Loans Receivable and Allowance for Loan Losses | Note 7 - Loans Receivable and Allowance for Loan Losses The following tables present the recorded investment in loans receivable as of June 30, 2019 and December 31, 2018 by segment and class: June 30, 2019 December 31, 2018 (In thousands) Residential one-to-four family $ 258,688 $ 258,085 Commercial and multi-family 1,702,132 1,697,837 Construction 134,963 107,783 Commercial business (1) 164,569 165,193 Home equity (2) 63,927 72,895 Consumer 727 809 2,325,006 2,302,602 Less: Deferred loan fees, net (1,452) (1,751) Allowance for loan losses (23,789) (22,359) Sub-total (25,241) (24,110) Total Loans, net $ 2,299,765 $ 2,278,492 June 30, 2019 December 31, 2018 (In thousands) Originated loans: Residential one-to-four family $ 216,742 $ 213,200 Commercial and multi-family 1,556,580 1,540,766 Construction 134,963 106,187 Commercial business (1) 140,980 136,966 Home equity (2) 47,084 54,271 Consumer 676 726 Sub-total 2,097,025 2,052,116 Acquired loans initially recorded at fair value: Residential one-to-four family 40,576 43,495 Commercial and multi-family 139,903 150,239 Construction - 1,596 Commercial business (1) 22,649 27,373 Home equity (2) 16,601 18,376 Consumer 51 83 Sub-total 219,780 241,162 Acquired loans with deteriorated credit: Residential one-to-four family 1,370 1,390 Commercial and multi-family 5,649 6,832 Construction - - Commercial business (1) 940 854 Home equity (2) 242 248 Consumer - - Sub-total 8,201 9,324 Total Loans 2,325,006 2,302,602 Less: Deferred loan fees, net (1,452) (1,751) Allowance for loan losses (23,789) (22,359) Sub-total (25,241) (24,110) Total Loans, net $ 2,299,765 $ 2,278,492 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - Loans Receivable and Allowance for Loan Losses (Continued) Purchased Credit Impaired Loans The carrying value of loans acquired in the IAB acquisition and accounted for in accordance with ASC Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” was $6.1 million at June 30, 2019, which was $1.1 million less than the balance at December 31, 2018. Under ASC Subtopic 310-30, these loans, referred to as purchased credit impaired (“PCI”) loans, may be aggregated and accounted for as pools of loans if the loans being aggregated have common risk characteristics. The Company elected to account for the loans with evidence of credit deterioration individually rather than aggregate them into pools. The difference between the undiscounted cash flows expected at acquisition and the investment in the acquired loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non- accretable difference,” are not recognized as a yield adjustment, as a loss accrual or as a valuation allowance. Increases in expected cash flows subsequent to the acquisition are recognized prospectively through an adjustment of the yield on the loans over the remaining life, while decreases in expected cash flows are recognized as impairments through a loss provision and an increase in the allowance for loan and lease losses. Valuation allowances (recognized in the allowance for loan and lease losses) on these impaired loans reflect only losses incurred after the acquisition (representing all cash flows that were expected at acquisition but currently are not expected to be received). The following table presents changes in the accretable discount on loans acquired with deteriorated credit quality for which the Company applies the provisions of ASC 310-30 (in thousands): Three months ended June 30, 2019 Three months ended June 30, 2018 Six months ended June 30, 2019 Six months ended June 30, 2018 (Dollars in thousands) Balance, beginning of Period $ 2,451 $ 2,146 $ 2,704 $ 2,230 Additions from acquisition of IAB - 1,399 - 1,399 Accretion recorded to interest income (222) (292) (475) (376) Balance, end of Period $ 2,229 $ 3,253 $ 2,229 $ 3,253 The following table presents the unpaid principal balance and the related recorded investment of acquired loans included in the Company’s Consolidated Statements of Financial Condition. (In thousands): June 30, December 31, 2019 2018 Unpaid principal balance $ 271,944 $ 301,357 Recorded investment 227,981 250,486 Note 7 - 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 portfolio. 