Loans Receivable and Allowance for Loan Losses | Note 6 - Loans Receivable and Allowance for Loan Losses The following table presents the recorded investment in loans receivable as of June 30, 2017 and December 31, 2016 by segment and class: June 30, 2017 December 31, 2016 (In Thousands) Originated loans: Residential one-to-four family $ 164,562 $ 142,081 Commercial and multi-family 1,130,902 1,056,806 Construction 73,376 70,867 Commercial business (1) 68,230 63,444 Home equity (2) 38,058 32,417 Consumer 1,196 1,269 Sub-total 1,476,324 1,366,884 Acquired loans recorded at fair value: Residential one-to-four family 52,382 56,310 Commercial and multi-family 51,933 60,422 Construction - - Commercial business (1) 3,752 4,460 Home equity (2) 10,304 13,877 Consumer 176 225 Sub-total 118,547 135,294 Acquired loans with deteriorated credit: Residential one-to-four family 1,425 1,443 Commercial and multi-family 742 753 Construction - - Commercial business (1) - - Home equity (2) - - Consumer - - Sub-total 2,167 2,196 Total Loans 1,597,038 1,504,374 Less: Deferred loan fees, net (1,893) (2,006) Allowance for loan losses (17,964) (17,209) (19,857) (19,215) Total Loans, net $ 1,577,181 $ 1,485,159 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) Allowance for Loan Losses Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements. These elements include a general allocated reserve for performing loans, a specific reserve for impaired loans and an unallocated portion. The Company consistently applies the following comprehensive methodology. During the quarterly review of the allowance for loan losses, the Company considers a variety of qualitative factors that include: • General economic conditions. • Trends in charge-offs. • Trends and levels of delinquent loans. • Trends and levels of non-performing loans, including loans over 90 days delinquent. • Trends in volume and terms of loans. • Levels of allowance for specific classified loans. • Credit concentrations. The methodology includes the segregation of the loan portfolio into two divisions. Loans that are performing and loans that are impaired. Loans which are performing are evaluated homogeneously by loan class or loan type. The allowance for performing loans is evaluated based on historical loan experience, including consideration of peer loss analysis, with an adjustment for qualitative factors referred to above. Impaired loans are loans which are more than 90 days delinquent or troubled debt restructured. These loans are individually evaluated for loan loss either by current appraisal, or net present value. Management reviews the overall estimate for feasibility and bases the loan loss provision accordingly. The loan portfolio is segmented into the following loan classes, where the risk level for each class is analyzed when determining the allowance for loan losses: Residential single family real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential family real estate loans decreases the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower. Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence. Commercial and multi-family real estate lending entails significant additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as economic conditions generally. Commercial business lending, including lines of credit, is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance. Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the collateral securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Bank’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decreases the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. Other consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan. The Company also maintains an unallocated allowance. The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable. It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates lack some element of precision. Management must make estimates using assumptions and information that is often subjective and changing rapidly. