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 March 31, 2018 and December 31, 2017 by segment and class: March 31, 2018 December 31, 2017 (In Thousands) Originated loans: Residential one-to-four family $ 191,274 $ 182,544 Commercial and multi-family 1,317,223 1,213,390 Construction 48,433 50,497 Commercial business (1) 76,884 66,775 Home equity (2) 44,484 38,725 Consumer 1,023 1,183 Sub-total 1,679,321 1,553,114 Acquired loans initially recorded at fair value: Residential one-to-four family 45,594 47,808 Commercial and multi-family 44,737 46,609 Commercial business (1) 4,170 4,057 Home equity (2) 8,569 8,955 Consumer 104 122 Sub-total 103,174 107,551 Acquired loans with deteriorated credit: Residential one-to-four family 1,407 1,413 Commercial and multi-family 724 731 Sub-total 2,131 2,144 Total Loans 1,784,626 1,662,809 Less: Deferred loan fees, net (1,692) (1,757) Allowance for loan losses (18,337) (17,375) (20,029) (19,132) Total Loans, net $ 1,764,597 $ 1,643,677 _____________________________ (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 The allowance for loan loss is evaluated regularly by management and reflects consideration of all significant factors that affect the collectability of the loan portolio. 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: " Lending Policies and Procedures " Personnel responsible for the particular portfolio - relative to experience and ability of staff " Trend for past due, criticized and classified loans " Relevant economic factors " Quality of the loan review system " Value of collateral for collateral dependent loans " The effect of any concentrations of credit and the changes in the level of such concentrations " Other external factors 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 with an adjustment for qualitative factors referred to above. Impaired loans are loans which are more than 90 days delinquent, troubled debt restructured, or adversely classified. 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 decrease 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) Criticized and Classified Assets . Our policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” or “loss.” 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 March 31, 2018, we had $42,000 in assets classified as losses, of which $42,000 were classified as impaired, and $20.3 million in assets classified as substandard, of which $20.3 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 1-5) are treated as “pass” for grading purposes. The “criticized” risk rating (6) and the “classified” risk ratings (7-9) are detailed below: 6 – Special Mention- Loans currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency. 7 – 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. 8 – Doubtful - Weaknesses in credit quality and collateral support make full collection improbable, but pending reasonable factors remain sufficient to defer the loss status. 9 – 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 March 31, 2018. 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 March 31, 2018. (In Thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: Originated Loans: $ 2,368 $ 11,656 $ 518 $ 2,018 $ 338 $ 6 $ 177 $ 17,081 Acquired loans initially recorded at fair value: 242 - - - - - - 242 Acquired loans with deteriorated credit: 40 12 - - - - - 52 Beginning Balance, December 31, 2017 2,650 11,668 518 2,018 338 6 177 17,375 Charge-offs: Originated Loans: 302 - - - - - - 302 Acquired loans initially recorded at fair value: 72 - - - 6 - - 78 Acquired loans with deteriorated credit: - - - - - - - Sub-total: 374 - - - 6 - - 380 Recoveries: Originated Loans: - - - - - - - - Acquired loans initially recorded at fair value: - - - - - - - - Acquired