Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

The table below presents the financial instruments carried at fair value by the valuation hierarchy:



	Level 1		Level 2		Level 3		Total
	(In thousands)
December 31, 2015
Financial assets
Investment securities available for sale:
U.S. government sponsored and federal agency obligations	$	—	$	3,136	$	—	$	3,136
Mortgage backed securities	—		338,384		—		338,384
Other securities	3		—		—		3
Loans held for sale	—		10,323		—		10,323
Other assets:
Interest rate lock commitments	—		189		—		189
Interest rate swap contacts	—		2,081		—		2,081
Total	$	3	$	354,113	$	—	$	354,116
Financial liabilities
Other liabilities:
Interest rate lock commitments	$	—	$	6	$	—	$	6
Forward contracts to sell mortgage loans	—		90		—		90
Interest rate swap contacts	—		2,081		—		2,081
Total	$	—	$	2,177	$	—	$	2,177



	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
Mortgage backed securities	—		291,335		—		291,335
Other securities	3		—		—		3
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 following is a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):



	Year Ended December 31, 2014
	(In thousands)
Non-agency CMOs
Beginning balance	$	6,208
Total realized/unrealized gains (losses):
Included in earnings	(37		)
Included in other comprehensive income	212
Included in earnings as unrealized other-than-temporary impairment	(64		)
Included in earnings as realized other-than-temporary impairment	222
Principal repayments	(1,126		)
Sales	(5,388		)
Transfers out of level 3	(27		)
Ending balance	$	—

The following table presents such assets carried on the consolidated balance sheets by caption and by level within the fair value hierarchy:



	Level 1		Level 2		Level 3		Total
	(In thousands)
December 31, 2015
Impaired loans, with an allowance recorded, net	$	—	$	—	$	18,838	$	18,838
Mortgage servicing rights	—		—		5,789		5,789
Other real estate owned	—		—		20,371		20,371
Total assets at fair value	$	—	$	—	$	44,998	$	44,998
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:



	December 31, 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 11.31%; weighted average discount rate 11.35%.
Other real estate owned	Appraised Values	External appraised values less selling and commission cost of 15% to 35%.

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



	December 31,
	2015				2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	75,267	$	75,267	$	147,273	$	147,273
Investment securities available for sale	341,523		341,523		294,599		294,599
Investment securities held to maturity	15,492		15,422		—		—
Loans held for sale	10,323		10,323		6,594		6,594
Loans held for investment, net	1,614,953		1,579,582		1,524,439		1,496,791
Mortgage servicing rights	18,942		19,252		19,404		19,590
Federal Home Loan Bank stock	11,940		11,940		11,940		11,940
Accrued interest receivable	7,827		7,827		7,627		7,627
Interest rate lock commitments	189		189		154		154
Unused commitments	—		—		—		—
Forward contracts to sell mortgage loans (1)	—		—		2		2
Interest rate swap contracts	2,081		2,081		—		—
Financial liabilities:
Non-maturity deposits	1,450,404		1,450,404		1,366,958		1,366,958
Deposits with stated maturities	390,320		388,285		447,213		445,938
Borrowed funds	12,562		12,837		13,752		14,077
Accrued interest payable	325		325		316		316
Interest rate lock commitments	6		6		14		14
Unused commitments	—		—		—		—
Forward contracts to sell mortgage loans (1)	90		90		174		174
Interest rate swap contracts	2,081		2,081		—		—


(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 Topic 815-45.