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) Classified Assets . Our policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” “loss” or “special mention.” When we classify problem assets, we may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining our regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. As of June 30, 2017, we had $152,000 in assets classified as losses, of which $152,000 were classified as impaired, $27.3 million in assets classified as substandard, of which $27.3 million were classified as impaired, and $ 14.9 million in assets classified as special mention, of which $8. 9 million were classified as impaired. The loans classified as substandard represent primarily commercial loans secured either by residential real estate, commercial real estate or heavy equipment. The loans that have been classified substandard were classified as such primarily due to payment status, because updated financial information has not been timely provided, or the collateral underlying the loan is in the process of being revalued. The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies. The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list (risk ratings 1-4) are treated as “pass” for grading purposes: 5 – Special Mention- Loans currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency. 6 – Substandard - Loans that are inadequately protected by current sound worth, paying capacity, and collateral support. Loans on “nonaccrual” status. The loan needs special and corrective attention. 7 – Doubtful - Weaknesses in credit quality and collateral support make full collection improbable, but pending reasonable factors remain sufficient to defer the loss status. 8 – Loss - Continuance as a bankable asset is not warranted. However, this does not preclude future attempts at partial recovery. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended June 30, 2017. The table also details the amount of total loans receivable, loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of June 30, 2017. (In Thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: Originated Loans: $ 2,151 $ 10,850 $ 756 $ 3,117 $ 335 $ 2 $ 150 $ 17,361 Acquired loans recorded at fair value: 112 - - - - - - 112 Acquired loans with deteriorated credit: 41 12 - - - - - 53 Beginning Balance, March 31, 2017 2,304 10,862 756 3,117 335 2 150 17,526 Charge-offs: Originated Loans: - 119 - - - - - 119 Acquired loans recorded at fair value: 219 - - - - - - 219 Acquired loans with deteriorated credit: - - - - - - - Sub-total: 219 119 - - - - - 338 Recoveries: Originated Loans: - - - - - - - - Acquired loans recorded at fair value: - - - - - - - - Acquired loans with deteriorated credit: - - - - - - - - Sub-total: - - - - - - - - Provisions: Originated Loans: (59) 451 (3) 112 12 3 (51) 465 Acquired loans recorded at fair value: 310 - - - - - - 310 Acquired loans with deteriorated credit: - 1 - - - - - 1 Sub-total: 251 452 (3) 112 12 3 (51) 776 Totals: Originated Loans: 2,092 11,182 753 3,229 347 5 99 17,707 Acquired loans recorded at fair value: 203 - - - - - - 203 Acquired loans with deteriorated credit: 41 13 - - - - - 54 Ending Balance, June 30, 2017 $ 2,336 $ 11,195 $ 753 $ 3,229 $ 347 $ 5 $ 99 $ 17,964 Loans Receivable: Ending Balance Originated Loans: $ 164,562 $ 1,130,902 $ 73,376 $ 68,230 $ 38,058 $ 1,196 $ - $ 1,476,324 Ending Balance Acquired loans recorded at fair value: 52,382 51,933 - 3,752 10,304 176 - 118,547 Ending Balance Acquired loans with deteriorated credit: 1,425 742 - - - - - 2,167 Total Gross Loans: $ 218,369 $ 1,183,577 $ 73,376 $ 71,982 $ 48,362 $ 1,372 $ - $ 1,597,038 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 9,038 $ 12,783 $ - $ 4,180 $ 1,093 $ - $ - $ 27,094 Ending Balance Acquired loans recorded at fair value: 7,771 5,832 - - 685 - - 14,288 Ending Balance Acquired loans with deteriorated credit: 1,425 519 - - - - - 1,944 Ending Balance Loans individually evaluated for impairment: $ 18,234 $ 19,134 $ - $ 4,180 $ 1,778 $ - $ - $ 43,326 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 155,524 $ 1,118,119 $ 73,376 $ 