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 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 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. At the same time, the marketability of the underlying properties 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. Commercial and multi-family real estate lending entails 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. 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 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. An unallocated component is maintained to cover uncertainties that could affect management’s estimates of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio. Note 7 - 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, 2019, and the related portion of the allowances for loan losses that is allocated to each loan class, as of June 30, 2019 (in thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: Originated Loans: $ 2,471 $ 15,077 $ 1,209 $ 3,328 $ 265 $ - $ 32 $ 22,382 Acquired loans initially recorded at fair value: 404 - - - - - - 404 Acquired loans with deteriorated credit: 32 144 - 39 3 - - 218 Beginning Balance, March 31, 2019 2,907 15,221 1,209 3,367 268 - 32 23,004 Recoveries: Originated Loans: - - - 7 - - - 7 Acquired loans initially recorded at fair value: 3 - 10 2 8 - - 23 Sub-total: 3 - 10 9 8 - - 30 Provisions: Originated Loans: 109 (826) 245 660 9 1 118 316 Acquired loans initially recorded at fair value: 324 - (10) (2) (8) - - 304 Acquired loans with deteriorated credit: 114 (7) - 28 - - - 135 Sub-total: 547 (833) 235 686 1 1 118 755 Totals: Originated Loans: 2,580 14,251 1,454 3,995 274 1 150 22,705 Acquired loans initially recorded at fair value: 731 - - - - - - 731 Acquired loans with deteriorated credit: 146 137 - 67 3 - - 353 Ending Balance, June 30, 2019 $ 3,457 $ 14,388 $ 1,454 $ 4,062 $ 277 $ 1 $ 150 $ 23,789 Loans Receivable: Ending Balance Originated Loans: $ 216,742 $ 1,556,580 $ 134,963 $ 140,980 $ 47,084 $ 676 $ - $ 2,097,025 Ending Balance Acquired loans initially recorded at fair value: 40,576 139,903 - 22,649 16,601 51 - 219,780 Ending Balance Acquired loans with deteriorated credit: 1,370 5,649 - 940 242 - - 8,201 Total Gross Loans: $ 258,688 $ 1,702,132 $ 134,963 $ 164,569 $ 63,927 $ 727 $ - $ 2,325,006 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 4,554 $ 11,266 $ - $ 1,955 $ 757 $ - $ - $ 18,532 Ending Balance Acquired loans initially recorded at fair value: 5,264 4,793 - 427 497 - - 10,981 Ending Balance Acquired loans with deteriorated credit: 1,370 5,450 - 899 43 - - 7,762 Ending Balance Loans individually evaluated for impairment: $ 11,188 $ 21,509 $ - $ 3,281 $ 1,297 $ - $ - $ 37,275 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 212,188 $ 1,545,314 $ 134,963 $ 139,025 $ 46,327 $ 676 $ - $ 2,078,493 Ending Balance Acquired loans initially recorded at fair value: 35,312 135,110 - 22,222 16,104 51 - 208,799 Ending Balance Acquired loans with deteriorated credit: - 199 - 41 199 - - 439 Ending Balance Loans collectively evaluated for impairment: $ 247,500 $ 1,680,623 $ 134,963 $ 161,288 $ 62,630 $ 727 $ - $ 2,287,731 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - 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 six months ended June 30, 2019 (in thousands). Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: Originated Loans: $ 2,374 $ 14,000 $ 1,003 $ 3,869 $ 313 $ 2 $ 189 $ 21,750 Acquired loans initially recorded at fair value: 335 - - - - - - 335 Acquired loans with deteriorated credit: 39 168 - 64 3 - - 274 Beginning Balance, January 1, 2018 2,748 14,168 1,003 3,933 316 2 189 22,359 Charge-offs: Originated Loans: - 111 - 145 - - - 256 Sub-total: - 111 - 145 - - - 256 Recoveries: Originated Loans: - - - 15 - - - 15 Acquired loans initially recorded at fair value: 3 10 - 3 11 - - 27 Sub-total: 3 10 - 18 11 - - 42 Provisions: Originated Loans: 206 362 451 256 (39) (1) (39) 1,196 Acquired loans initially recorded at fair value: 393 (10) - (3) (11) - - 369 Acquired loans with deteriorated credit: 107 (31) - 3 - - - 79 Sub-total: 706 321 451 256 (50) (1) (39) 1,644 Totals: Originated Loans: 2,580 14,251 1,454 3,995 274 1 150 22,705 Acquired loans initially recorded at fair value: 731 - - - - - - 731 Acquired loans with deteriorated credit: 146 137 - 67 3 - - 353 Ending Balance, June 30, 2019 $ 3,457 $ 14,388 $ 1,454 $ 4,062 $ 277 $ 1 $ 150 $ 23,789 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - 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, 2018 (in thousands). Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: 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 Beginning Balance, March 31, 2018 2,667 11,892 492 2,700 384 4 198 18,337 Charge-offs: Originated Loans: - - - 5 - - - - 5 Sub-total: - - - 5 - - - 5 Recoveries: Originated Loans: 1 - - 6 - - - 7 Acquired loans initially recorded at fair value: 85 - - 12 - - - 97 Acquired loans with deteriorated credit: - - - 144 - - - 144 Sub-total: 86 - - 162 - - - 248 Provisions: Originated Loans: 3 1,204 24 723 63 37 90 2,144 Acquired loans initially recorded at fair value: (36) 92 - 4 - - - 60 Acquired loans with deteriorated credit: - - - (144) - - - (144) Sub-total: (33) 1,296 24 583 63 37 90 2,060 Totals: Originated Loans: 2,249 13,084 516 3,400 447 41 288 20,025 Acquired loans initially recorded at fair value: 418 92 - 40 - - - 550 Acquired loans with deteriorated credit: 53 12 - - - - - 65 Ending Balance, June 30, 2018 $ 2,720 $ 13,188 $ 516 $ 3,440 $ 447 $ 41 $ 288 $ 20,640 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - 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 six months ended June 30, 2018 (in thousands). Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for credit 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, 2018 2,650 11,668 518 2,018 338 6 177 17,375 Charge-offs: Originated Loans: 302 - - 5 - - - 307 Acquired loans initially recorded at fair value: 72 - - - 6 - - 78 Sub-total: 374 - - 5 - - - 385 Recoveries: Originated Loans: 1 - - 6 - - - 7 Acquired loans recorded at fair value: 85 - - 12 - - - 97 Acquired loans with deteriorated credit: - - - 144 - - - 144 Sub-total: 86 - - 162 - - - 248 Provisions: Originated Loans: 182 1,428 (2) 1,381 109 35 111 3,244 Acquired loans initially recorded at fair value: 163 92 - 28 6 - - 289 Acquired loans with deteriorated credit: 13 - - (144) - - - (131) Sub-total: 358 1,520 (2) 1,265 115 35 111 3,402 Totals: Originated Loans: 2,249 13,084 516 3,400 447 41 288 20,025 Acquired loans initially recorded at fair value: 418 92 - 40 - - - 550 Acquired loans with deteriorated credit: 53 12 - - - - - 65 Ending Balance, June 30, 2018 $ 2,720 $ 13,188 $ 516 $ 3,440 $ 447 $ 41 $ 288 $ 20,640 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the activity in the Bank’s allowance for loan losses for the year ended December 31, 2018 and recorded in loans receivable at December 31, 2018. 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 (in thousands). Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Loans Receivable: Ending Balance Originated Loans: $ 213,200 $ 1,540,766 $ 106,187 $ 136,966 $ 54,271 $ 726 $ - $ 2,052,116 Ending Balance Acquired Loans: 43,495 150,239 1,596 27,373 18,376 83 - 241,162 Ending Balance Acquired loans with deteriorated credit: 1,390 6,832 - 854 248 - - 9,324 Total Gross Loans: $ 258,085 $ 1,697,837 $ 107,783 $ 165,193 $ 72,895 $ 809 $ - $ 2,302,602 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 6,043 $ 12,822 $ - $ 2,372 $ 915 $ - $ - $ 22,152 Ending Balance Acquired Loans: 6,139 4,881 - 53 306 - - 11,379 Ending Balance Acquired loans with deteriorated credit: 1,390 6,628 - 810 49 - - 8,877 Ending Balance Loans individually evaluated for impairment: $ 13,572 $ 24,331 $ - $ 3,235 $ 1,270 $ - $ - $ 42,408 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 207,157 $ 1,527,944 $ 106,187 $ 134,594 $ 53,356 $ 726 $ - $ 2,029,964 Ending Balance Acquired Loans: 37,356 145,358 1,596 27,320 18,070 83 - 229,783 Ending Balance Acquired loans with deteriorated credit: - 204 - 44 199 - - 447 Ending Balance Loans collectively evaluated for impairment: $ 244,513 $ 1,673,506 $ 107,783 $ 161,958 $ 71,625 $ 809 $ - $ 2,260,194 N ote 7 - 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, 2019 and December 31, 2018. 