		341,515		294,599		294,599
Investment securities held to maturity	15,492		15,477		—		—
Loans held for sale	8,408		8,408		6,594		6,594
Loans held for investment, net	1,519,658		1,501,024		1,524,439		1,496,791
Mortgage servicing rights	19,021		19,208		19,404		19,590
Federal Home Loan Bank stock	11,940		11,940		11,940		11,940
Accrued interest receivable	7,443		7,443		7,627		7,627
Interest rate lock commitments	473		473		154		154
Unused commitments	—		—		—		—
Forward contracts to sell mortgage loans (1)	—		—		2		2
Interest rate swap contracts	1,833		1,833		—		—
Financial liabilities:
Non-maturity deposits	1,427,607		1,427,607		1,366,958		1,366,958
Deposits with stated maturities	402,309		401,664		447,213		445,938
Borrowed funds	12,581		12,998		13,752		14,077
Accrued interest payable	374		374		316		316
Interest rate lock commitments	1		1		14		14
Unused commitments	—		—		—		—
Forward contracts to sell mortgage loans (1)	380		380		174		174
Interest rate swap contracts	1,833		1,833		—		—


(1)	The Company, as of the quarter ended September 30, 2015, has elected to offset the fair value of individual forward sale contracts and present a net amount on the Consolidated Balance Sheets in accordance with ASC 815-45, Derivatives and Hedging.