64,050 $ 36,965 $ 1,196 $ - $ 1,449,230 Ending Balance Acquired loans recorded at fair value: 44,611 46,101 - 3,752 9,619 176 - 104,259 Ending Balance Acquired loans with deteriorated credit: - 223 - - - - - 223 Ending Balance Loans collectively evaluated for impairment: $ 200,135 $ 1,164,443 $ 73,376 $ 67,802 $ 46,584 $ 1,372 $ - $ 1,553,712 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The following table set forth the activity in the Company’s allowance for loan losses for the six months ended June 30, 2017, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for credit losses: Originated Loans: $ 2,098 $ 10,621 $ 736 $ 3,079 $ 374 $ 2 $ 69 $ 16,979 Acquired loans recorded at fair value: 170 - - - 4 - - 174 Acquired loans with deteriorated credit: 43 13 - - - - - 56 Beginning Balance, December 31, 2016 2,311 10,634 736 3,079 378 2 69 17,209 Charge-offs: Originated Loans: - - 190 - - - - - - 6 - - - 196 Acquired loans recorded at fair value: 308 - - - - - - 34 - - - - - 342 Acquired loans with deteriorated credit: - - - - - - - - - - - - - - Sub-total: 308 190 - - 34 6 - 538 Recoveries: Originated Loans: - - - - - - - - Acquired loans recorded at fair value: - - - - - - - - Acquired loans with deteriorated credit: - - - 19 - - - 19 Sub-total: - - - 19 - - - 19 Provisions: Originated Loans: (6) 751 17 150 (27) 9 30 924 Acquired loans recorded at fair value: 341 - - - 30 - - 371 Acquired loans with deteriorated credit: (2) - - (19) - - - (21) Sub-total: 333 751 17 131 3 9 30 1,274 Totals: Originated Loans: 2,092 11,182 753 3,229 347 5 99 17,707 Acquired loans recorded at fair value: 203 - - - - - - 203 Acquired loans with deteriorated credit: 41 13 - - - - - 54 Ending Balance, June 30, 2017 $ 2,336 $ 11,195 $ 753 $ 3,229 $ 347 $ 5 $ 99 $ 17,964 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the activity in the Company’s allowance for loan losses for the year ended December 31, 2016. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of December 31, 2016. (In Thousands): ____ Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for credit losses: Originated Loans: $ 2,107 $ 11,643 $ 722 $ 1,749 $ 369 $ 879 $ 168 $ 17,637 Acquired loans recorded at fair value: 270 17 - - 50 - - 337 Acquired loans with deteriorated credit: 47 14 - 4 3 - - 68 Beginning Balance, December 31, 2016 2,424 11,674 722 1,753 422 879 168 18,042 Charge-offs: Originated Loans: - 367 - 160 - - - - 527 Acquired loans recorded at fair value: 459 38 - 3 54 - - 554 Acquired loans with deteriorated credit: - - - - - - - - Sub-total: 459 405 - 163 54 - - 1,081 Recoveries: Originated Loans: - 74 - - - - - 74 Acquired loans recorded at fair value: - 4 - - 14 - - - 18 Acquired loans with deteriorated credit: - - - 129 - - - 129 Sub-total: - 78 - 129 14 - - 221 Provisions: Originated Loans: (9) (729) 14 1,490 5 (877) (99) (205) Acquired loans recorded at fair value: 359 17 - 3 (6) - - 373 Acquired loans with deteriorated credit: (4) (1) - (133) (3) - - (141) Sub-total: 346 (713) 14 1,360 (4) (877) (99) 27 Totals: Originated Loans: 2,098 10,621 736 3,079 374 2 69 16,979 Acquired loans recorded at fair value: 170 - - - 4 - - 174 Acquired loans with deteriorated credit: 43 13 - - - - - 56 Ending Balance, December 31, 2016 $ 2,311 $ 10,634 $ 736 $ 3,079 $ 378 $ 2 $ 69 $ 17,209 Loans Receivables: Ending Balance Originated Loans: $ 142,081 $ 1,056,806 $ 70,867 $ 63,444 $ 32,417 $ 1,269 $ - $ 1,366,884 Ending Balance Acquired Loans: 56,310 60,422 - 4,460 13,877 225 - 135,294 Ending Balance Acquired loans with deteriorated credit: 1,443 753 - - - - - 2,196 Total Gross Loans: $ 199,834 $ 1,117,981 $ 70,867 $ 67,904 $ 46,294 $ 1,494 $ - $ 1,504,374 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 10,651 $ 12,325 $ 6 $ 4,088 $ 1,362 $ - $ - $ 28,432 Ending Balance Acquired Loans: 7,600 6,356 - - 1,065 - - 15,021 Ending Balance Acquired loans with deteriorated credit: 1,443 523 - - - - - 1,966 Ending Balance Loans individually evaluated for impairment: $ 19,694 $ 19,204 $ 6 $ 4,088 $ 2,427 $ - $ - $ 45,419 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 