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, 2019 and December 31, 2018, 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, 2019 As of December 31, 2018 (In thousands) (In thousands) Non-Accruing Loans: Originated loans: Residential one-to-four family $ 1,022 $ 1,160 Commercial and multi-family 1,881 2,568 Commercial business (1) 745 356 Home equity (2) 129 277 Sub-total: 3,777 4,361 Acquired loans initially recorded at fair value: Residential one-to-four family 1,116 2,165 Commercial and multi-family - 605 Commercial business (1) 378 48 Home equity (2) 217 42 Sub-total: 1,711 2,860 Total $ 5,488 $ 7,221 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Nonaccrual loans in the preceding table do not include loans acquired with deteriorated credit quality which were recorded at their fair value at acquisition and totaled $5.9 million at June 30, 2019, and $7.0 million at December 31, 2018. Note 7 - 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, 2019 and 2018 (In thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2019 2018 2018 2019 2019 2018 2018 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 $ 2,818 $ 18 $ 1,912 $ 7 $ 2,753 $ 46 $ 1,965 $ 15 Commercial and Multi-family 11,499 120 11,973 86 11,903 254 12,052 172 Commercial business (1) 1,145 41 - 43 1,088 83 622 87 Home equity (2) 680 6 843 7 707 12 912 15 Consumer - - 926 - - - - - Sub-total: $ 16,142 $ 185 $ 15,654 $ 143 $ 16,451 $ 395 $ 15,551 $ 289 Acquired loans initially recorded at fair value with no related allowance recorded: Residential one-to-four family $ 2,216 $ 25 $ 3,385 $ 23 $ 2,518 $ 50 $ 3,630 $ 46 Commercial and Multi-family 3,917 55 3,639 54 3,932 110 3,683 109 Commercial business (1) 51 1 - - 52 2 - Home equity (2) 336 3 245 3 291 6 235 7 Consumer - - - - 7 - - - Sub-total $ 6,520 $ 84 $ 7,269 $ 80 $ 6,800 $ 168 $ 7,548 $ 162 Acquired loans with deteriorated credit with no related allowance recorded: Residential one-to-four family (3) $ 929 $ 14 $ 1,035 $ 16 $ 960 $ 30 $ 1,161 $ 33 Commercial and Multi-family (3) 5,461 7 6,091 122 5,850 13 4,231 244 Construction (3) - - 1,335 213 - - 890 426 Commercial business (1)(3) 829 - 493 135 823 - 329 270 Home equity (2)(3) 45 - 200 5 46 - 133 10 Consumer (3) - - 27 1 - - 18 1 Sub-total: $ 7,264 $ 21 $ 9,181 $ 492 $ 7,679 $ 43 $ 6,762 $ 984 Total Impaired Loans with no related allowance recorded: $ 29,926 $ 290 $ 32,104 $ 715 $ 30,930 $ 606 $ 29,861 $ 1,435 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. (3) Does not include accretable yield on loans acquired with deteriorated credit. Note 7 - 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, 2019 and 2018. (In thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2019 2018 2018 2019 2019 2018 2018 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 $ 2,452 $ 24 $ 4,752 $ 47 $ 2,775 $ 49 $ 5,125 $ 95 Commercial and Multi-family - - 485 - 37 - 323 - Commercial business (1) 574 27 1,094 20 849 54 1,262 40 Home equity (2) 152 2 156 2 152 4 156 3 Consumer - - 21 - - - 14 - Sub-total: $ 3,178 $ 53 $ 6,508 $ 69 $ 3,813 $ 107 $ 6,880 $ 138 Acquired loans initially recorded at fair value with an allowance recorded: Residential one-to-four family $ 3,245 $ 28 $ 3,564 $ 28 $ 3,169 $ 52 $ 3,519 $ 56 Commercial and Multi-family 897 4 923 5 905 8 1,035 9 Commercial business (1) 189 - - - 126 - - - Home equity (2) 84 1 85 1 84 3 85 3 Sub-total $ 4,415 $ 33 $ 4,572 $ 34 $ 4,284 $ 63 $ 4,639 $ 68 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family (3) $ 447 $ 7 $ 370 $ 5 $ 420 $ 12 $ 246 $ 10 Sub-total: $ 447 $ 7 $ 370 $ 5 $ 420 $ 12 $ 246 $ 10 Total Impaired Loans with an allowance recorded: $ 8,040 $ 93 $ 11,450 $ 108 $ 8,517 $ 182 $ 11,765 $ 216 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. (3) Does not include accretable yield on loans acquired with deteriorated credit. Note 7 - 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, 2019 and December 31, 2018. (In thousands): As of June 30, 2019 As of December 31, 2018 