loans with deteriorated credit: - - - - - - - - Sub-total: - - - - - - - - Provisions: Originated Loans: 179 224 (26) 658 46 (2) 21 1,100 Acquired loans initially recorded at fair value: 199 - - 24 6 - - 229 Acquired loans with deteriorated credit: 13 - - - - - - 13 Sub-total: 391 224 (26) 682 52 (2) 21 1,342 Totals: Originated Loans: 2,245 11,880 492 2,676 384 4 198 17,879 Acquired loans initially recorded at fair value: 369 - - 24 - - - 393 Acquired loans with deteriorated credit: 53 12 - - - - - 65 Ending Balance, March 31, 2018 $ 2,667 $ 11,892 $ 492 $ 2,700 $ 384 $ 4 $ 198 $ 18,337 Loans Receivable: Ending Balance Originated Loans: $ 191,274 $ 1,317,223 $ 48,433 $ 76,884 $ 44,484 $ 1,023 $ - $ 1,679,321 Ending Balance Acquired loans initially recorded at fair value: 45,594 44,737 - 4,170 8,569 104 - 103,174 Ending Balance Acquired loans with deteriorated credit: 1,407 724 - - - - - 2,131 Total Gross Loans: $ 238,275 $ 1,362,684 $ 48,433 $ 81,054 $ 53,053 $ 1,127 $ - $ 1,784,626 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 7,072 $ 12,067 $ - $ 1,647 $ 1,064 $ - $ - $ 21,850 Ending Balance Acquired loans initially recorded at fair value: 7,363 4,739 - - 330 - - 12,432 Ending Balance Acquired loans with deteriorated credit: 1,407 510 - - - - - 1,917 Ending Balance Loans individually evaluated for impairment: $ 15,842 $ 17,316 $ - $ 1,647 $ 1,394 $ - $ - $ 36,199 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 184,202 $ 1,305,156 $ 48,433 $ 75,237 $ 43,420 $ 1,023 $ - $ 1,657,471 Ending Balance Acquired loans initially recorded at fair value: 38,231 39,998 - 4,170 8,239 104 - 90,742 Ending Balance Acquired loans with deteriorated credit: - 214 - - - - - 214 Ending Balance Loans collectively evaluated for impairment: $ 222,433 $ 1,345,368 $ 48,433 $ 79,407 $ 51,659 $ 1,127 $ - $ 1,748,427 _____________________________ (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, 2017. 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, 2017. (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 - 1,553 - - 11 - 1,754 Acquired loans recorded at fair value: 336 - - - 54 - - 390 Acquired loans with deteriorated credit: - - - - - - - - Sub-total: 336 190 - 1,553 54 11 - 2,144 Recoveries: Originated Loans: - 182 - - - - - 182 Acquired loans recorded at fair value: - - - - - - - - - Acquired loans with deteriorated credit: - - - 18 - - - 18 Sub-total: - 182 - 18 - - - 200 Provisions: Originated Loans: 270 1,043 (218) 492 (36) 15 108 1,674 Acquired loans recorded at fair value: 408 - - - 50 - - 458 Acquired loans with deteriorated credit: (3) (1) - (18) - - - (22) Sub-total: 675 1,042 (218) 474 14 15 108 2,110 Totals: Originated Loans: 2,368 11,656 518 2,018 338 6 177 17,081 Acquired loans recorded at fair value: 242 - - - - - - 242 Acquired loans with deteriorated credit: 40 12 - - - - - 52 Ending Balance, December 31, 2017 $ 2,650 $ 11,668 $ 518 $ 2,018 $ 338 $ 6 $ 177 $ 17,375 Loans Receivables: Ending Balance Originated Loans: $ 182,544 $ 1,213,390 $ 50,497 $ 66,775 $ 38,725 $ 1,183 $ - $ 1,553,114 Ending Balance Acquired Loans: 47,808 46,609 - 4,057 8,955 122 - 107,551 Ending Balance Acquired loans with deteriorated credit: 1,413 731 - - - - - 2,144 Total Gross Loans: $ 231,765 $ 1,260,730 $ 50,497 $ 70,832 $ 47,680 $ 1,305 $ - $ 1,662,809 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 7,944 $ 12,212 $ - $ 1,780 $ 1,042 $ - $ - $ 22,978 Ending Balance Acquired Loans: 7,548 5,032 - - 302 - - 12,882 Ending Balance Acquired loans with deteriorated credit: 1,413 513 - - - - - 1,926 Ending Balance Loans individually evaluated for impairment: $ 16,905 $ 17,757 $ - $ 1,780 $ 1,344 $ - $ - $ 37,786 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 174,600 $ 1,201,178 $ 50,497 $ 64,995 $ 37,683 $ 1,183 $ - $ 1,530,136 Ending Balance Acquired Loans: 40,260 41,577 - 4,057 8,653 122 - 94,669 Ending Balance Acquired loans with deteriorated credit: - 218 - - - - - 218 Ending Balance Loans collectively evaluated for impairment: $ 214,860 $ 1,242,973 $ 50,497 $ 69,052 $ 46,336 $ 1,305 $ - $ 1,625,023 (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 March 31, 2017. 