131,430 $ 1,044,481 $ 70,861 $ 59,356 $ 31,055 $ 1,269 $ - $ 1,338,452 Ending Balance Acquired Loans: 48,710 54,066 - 4,460 12,812 225 - 120,273 Ending Balance Acquired loans with deteriorated credit: - 230 - - - - - 230 Ending Balance Loans collectively evaluated for impairment: $ 180,140 $ 1,098,777 $ 70,861 $ 63,816 $ 43,867 $ 1,494 $ - $ 1,458,955 (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended June 30, 2016. The table also details the amount of total loans receivable that are evaluated individually and collectively for impairment, and the related portion of the allowance for loan losses that is allocated to each loan class, as of June 30, 2016 (In Thousands): Residential Commercial & Multi-family Construction Business (1) Equity (2) Consumer Unallocated Total Allowance for credit losses: Originated Loans: $ 2,238 $ 11,575 $ 833 $ 1,662 $ 342 $ 925 $ 264 $ 17,839 Acquired loans recorded at fair value: 208 10 - - 44 - - 262 Acquired loans with deteriorated credit: 47 13 - 4 3 - - 67 Beginning Balance, March 31, 2016 2,493 11,598 833 1,666 389 925 264 18,168 Charge-offs: Originated Loans: - - - - - - - - - - - - - Acquired loans recorded at fair value: - - - - - - - - - - - - Acquired loans with deteriorated credit: - - - - - - - - Sub-total: - - - - - - - - Recoveries: Originated Loans: - - - - - - - - Acquired loans recorded at fair value: - - - - 3 - - 3 Acquired loans with deteriorated credit: - - - 130 - - - 130 Sub-total: - - - 130 3 - - 133 Provisions: Originated Loans: (243) 155 (69) 97 33 104 (48) 29 Acquired loans recorded at fair value: 149 (10) - - 9 - 148 Acquired loans with deteriorated credit: (4) 1 - (134) (3) - - (140) Sub-total: (98) 146 (69) (37) 39 104 (48) 37 Totals: Originated Loans: 1,995 11,730 764 1,759 375 1,029 216 17,868 Acquired loans recorded at fair value: 357 - - - 56 - - 413 Acquired loans with deteriorated credit: 43 14 - - - - - 57 Ending Balance, June 30, 2016 $ 2,395 $ 11,744 $ 764 $ 1,759 $ 431 $ 1,029 $ 216 $ 18,338 Loans Receivable: Ending Balance Originated Loans: $ 119,329 $ 1,008,498 $ 71,770 $ 57,500 $ 31,609 $ 1,703 $ - $ 1,290,409 Ending Balance Acquired loans recorded at fair value: 62,309 68,767 - 4,903 16,580 240 - 152,799 Ending Balance Acquired loans with deteriorated credit: 1,458 764 - - - - - 2,222 Total Gross Loans: $ 183,096 $ 1,078,029 $ 71,770 $ 62,403 $ 48,189 $ 1,943 $ - $ 1,445,430 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 10,356 $ 14,512 $ - $ 3,798 $ 1,126 $ 1,263 $ - $ 31,055 Ending Balance Acquired loans recorded at fair value: 8,751 6,281 - - 1,276 - - 16,308 Ending Balance Acquired loans with deteriorated credit: 1,458 528 - - - - - 1,986 Ending Balance Loans individually evaluated for impairment: $ 20,565 $ 21,321 $ - $ 3,798 $ 2,402 $ 1,263 $ - $ 49,349 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 108,973 $ 993,986 $ 71,770 $ 53,702 $ 30,483 $ 440 $ - $ 1,259,354 Ending Balance Acquired loans recorded at fair value: 53,558 62,486 - 4,903 15,304 240 - 136,491 Ending Balance Acquired loans with deteriorated credit: - 236 - - - - - 236 Ending Balance Loans collectively evaluated for impairment: $ 162,531 $ 1,056,708 $ 71,770 $ 58,605 $ 45,787 $ 680 $ - $ 1,396,081 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the activity in the Company’s allowance for loans losses for the six months ended June 30, 2016, and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for credit losses: Originated Loans: $ 2,107 $ 11,643 $ 722 $ 1,749 $ 369 $ 879 $ 168 $ 17,637 Acquired loans recorded at fair value: 270 17 - - 50 - - 337 Acquired loans with deteriorated credit: 47 14 - 4 3 - - 68 Beginning Balance, December 31, 2015 2,424 11,674 722 1,753 422 879 168 18,042 Charge-offs: Originated Loans: - - - - - - - - - Acquired loans recorded at fair value: 67 - - 3 3 - - - 73 Acquired loans with deteriorated credit: - - - - - - - - - Sub-total: 67 - - 3 3 - - 73 Recoveries: Originated Loans: - - - - - - - - Acquired loans recorded at fair value: - - - - 14 - - 14 Acquired loans with