Edgar Filing: Territorial Bancorp Inc.

tbnk_Current folio_10Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2016

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 1-34403

TERRITORIAL BANCORP INC.

(Exact Name of Registrant as Specified in Charter)

Maryland		26-4674701
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

1132 Bishop Street, Suite 2200, Honolulu, Hawaii		96813
(Address of Principal Executive Offices)		(Zip Code)

(808) 946-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 9,673,955 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of April 30, 2016.

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TERRITORIAL BANCORP INC.

Form 10-Q Quarterly Report

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PART I

ITEM 1.	FINANCIAL STATEMENTS	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	35

PART II

ITEM 1.	LEGAL PROCEEDINGS	36
ITEM 1A.	RISK FACTORS	36
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36
ITEM 4.	MINE SAFETY DISCLOSURES	36
ITEM 5.	OTHER INFORMATION	36
ITEM 6.	EXHIBITS	36

SIGNATURES		37

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PART I

ITEM 1. FINANCIAL STATEMENTS

TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands, except share data)


	March 31,		December 31,
	2016		2015
ASSETS
Cash and cash equivalents	$	81,988	$	65,919
Investment securities held to maturity, at amortized cost (fair value of $494,514 and $497,982 at March 31, 2016 and December 31, 2015, respectively)		480,296		493,059
Loans held for sale		603		2,139
Loans receivable, net		1,214,762		1,188,649
Federal Home Loan Bank stock, at cost		4,945		4,790
Federal Reserve Bank stock, at cost		3,042		3,022
Accrued interest receivable		4,803		4,684
Premises and equipment, net		4,619		4,903
Bank-owned life insurance		42,575		42,328
Current income taxes receivable		1,311		—
Deferred income tax assets, net		8,758		9,378
Prepaid expenses and other assets		2,352		2,270
Total assets	$	1,850,054	$	1,821,141

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	1,474,925	$	1,445,103
Advances from the Federal Home Loan Bank		69,000		69,000
Securities sold under agreements to repurchase		55,000		55,000
Accounts payable and accrued expenses		23,276		25,178
Current income taxes payable		1,805		2,095
Advance payments by borrowers for taxes and insurance		3,021		5,124
Total liabilities		1,627,027		1,601,500

Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 50,000,000 shares, no shares issued or outstanding		—		—
Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding 9,675,955 and 9,659,685 shares at March 31, 2016 and December 31, 2015, respectively		97		96
Additional paid-in capital		71,259		70,118
Unearned ESOP shares		(6,239)		(6,361)
Retained earnings		163,163		161,024
Accumulated other comprehensive loss		(5,253)		(5,236)
Total stockholders’ equity		223,027		219,641
Total liabilities and stockholders’ equity	$	1,850,054	$	1,821,141

See accompanying notes to consolidated financial statements.

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended
	March 31,
	2016		2015
Interest and dividend income:
Loans	$	12,361	$	10,686
Investment securities		3,875		4,523
Other investments		144		79
Total interest and dividend income		16,380		15,288

Interest expense:
Deposits		1,408		1,134
Advances from the Federal Home Loan Bank		257		70
Securities sold under agreements to repurchase		218		312
Total interest expense		1,883		1,516

Net interest income		14,497		13,772
Provision for loan losses		28		194

Net interest income after provision for loan losses		14,469		13,578

Noninterest income:
Service fees on loan and deposit accounts		456		460
Income on bank-owned life insurance		247		255
Gain on sale of investment securities		—		236
Gain on sale of loans		61		129
Other		122		166
Total noninterest income		886		1,246

Noninterest expense:
Salaries and employee benefits		5,426		5,099
Occupancy		1,420		1,437
Equipment		906		945
Federal deposit insurance premiums		225		209
Other general and administrative expenses		1,082		1,214
Total noninterest expense		9,059		8,904

Income before income taxes		6,296		5,920
Income taxes		2,512		2,394
Net income	$	3,784	$	3,526

Basic earnings per share	$	0.42	$	0.39
Diluted earnings per share	$	0.41	$	0.38
Cash dividends declared per common share	$	0.18	$	0.16
Basic weighted-average shares outstanding		9,034,919		9,120,720
Diluted weighted-average shares outstanding		9,305,615		9,319,814

See accompanying notes to consolidated financial statements.