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 March 31, 2017 (In Thousands): Residential Commercial & Multi-family Construction Business (1) 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: - - 71 - - - - - 6 - - - 77 Acquired loans recorded at fair value: 89 - - - - 34 - - - - - 123 Acquired loans with deteriorated credit: - - - - - - - - - - - - - Sub-total: 89 71 - - 34 6 - 200 Recoveries: Originated Loans: - - - - - - - - Acquired loans recorded at fair value: - - - - - - - - Acquired loans with deteriorated credit: - - - 19 - - - 19 Sub-total: - - - 19 - - - 19 Provisions: Originated Loans: 53 300 20 38 (39) 6 80 458 Acquired loans recorded at fair value: 31 - - - 30 - 61 Acquired loans with deteriorated credit: (2) (1) - (18) - - - (21) Sub-total: 82 299 20 20 (9) 6 80 498 Totals: 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 Ending Balance, March 31, 2017 $ 2,304 $ 10,862 $ 756 $ 3,117 $ 335 $ 2 $ 150 $ 17,526 Loans Receivable: Ending Balance Originated Loans: $ 154,047 $ 1,099,166 $ 72,899 $ 61,504 $ 34,336 $ 589 $ - $ 1,422,541 Ending Balance Acquired loans recorded at fair value: 54,281 53,676 - 2,985 12,434 196 - 123,572 Ending Balance Acquired loans with deteriorated credit: 1,435 748 - - - - - 2,183 Total Gross Loans: $ 209,763 $ 1,153,590 $ 72,899 $ 64,489 $ 46,770 $ 785 $ - $ 1,548,296 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 10,293 $ 13,623 $ - $ 4,097 $ 1,203 $ - $ - $ 29,216 Ending Balance Acquired loans recorded at fair value: 8,019 5,858 - - 782 - - 14,659 Ending Balance Acquired loans with deteriorated credit: 1,435 520 - - - - - 1,955 Ending Balance Loans individually evaluated for impairment: $ 19,747 $ 20,001 $ - $ 4,097 $ 1,985 $ - $ - $ 45,830 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 143,754 $ 1,085,543 $ 72,899 $ 57,407 $ 33,133 $ 589 $ - $ 1,393,325 Ending Balance Acquired loans recorded at fair value: 46,262 47,818 - 2,985 11,652 196 - 108,913 Ending Balance Acquired loans with deteriorated credit: - 228 - - - - - 228 Ending Balance Loans collectively evaluated for impairment: $ 190,016 $ 1,133,589 $ 72,899 $ 60,392 $ 44,785 $ 785 $ - $ 1,502,466 _____________________________ (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 March 31, 2018 and December 31, 2017. 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 March 31, 2018 and December 31, 2017, 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 March 31, 2018 As of December 31, 2017 (In Thousands) (In Thousands) Non-Accruing Loans: Originated loans: Residential one-to-four family $ 1,432 $ 2,545 Commercial and multi-family 5,652 6,762 Commercial business (1) 176 299 Home equity (2) 356 201 Sub-total: $ 7,616 $ 9,807 Acquired loans initially recorded at fair value: Residential one-to-four family $ 2,374 $ 2,372 Commercial and multi-family 590 850 Home equity (2) 39 7 Sub-total: $ 3,003 $ 3,229 Total $ 10,619 $ 13,036 __________ (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 months ended March 31, 2018 and 2017 (In Thousands): Three Months Ended March 31, 2018 2018 2017 2017 Average Interest Average Interest Recorded Income Recorded Income Originated loans Investment Recognized Investment Recognized With no related allowance recorded: Residential one-to-four family $ 1,981 $ 7 $ 4,499 $ 23 Commercial and Multi-family 11,897 77 11,576 63 Commercial