deteriorated credit: - - - 129 - - - 129 Sub-total: - - - 129 14 - - 143 Provisions: Originated Loans: (112) 87 42 10 6 150 48 231 Acquired loans recorded at fair value: 154 (17) - 3 (5) - - 135 Acquired loans with deteriorated credit: (4) - - (133) (3) - - (140) Sub-total: 38 70 42 (120) (2) 150 48 226 Totals: Originated Loans: 1,995 11,730 764 1,759 375 1,029 216 17,868 Acquired loans recorded at fair value: 357 - - - 56 - - 413 Acquired loans with deteriorated credit: 43 14 - - - - - 57 Ending Balance, June 30, 2016 $ 2,395 $ 11,744 $ 764 $ 1,759 $ 431 $ 1,029 $ 216 $ 18,338 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) The table below sets forth the amounts and types of non-accrual loans in the Company’s loan portfolio as of June 30, 2017 and December 31, 201 6 . Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of June 30, 2017 and December 31, 201 6 , total non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans which are maintained on non-accrual status for a minimum of six months and until the borrower has demonstrated its ability to satisfy the terms of the restructured loan. As of June 30, 2017 As of December 31, 2016 (In Thousands) (In Thousands) Non-Accruing Loans: Originated loans: Residential one-to-four family $ 3,076 $ 3,693 Commercial and multi-family 7,040 5,437 Construction - - Commercial business (1) 785 726 Home equity (2) 208 416 Consumer - 6 Sub-total: $ 11,109 $ 10,278 Acquired loans recorded at fair value: Residential one-to-four family $ 3,460 $ 3,429 Commercial and multi-family 726 1,182 Construction - - Commercial business (1) - - Home equity (2) 161 763 Consumer - - Sub-total: $ 4,347 $ 5,374 Acquired loans with deteriorated credit: Residential one-to-four family $ - $ - Commercial and multi-family - - Construction - - Commercial business (1) - - Home equity (2) - - Consumer - - Sub-total: $ - $ - Total $ 15,456 $ 15,652 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6-Loans Receivable and Allowance for Loan Losses (Continued) The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three and six months ended June 30, 2017 and 2016 (In Thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2017 2016 2016 2017 2017 2016 2016 Average Interest Average Interest Average Interest Average Interest Recorded Income Recorded Income Recorded Income Recorded Income Originated loans Investment Recognized Investment Recognized Investment Recognized Investment Recognized With no related allowance recorded: Residential one-to-four family $ 3,640 $ 24 $ 4,085 $ 23 $ 4,299 $ 49 $ 3,938 $ 47 Commercial and Multi-family 12,365 63 10,313 58 11,287 125 10,687 115 Construction - - 1,492 - - - - - Commercial business (1) 712 11 2,030 27 1,095 21 2,046 53 Home equity (2) 865 9 1,039 8 941 18 1,106 16 Consumer - - - - 3 - - - Sub-total: $ 17,582 $ 107 $ 18,959 $ 116 $ 17,625 $ 213 $ 17,777 $ 231 Acquired loans recorded at fair value With no related allowance recorded: Residential one-to-four family $ 5,306 $ 35 $ 5,308 $ 31 $ 4,998 $ 71 $ 6,223 $ 62 Commercial and Multi-family 4,127 56 4,637 52 4,845 112 4,703 104 Construction - - - - - - - - Commercial business (1) - - - - - - - - Home equity (2) 628 - 589 5 563 12 708 9 Consumer - 6 - - - - - - Sub-total $ 10,061 $ 97 $ 10,534 $ 88 $ 10,406 $ 195 $ 11,634 $ 175 Acquired loans with deteriorated credit With no related allowance recorded: Residential one-to-four family $ 1,430 $ 22 $ 1,462 $ 22 $ 1,434 $ 44 $ 1,466 $ 45 Commercial and Multi-family 520 7 529 7 521 14 477 14 Construction - - - - - - - - Commercial business (1) - - - - - - - - Home equity (2) - - 37 - - - 36 - Consumer - - - - - - - - Sub-total: $ 1,950 $ 29 $ 2,028 $ 29 $ 1,955 $ 58 $ 1,979 $ 59 Total Impaired Loans With no related allowance recorded: $ 29,593 $ 233 $ 31,521 $ 233 $ 29,986 $ 466 $ 31,390 $ 465 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6-Loans Receivable and Allowance for Loan Losses (Continued) The following table summarizes the average recorded investment and interest income recognized on impaired loans with allowance recorded by portfolio