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)


	Three Months Ended
	March 31,
	2016		2015

Net income	$	3,784	$	3,526

Change in unfunded pension liability		(21)		—
Change in unrealized loss on securities		2		9
Change in noncredit related loss on trust preferred securities		2		31
Other comprehensive income (loss), net of tax		(17)		40
Comprehensive income	$	3,767	$	3,566

See accompanying notes to consolidated financial statements.

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)

(Dollars in thousands, except per share data)


									Accumulated
			Additional		Unearned				Other		Total
	Common		Paid-in		ESOP		Retained		Comprehensive		Stockholders’
	Stock		Capital		Shares		Earnings		Income (Loss)		Equity
Balances at December 31, 2014	$	99	$	75,229	$	(6,851)	$	153,289	$	(5,388)	$	216,378

Net income		—		—		—		3,526		—		3,526
Other comprehensive income		—		—		—		—		40		40
Cash dividends declared ($0.16 per share)		—		—		—		(1,497)		—		(1,497)
Share-based compensation		—		738		—		—		—		738
Allocation of 12,233 ESOP shares		—		145		123		—		—		268
Repurchase of 198,105 shares of company common stock		(2)		(4,306)		—		—		—		(4,308)
Balances at March 31, 2015	$	97	$	71,806	$	(6,728)	$	155,318	$	(5,348)	$	215,145

Balances at December 31, 2015	$	96	$	70,118	$	(6,361)	$	161,024	$	(5,236)	$	219,641

Net income		—		—		—		3,784		—		3,784
Other comprehensive loss		—		—		—		—		(17)		(17)
Cash dividends declared ($0.18 per share)		—		—		—		(1,645)		—		(1,645)
Share-based compensation		—		661		—		—		—		661
Allocation of 12,233 ESOP shares		—		198		122		—		—		320
Exercise of 16,270 options of common stock		1		282		—		—		—		283
Balances at March 31, 2016	$	97	$	71,259	$	(6,239)	$	163,163	$	(5,253)	$	223,027

See accompanying notes to consolidated financial statements.

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)


	Three Months Ended
	March 31,
	2016		2015
Cash flows from operating activities:
Net income	$	3,784	$	3,526
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		28		194
Depreciation and amortization		302		339
Deferred income tax expense (benefit)		596		(258)
Amortization of fees, discounts, and premiums		(160)		(73)
Origination of loans held for sale		(10,242)		(15,324)
Proceeds from sales of loans held for sale		10,952		13,335
Gain on sale of loans, net		(61)		(129)
Gain on sale of investment securities held to maturity		—		(236)
ESOP expense		320		268
Share-based compensation expense		661		738
Increase in accrued interest receivable		(119)		(147)
Net increase in bank-owned life insurance		(247)		(255)
Net increase in prepaid expenses and other assets		(82)		(316)
Net increase (decrease) in accounts payable and accrued expenses		(1,902)		3,125
Net decrease in advance payments by borrowers for taxes and insurance		(2,103)		(1,206)
Net increase in income taxes receivable		(1,311)		—
Net increase (decrease) in income taxes payable		(290)		225

Net cash from operating activities		126		3,806
Cash flows from investing activities:
Purchases of investment securities held to maturity		(1,323)		(1,204)
Principal repayments on investment securities held to maturity		14,107		20,510
Proceeds from sale of investment securities held to maturity		—		2,580
Loan originations, net of principal repayments on loans receivable		(25,108)		(70,532)
Purchases of FHLB stock		(155)		—
Proceeds from redemption of FHLB stock		—		122
Purchases of Federal Reserve Bank stock		(20)		(24)
Purchases of premises and equipment		(18)		(155)

Net cash from investing activities		(12,517)		(48,703)

(Continued)

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)