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 $ 2,112 $ 2,180 $ - $ 2,623 $ 2,689 $ - Commercial and multi-family 11,266 11,749 - 12,711 13,308 - Commercial business (1) 1,138 3,714 - 974 3,411 - Home equity (2) 606 614 - 762 779 - Sub-total: $ 15,122 $ 18,257 $ - $ 17,070 $ 20,187 $ - Acquired loans initially recorded at fair value with no related allowance recorded: Residential one-to-four family $ 2,049 $ 2,175 $ - $ 3,123 $ 3,254 $ - Commercial and Multi-family 3,903 3,903 - 3,961 3,961 - Commercial business (1) 50 50 - 53 53 - Home equity (2) 413 416 - 222 222 - Sub-total: $ 6,415 $ 6,544 $ - $ 7,359 $ 7,490 $ - Acquired loans with deteriorated credit with no related allowance recorded: Residential one-to-four family $ 842 $ 1,398 $ - $ 1,023 $ 1,579 $ - Commercial and Multi-family 5,450 6,574 - 6,628 7,957 - Commercial business (1) 899 6,453 - 810 6,253 - Home equity (2) 43 52 - 49 57 - Sub-total: $ 7,234 $ 14,477 $ - $ 8,510 $ 15,846 $ - Total Impaired Loans with no related allowance recorded: $ 28,771 $ 39,278 $ - $ 32,939 $ 43,523 $ - __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - 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, 2019 and December 31, 2018. (In thousands): As of June 30, 2019 As of December 31, 2018 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 $ 2,442 $ 2,449 $ 92 $ 3,420 $ 3,420 $ 229 Commercial and Multi-family - - - 111 153 111 Commercial business (1) 817 1,944 773 1,398 1,549 905 Home equity (2) 151 151 19 153 153 21 Sub-total: $ 3,410 $ 4,544 $ 884 $ 5,082 $ 5,275 $ 1,266 Acquired loans initially recorded at fair value with an allowance recorded: Residential one-to-four family $ 3,215 $ 3,380 $ 500 $ 3,016 $ 3,166 $ 532 Commercial and Multi-family 890 1,079 315 920 1,094 369 Commercial business (1) 377 1,489 377 - - - Home equity (2) 84 84 5 84 84 5 Sub-total $ 4,566 $ 6,032 $ 1,197 $ 4,020 $ 4,344 $ 906 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ 528 $ 575 $ 12 $ 367 $ 414 $ 9 Sub-total: $ 528 $ 575 $ 12 $ 367 $ 414 $ 9 Total Impaired Loans with an allowance recorded: $ 8,504 $ 11,151 $ 2,093 $ 9,469 $ 10,033 $ 2,181 Total Impaired Loans with no related allowance recorded: $ 28,771 $ 39,278 $ - $ 32,939 $ 43,523 $ - Total Impaired Loans: $ 37,275 $ 50,429 $ 2,093 $ 42,408 $ 53,556 $ 2,181 __________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 7 - 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 concession 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. 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. At June 30, 2019 At December 31, 2018 (In thousands) Recorded investment in TDRs: Accrual status $ 21,828 $ 22,477 Non-accrual status 2,201 4,136 Total recorded investment in TDRs $ 24,029 $ 26,613 There were no new TDRs originated for the three months ended June 30, 2019 and June 30, 2018. TDRs originated for the six months ended June 30, 2019 totaled $1.2 million for three contracts and $819,000 for two contracts during the six months ended June 30, 2018. TDRs for which there was a payment default within twelve months of restructuring totaled $0 during the three months ended June 30, 2019 and $639,000 for one contract during the three months ended June 30, 2018. TDRs for which there was a payment default within twelve months of restructuring totaled $0 during the six months ended June 30, 2019 and $851,674 for two contracts during the six months ended June 30, 2018. Note 7 - Loans Receivable and Allowance for Loan Losses (Continued) The following table sets forth the delinquency status of total loans receivable as of June 30, 2019: Loans Receivable 30-59 Days 60-90 Days Greater Than Total Past Total Loans >90 Days Past Due Past Due 90 Days Due Current Receivable and Accruing (In thousands) Originated loans: Residential one-to-four family $ 1,851 $ 630 $ 214 $ 2,695 $ 214,047 $ 216,742 $ - Commercial and multi-family 7,694 1,062 1,257 10,013 1,546,567 1,556,580 - Construction - - - - 134,963 134,963 - Commercial business (1) 593 - 553 1,146 139,834 140,980 - Home equity (2) - - 37 37 47,047 47,084 - Consumer - - - - 676 676
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