class for the three and six months ended June 30, 2017 and 2016. (In Thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2017 2016 2016 2017 2017 2016 2016 Average Interest Average Interest Average Interest Average Interest Recorded Income Recorded Income Recorded Income Recorded Income Originated loans Investment Recognized Investment Recognized Investment Recognized Investment Recognized with an allowance recorded: Residential one-to-four family $ 6,026 $ 48 $ 5,620 $ 64 $ 5,546 $ 96 $ 5,801 $ 128 Commercial and Multi-family 839 10 4,258 6 1,267 19 3,910 12 Construction - - - - - - - - Commercial business (1) 3,427 35 1,921 20 3,039 69 1,955 39 Home equity (2) 284 3 214 2 287 5 186 5 Consumer - - 1,263 - - - 1,363 - Sub-total: $ 10,576 $ 96 $ 13,276 $ 92 $ 10,139 $ 189 $ 13,215 $ 184 Acquired loans recorded at fair value with an allowance recorded: Residential one-to-four family $ 2,590 $ 21 $ 3,782 $ 20 $ 2,688 $ 43 $ 3,096 $ 39 Commercial and Multi-family 1,718 16 1,360 16 1,249 32 1,826 16 Construction - - - - - - - - Commercial business (1) - - - - - - - - Home equity (2) 106 2 730 5 313 3 612 27 Consumer - - - - - - - - Sub-total $ 4,414 $ 39 $ 5,872 $ 41 $ 4,250 $ 78 $ 5,534 $ 82 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ - $ - $ - $ - $ - $ - $ - $ - Commercial and Multi-family - - - - - - - - Construction - - - - - - - - Commercial business (1) - - 82 - - - 84 - Home equity (2) - - - - - - - - Consumer - - - - - - - - Sub-total: $ - $ - $ 82 $ - $ - $ - $ 84 $ - Total Impaired Loans with an allowance recorded: $ 14,990 $ 135 $ 19,230 $ 133 $ 14,389 $ 267 $ 18,833 $ 266 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6-Loans Receivable and Allowance for Loan Losses (Continued) The following table summarizes the recorded investment and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at June 30, 2017 and December 31, 2016. (In Thousands): As of June 30, 2017 As of December 31, 2016 Recorded Unpaid Principal Related Recorded Unpaid Principal Related Originated loans Investment Balance Allowance Investment Balance Allowance with no related allowance recorded: Residential one-to-four family $ 3,440 $ 3,608 $ - $ 5,158 $ 5,341 $ - Commercial and multi-family 12,076 12,676 - 10,498 10,722 - Construction - 6 - 6 6 - Commercial business (1) 1,168 2,338 - 1,022 1,966 - Home equity (2) 860 930 - 1,022 1,101 - Consumer - - - - - - Sub-total: $ 17,544 $ 19,558 $ - $ 17,706 $ 19,136 $ - Acquired loans recorded at fair value with no related allowance recorded: Residential one-to-four family $ 4,419 $ 5,174 $ - $ 5,577 $ 6,149 $ - Commercial and Multi-family 4,115 4,188 - 5,575 5,710 - Construction - - - - - - Commercial business (1) - - - - - - Home equity (2) 580 727 - 545 650 - Consumer - - - - - - Sub-total: $ 9,114 $ 10,089 $ - $ 11,697 $ 12,509 $ - Acquired loans with deteriorated credit with no related allowance recorded: Residential one-to-four family $ 1,425 $ 2,051 $ - $ 1,443 $ 2,069 $ - Commercial and Multi-family 519 545 - 523 552 - Construction - - - - - - Commercial business (1) - - - - - - Home equity (2) - - - - - - Consumer - - - - - - Sub-total: $ 1,944 $ 2,596 $ - $ 1,966 $ 2,621 $ - Total Impaired Loans with no related allowance recorded: $ 28,602 $ 32,243 $ - $ 31,369 $ 34,266 $ - __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6-Loans Receivable and Allowance for Loan Losses (Continued) The following table summarizes the recorded investment, unpaid principal balance, and the related allowance on impaired loans by portfolio class at June 30, 2017 and December 31, 2016. (In Thousands): As of June 30, 2017 As of December 31, 2016 Recorded Unpaid Principal Related Recorded Unpaid Principal Related Originated loans Investment Balance Allowance Investment Balance Allowance with an allowance recorded: Residential one-to-four family $ 5,598 $ 5,687 $ 394 $ 5,493 $ 5,493 $ 496 Commercial and Multi-family 707 707 32 1,827 1,866 380 Construction - - - - - - Commercial business (1) 3,012 3,826 2,480 3,066 4,006
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