business (1) 382 4 639 - Home equity (2) 897 7 946 9 Sub-total: $ 15,157 $ 95 $ 17,663 $ 95 Acquired loans initially recorded at fair value With no related allowance recorded: Residential one-to-four family $ 3,876 $ 30 $ 5,885 $ 36 Commercial and Multi-family 3,793 59 4,857 56 Home equity (2) 231 - 611 - Consumer - 4 - 6 Sub-total $ 7,900 $ 93 $ 11,353 $ 98 Acquired loans with deteriorated credit With no related allowance recorded: Residential one-to-four family $ 1,225 $ 16 $ 1,439 $ 22 Commercial and Multi-family 512 7 522 7 Sub-total: $ 1,737 $ 23 $ 1,961 $ 29 Total Impaired Loans With no related allowance recorded: $ 24,794 $ 211 $ 30,977 $ 222 __________ (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 months ended March 31, 2018 and 2017. (In Thousands): Three Months Ended March 31, 2018 2018 2017 2017 Average Interest Average Interest Recorded Income Recorded Income Originated loans Investment Recognized Investment Recognized with an allowance recorded: Residential one-to-four family $ 5,527 $ 57 $ 5,973 $ 60 Commercial and Multi-family 243 - 1,399 10 Commercial business (1) 1,332 16 3,454 46 Home equity (2) 157 2 337 4 Sub-total: $ 7,259 $ 75 $ 11,163 $ 120 Acquired loans initially recorded at fair value with an allowance recorded: Residential one-to-four family $ 3,580 $ 32 $ 1,925 $ 19 Commercial and Multi-family 1,093 5 1,250 16 Home equity (2) 86 1 313 2 Sub-total $ 4,759 $ 38 $ 3,488 $ 37 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ 185 $ 5 $ - $ - Sub-total: $ 185 $ 5 $ - $ - Total Impaired Loans with an allowance recorded: $ 12,203 $ 118 $ 14,651 $ 157 __________ (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 March 31, 2018 and December 31, 2017. (In Thousands): As of March 31, 2018 As of December 31, 2017 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 $ 1,889 $ 2,056 $ - $ 2,073 $ 2,236 $ - Commercial and multi-family 11,582 11,974 - 12,212 12,763 - Commercial business (1) 582 1,845 - 181 908 - Home equity (2) 908 960 - 885 932 - Sub-total: $ 14,961 $ 16,835 $ - $ 15,351 $ 16,839 $ - Acquired loans initially recorded at fair value with no related allowance recorded: Residential one-to-four family $ 3,632 $ 3,816 $ - $ 4,119 $ 4,285 $ - Commercial and Multi-family 3,814 3,814 - 3,772 3,773 - Home equity (2) 245 245 - 216 268 - Sub-total: $ 7,691 $ 7,875 $ - $ 8,107 $ 8,326 $ - Acquired loans with deteriorated credit with no related allowance recorded: Residential one-to-four family $ 1,037 $ 1,604 $ - $ 1,413 $ 2,031 $ - Commercial and Multi-family 510 534 - 513 537 - Sub-total: $ 1,547 $ 2,138 $ - $ 1,926 $ 2,568 $ - Total Impaired Loans with no related allowance recorded: $ 24,199 $ 26,848 $ - $ 25,384 $ 27,733 $ - __________ (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 March 31, 2018 and December 31, 2017. (In Thousands): As of March 31, 2018 As of December 31, 2017 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 $ 5,183 $ 5,183 $ 305 $ 5,871 $ 5,871 $ 508 Commercial and Multi-family 485 526 124 - - - Commercial business (1) 1,065 1,189 764 1,599 2,431 1,033 Home equity (2) 156 156 24 157 157 25 Sub-total: $ 6,889 $ 7,054 $ 1,217 $ 7,627 $ 8,459 $ 1,566 Acquired loans initially recorded at fair value with an allowance recorded: - Residential one-to-four family $ 3,731 $ 3,945 $ 390 $ 3,429 $ 3,580 $ 281 Commercial and Multi-family 925 978 191 1,260 1,313 179 Home equity (2) 85 85 6 86 86 7 Sub-total $ 4,741 $ 5,008 $ 587 $ 4,775 $ 4,979 $ 467 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ 370 $ 418 $ 13 $ - $ - $ - Sub-total: $ 370 $ 418 $ 13 $ - $ - $ - Total Impaired Loans with an allowance recorded: $ 12,000 $ 12,480 $ 1,817 $ 12,402 $ 13,438 $ 2,033 Total Impaired Loans with no related allowance recorded: $ 24,199 $ 26,848 $ - $ 25,384 $ 27,733 $ - Total Impaired Loans: $ 36,199 $ 39,328 $ 1,817 $ 37,786 $ 41,171 $ 2,033 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) A troubled debt restructured (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. A TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal. The following table presents the total TDR loans at March 31, 2018, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands): Accrual Non-accrual Total March 31, 2018 # of Loans Amount # of Loans Amount # of Loans Amount Originated loans: Residential one-to-four family 6 $ 3,107 2 $ 268 8 $ 3,375 Commercial and multi-family 9 5,819 7 4,518 16 10,337 Commercial business (1) 1 406 2 - 3 406 Home equity (2) 4 653 1 44 5 697 Sub-total: 20 $ 9,985 12 $ 4,830 32 $ 14,815 Acquired loans recorded at fair value: Residential one-to-four family 21 $ 4,806 4 $ 1,300 25 $ 6,106 Commercial and Multi-family 11 3,814 1 590 12 4,404 Home equity (2) 2 261 - - 2 261 Sub-total: 34 $ 8,881 5 $ 1,890 39 $ 10,771 Acquired loans with deteriorated credit: Residential one-to-four family 5 $ 2,021 - $ - 5 $ 2,021 Commercial and Multi-family 1 534 - - 1 534 Sub-total: 6 $ 2,555 - $ - 6 $ 2,555 Total 60 $ 21,421 17 $ 6,720 77 $ 28,141 __________ (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 presents the total troubled debt restructured loans at December 31, 2017, excluding the purchase impairment mark on the acquired loans with deteriorated credit. (Dollars In Thousands): Accrual Non-accrual Total December 31, 2017 # of Loans Amount # of Loans Amount # of Loans Amount Originated loans: Residential one-to-four family 5 $ 2,352 2 $ 1,086 7 $ 3,438 Commercial and multi-family 8 4,846 8 5,416 16 10,262 Commercial business (1) 1 411 2 57 3 468 Home equity (2) 5 786 1 44 6 830 Sub-total: 19 $ 8,395 13 $ 6,603 32 $ 14,998 Acquired loans initially recorded at fair value: Residential one-to-four family 21 $ 4,992 4 $ 1,215 25 $ 6,207 Commercial and Multi-family 11 3,840 1 590 12 4,430 Home equity (2) 2 262 - - 2 262 Sub-total: 34 $ 9,094 5 $ 1,805 39 $ 10,899 Acquired loans with deteriorated credit: Residential one-to-four family 5 $ 2,031 - $ - 5 $ 2,031 Commercial and Multi-family 1 538 - - 1 538 Sub-total: 6 $ 2,569 - $ - 6 $ 2,569 Total 59 $ 20,058 18 $ 8,408 77 $ 28,466 __________ (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 information with regards to troubled debt restructurings which occurred during the three months ended March 31, 2018. (Dollars in Thousands): Three Months Ended March 31, 2018 Pre-Modification Outstanding Post-Modification Outstanding Number of Contracts Recorded Investments Recorded Investments Originated loans: Residential one-to-four family 1 $ 640 $ 640 Sub-total: 1 $ 640 $ 640 Acquired loans initially recorded at fair value: Residential one-to-four family 1 $ 179 $ 179 Sub-total: 1 $ 179 $ 179 Total 2 $ 819 $ 819 The loans included above are considered TDRs as a result of the Company implementing one or more of the following concessions: granting a material extension of time, issuing a forbearance agreement, adjusting the interest rate to a below market rate and/or accepting interest only for a period of time or a change in amortization period. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses. Note 6 - Loans Receivable and Allowance for Loan Losses (Continued) T he following table summarizes information in regards to troubled debt restructurings for which there was a payment default within twelve months of restructuring during the three months ended March 31, 2018. (Dollars in Thousands) Three Months Ended March 31, 2018 Number of Contracts Recorded Investment Originated loans: Commercial and multi-family 1 2,851 Sub-total: 1 $ 2,851 Acquired loans initially |