	Three Months Ended
	March 31,
	2016		2015
Cash flows from financing activities:
Net increase in deposits	$	29,822	$	21,782
Proceeds from advances from the Federal Home Loan Bank		—		22,000
Repayments of advances from the Federal Home Loan Bank		—		(10,000)
Proceeds from securities sold under agreements to repurchase		—		25,000
Repayments of securities sold under agreements to repurchase		—		(37,000)
Proceeds from exercise of stock options		283		—
Repurchases of common stock		—		(4,674)
Cash dividends paid		(1,645)		(1,497)

Net cash from financing activities		28,460		15,611
Net increase (decrease) in cash and cash equivalents		16,069		(29,286)
Cash and cash equivalents at beginning of the year		65,919		75,060
Cash and cash equivalents at end of the year	$	81,988	$	45,774
Supplemental disclosure of cash flow information:
Cash paid for:
Interest on deposits and borrowings	$	1,871	$	1,532
Income taxes		3,517		2,350

Supplemental disclosure of noncash investing and financing activities:
Investments purchased, not settled	$	—	$	1,166
Company stock repurchased prior year, settled current year		—		366

See accompanying notes to consolidated financial statements.

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TERRITORIAL BANCORP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements of Territorial Bancorp Inc. (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements and notes should be read in conjunction with the Company’s consolidated financial statements and notes thereto filed as part of the Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, all adjustments necessary for a fair presentation have been made and consist only of normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year.

(2) Organization

On November 4, 2008, the Board of Directors of Territorial Mutual Holding Company (MHC) approved a plan of conversion and reorganization under which the MHC would convert from a mutual holding company to a stock holding company. The conversion to a stock holding company was approved by the depositors and borrowers of Territorial Savings Bank and the Office of Thrift Supervision (OTS) and included the filing of a registration statement with the U.S. Securities and Exchange Commission. Upon the completion of the conversion and reorganization on July 10, 2009, Territorial Mutual Holding Company and Territorial Savings Group, Inc. ceased to exist as separate legal entities and Territorial Bancorp Inc. became the holding company for Territorial Savings Bank.

Upon completion of the conversion and reorganization, a special “liquidation account” was established in an amount equal to the total equity of Territorial Mutual Holding Company as of December 31, 2008. The liquidation account is to provide eligible account holders and supplemental eligible account holders who maintain their deposit accounts with Territorial Savings Bank after the conversion with a liquidation interest in the unlikely event of the complete liquidation of Territorial Savings Bank after the conversion. The balance of the liquidation account at December 31, 2015 was $13.5 million.

On June 25, 2014, Territorial Savings Bank converted from a federal savings bank to a Hawaii state-chartered savings bank. On July 10, 2014, Territorial Savings Bank became a member of the Federal Reserve System.

(3) Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) amended the Revenue Recognition topic of the FASB Accounting Standards Codification (ASC). The amendment seeks to clarify the principles for recognizing revenue as well as to develop common revenue standards for U.S. generally accepted accounting principles and International Financial Reporting Standards. The amendment is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. In August 2015, the FASB deferred the effective date of the amendment by one year. However, entities may still choose to adopt the amendment as of the original effective date. The Company does not expect the adoption of this amendment to have a material effect on its consolidated financial statements.

In April 2015, the FASB amended the Intangibles – Goodwill and Other topic of the FASB ASC. The amendment adds guidance to help entities evaluate the accounting for fees paid in cloud computing arrangements. The amendment is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company adopted this amendment on January 1, 2016, and the adoption did not have a material effect on its consolidated financial statements.

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In January 2016, the FASB amended the Financial Instruments – Overall topic of the FASB ASC. The amendment addresses several aspects of recognition, measurement, presentation and disclosure of financial instruments. Included are: (a) a requirement to measure equity investments at fair value, with changes in fair value recognized in net income, (b) a simplification of the impairment assessment of equity investments without readily determinable fair values, (c) the elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet, and (d) a requirement to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this amendment to have a material effect on its consolidated financial statements.

In February 2016, the FASB amended the Leases topic of the FASB ASC. The primary effects of the amendment will be to recognize lease assets and lease liabilities on the balance sheet and to disclose certain information about leasing arrangements. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effects that the adoption of this amendment will have on its consolidated financial statements.

In March 2016, the FASB amended the Compensation – Stock Compensation topic of the FASB ASC. The amendment seeks to simplify several areas of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification of transactions on the statement of cash flows. The amendment is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. The Company does not expect the adoption of this amendment to have a material effect on its consolidated financial statements.

(4) Cash and Cash Equivalents

The table below presents the balances of cash and cash equivalents:


	March 31,		December 31,
(Dollars in thousands)	2016		2015

Cash and due from banks	$	9,093	$	10,318
Interest-earning deposits in other banks		72,895		55,601
Cash and cash equivalents	$	81,988	$	65,919

Interest-earning deposits in other banks consist primarily of deposits at the Federal Reserve Bank.

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(5) Investment Securities

The amortized cost and fair values of investment securities are as follows:


	Amortized		Gross Unrealized				Estimated
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
March 31, 2016:
Held to maturity:
U.S. government-sponsored mortgage-backed securities	$	479,377	$	15,461	$	(1,243)	$	493,595
Trust preferred securities		919		—		—		919
Total	$	480,296	$	15,461	$	(1,243)	$	494,514

December 31, 2015:
Held to maturity:
U.S. government-sponsored mortgage-backed securities	$	492,143	$	11,092	$	(6,169)	$	497,066
Trust preferred securities		916		—		—		916
Total	$	493,059	$	11,092	$	(6,169)	$	497,982

The amortized cost and estimated fair value of investment securities at March 31, 2016 are shown below. Incorporated in the maturity schedule are mortgage-backed and trust preferred securities, which are allocated using the contractual maturity as a basis. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized		Estimated
(Dollars in thousands)	Cost		Fair Value
Held to maturity:
Due within 5 years	$	28	$	29
Due after 5 years through 10 years		6		7
Due after 10 years		480,262		494,478
Total	$	480,296	$	494,514

Realized gains and losses and the proceeds from sales of securities held to maturity and trading are shown in the table below. All sales of securities were U.S. government-sponsored mortgage-backed securities.


	Three Months Ended
	March 31,
(Dollars in thousands)	2016		2015
Proceeds from sales	$	—	$	2,580
Gross gains		—		236
Gross losses		—		—

The Company did not sell any held-to-maturity mortgage-backed securities during the three months ended March 31, 2016. During the three months ended March 31, 2015, the Company received proceeds of $2.6 million from the sale of $2.3 million of held-to-maturity mortgage-backed securities, resulting in gross realized gains of $236,000. The sale of these mortgage-backed securities, for which the Company had already collected a substantial portion of the outstanding purchased principal (at least 85%), is in accordance with the Investments – Debt and Equity Securities topic of the FASB ASC and does not taint management’s assertion of intent to hold remaining securities in the held-to-maturity portfolio to maturity.

Investment securities with amortized costs of $247.1 million and $241.4 million at March 31, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and transaction clearing accounts.

Provided below is a summary of investment securities which were in an unrealized loss position at March 31, 2016 and December 31, 2015. The Company does not intend to sell these securities until such time as the value recovers

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or the securities mature and it is not more likely than not that the Company will be required to sell the securities prior to recovery of value or the securities mature.


	Less Than 12 Months				12 Months or Longer				Total
			Unrealized				Unrealized		Number of			Unrealized
Description of securities	Fair Value		Losses		Fair Value		Losses		Securities	Fair Value		Losses
(Dollars in thousands)
March 31, 2016
Mortgage-backed securities	$	2,586	$	4	$	143,898	$	1,239	25	$	146,484	$	1,243
December 31, 2015
Mortgage-backed securities	$	142,810	$	3,939	$	53,142	$	2,230	43	$	195,952	$	6,169

Mortgage-Backed Securities. The unrealized losses on the Company’s investment in mortgage-backed securities were caused by increases in market interest rates. All of the mortgage-backed securities are guaranteed by Freddie Mac or Fannie Mae, which are U.S. government-sponsored enterprises, or Ginnie Mae, which is a U.S. government agency. Since the decline in market value is attributable to changes in interest rates and not credit quality, and the Company does not intend to sell these investments until maturity and it is not more likely than not that the Company will be required to sell such investments prior to recovery of its cost basis, the Company does not consider these investments to be other-than-temporarily impaired as of March 31, 2016 and December 31, 2015.

Trust Preferred Securities. At March 31, 2016, the Company owned one trust preferred security, PreTSL XXIII. The trust preferred security represents an investment in a pool of debt obligations issued primarily by holding companies for Federal Deposit Insurance Corporation-insured financial institutions. This security is classified in the Company’s held-to-maturity investment portfolio.

The trust preferred securities market is considered to be inactive as only six transactions have occurred over the past 51 months in the same tranche of securities owned by the Company. The Company uses a discounted cash flow model to determine whether this security is other-than-temporarily impaired. The assumptions used in preparing the discounted cash flow model include the following: estimated discount rates, estimated deferral and default rates on collateral, and estimated cash flows.

Based on the Company’s review, the Company’s investment in PreTSL XXIII did not incur additional impairment during the quarter ended March 31, 2016.

PreTSL XXIII has an amortized cost of $919,000 at March 31, 2016. The difference between the amortized cost of $919,000 and the remaining cost basis of $1.1 million is reported as accumulated other comprehensive loss and is related to noncredit factors.

It is reasonably possible that the fair value of the trust preferred security could decline in the near term if the overall economy and the financial condition of some of the issuers continue to deteriorate and the liquidity of this security remains low. As a result, there is a risk that the Company’s remaining cost basis of $1.1 million on its trust preferred security could be credit-related other-than-temporarily impaired in the near term. The impairment, if any, could be material to the Company’s consolidated statements of income.

The table below provides a cumulative roll forward of credit losses recognized in earnings for debt securities held and not intended to be sold:


(Dollars in thousands)	2016		2015
Balance at January 1,	$	2,403	$	5,885
Credit losses on debt securities for which other-than-temporary impairment was not previously recognized		—		—
Credit losses on debt securities which were sold		—		—
Balance at March 31,	$	2,403	$	5,885

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The table below shows the components of accumulated other comprehensive loss, net of taxes, resulting from other-than-temporarily impaired securities:


	March 31,
(Dollars in thousands)	2016		2015
Noncredit losses on other-than-temporarily impaired securities, net of taxes	$	145	$	253

(6) Loans Receivable and Allowance for Loan Losses

The components of loans receivable are as follows:


	March 31,		December 31,
(Dollars in thousands)	2016		2015
Real estate loans:
First mortgages:
One- to four-family residential	$	1,169,038	$	1,145,904
Multi-family residential		9,758		9,834
Construction, commercial and other		21,878		19,288
Home equity loans and lines of credit		15,634		15,333
Total real estate loans		1,216,308		1,190,359
Other loans:
Loans on deposit accounts		325		304
Consumer and other loans		4,186		4,239
Total other loans		4,511		4,543
Less:
Net unearned fees and discounts		(3,874)		(4,087)
Allowance for loan losses		(2,183)		(2,166)
Total unearned fees, discounts and allowance for loan losses		(6,057)		(6,253)
Loans receivable, net	$	1,214,762	$	1,188,649

The table below presents the activity in the allowance for loan losses by portfolio segment:


			Construction,		Home
			Commercial		Equity
			and Other		Loans and
	Residential		Mortgage		Lines of		Consumer
(Dollars in thousands)	Mortgage		Loans		Credit		and Other		Unallocated		Totals
Three months ended March 31, 2016:
Balance, beginning of period	$	1,380	$	517	$	3	$	72	$	194	$	2,166
Provision (reversal of allowance) for loan losses		18		(8)		—		14		4		28
		1,398		509		3		86		198		2,194
Charge-offs		—		—		—		(14)		—		(14)
Recoveries		—		—		—		3		—		3
Net charge-offs		—		—		—		(11)		—		(11)
Balance, end of period	$	1,398	$	509	$	3	$	75	$	198	$	2,183

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Construction,

Home

Commercial

Equity

and Other

Loans and

Residential

Mortgage

Lines of

Consumer

(Dollars in thousands)

Mortgage

Loans

Credit

and Other

Unallocated

Totals

Three months ended March 31, 2015: