Loans Receivable and Allowance for Loan Losses | Note 7 - Loans Receivable and Allowance for Loan Losses The following table presents the recorded investment in loans receivable as of September 30, 2018 and December 31, 2017 by segment and class: September 30, 2018 December 31, 2017 (In thousands) Originated loans: Residential one-to-four family $ 207,238 $ 182,544 Commercial and multi-family 1,530,966 1,213,390 Construction 74,029 50,497 Commercial business (1) 112,555 66,775 Home equity (2) 53,332 38,725 Consumer 1,278 1,183 Sub-total 1,979,398 1,553,114 Acquired loans initially recorded at fair value: Residential one-to-four family 45,515 47,808 Commercial and multi-family 159,523 46,609 Construction 1,572 - Commercial business (1) 27,762 4,057 Home equity (2) 19,984 8,955 Consumer 90 122 Sub-total 254,446 107,551 Acquired loans with deteriorated credit: Residential one-to-four family 1,396 1,413 Commercial and multi-family 10,616 731 Construction - - Commercial business (1) 1,995 - Home equity (2) 398 - Consumer - - Sub-total 14,405 2,144 Total Loans 2,248,249 1,662,809 Less: Deferred loan fees, net (1,744) (1,757) Allowance for loan losses (21,504) (17,375) Sub-total (23,248) (19,132) Total Loans, net $ 2,225,001 $ 1,643,677 _____________________________ (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 $13.3 million at September 30, 2018, which was $1.6 million less than the balance at the time of acquisition on April 17, 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 yield for PCI loans: Nine months ended September 30, 2018 (Dollars in thousands) Accretable yield, beginning balance $ - Acquisition of impaired loans 1,399 Accretable yield amortized to interest income (388) Reclassification from non-accretable difference - Accretable yield, ending balance $ 1,011 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 September 30, 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 September 30, 2018 (In thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for loan losses: Originated Loans: $ 2,249 $ 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 Beginning Balance, June 30, 2018 2,720 13,188 516 3,440 447 41 288 20,640 Charge-offs: Originated Loans: - - - 10 9 42 - 61 Sub-total: - - - 10 9 42 - 61 Recoveries: Acquired loans initially recorded at fair value: - - - 15 3 - - 18 Sub-total: - - - 15 3 - - 18 Provisions: Originated Loans: 137 1,199 136 (179) (125) 1 (269) 900 Acquired loans initially recorded at fair value: (138) (92) - (55) (3) - - (288) Acquired loans with deteriorated credit: (15) 241 - 63 6 - - 295 Sub-total: (16) 1,348 136 (171) (122) 1 (269) 907 Totals: Originated Loans: 2,386 14,283 652 3,211 313 - 19 20,864 Acquired loans initially recorded at fair value: 280 - - - - - - 280 Acquired loans with deteriorated credit: 38 253 - 63 6 - - 360 Ending Balance, September 30, 2018 $ 2,704 $ 14,536 $ 652 $ 3,274 $ 319 $ - $ 19 $ 21,504 Loans Receivable: Ending Balance Originated Loans: $ 207,238 $ 1,530,966 $ 74,029 $ 112,555 $ 53,332 $ 1,278 $ - $ 1,979,398 Ending Balance Acquired loans initially recorded at fair value: 45,515 159,523 1,572 27,762 19,984 90 - 254,446 Ending Balance Acquired loans with deteriorated credit: 1,396 10,616 - 1,995 398 - - 14,405 Total Gross Loans: $ 254,149 $ 1,701,105 $ 75,601 $ 142,312 $ 73,714 $ 1,368 $ - $ 2,248,249 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 6,207 $ 12,811 $ - $ 2,452 $ 1,033 $ - $ - $ 22,503 Ending Balance Acquired loans initially recorded at fair value: 6,584 4,913 - 349 287 - - 12,133 Ending Balance Acquired loans with deteriorated credit: 1,396 10,288 - 857 74 - - 12,615 Ending Balance Loans individually evaluated for impairment: $ 14,187 $ 28,012 $ - $ 3,658 $ 1,394 $ - $ - $ 47,251 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 202,325 $ 1,518,155 $ 74,029 $ 110,103 $ 52,299 $ 1,278 $ - $ 1,958,189 Ending Balance Acquired loans initially recorded at fair value: 37,637 154,610 1,572 27,413 19,697 90 - 241,019 Ending Balance Acquired loans with deteriorated credit: - 328 - 1,138 324 - - 1,790 Ending Balance Loans collectively evaluated for impairment: $ 239,962 $ 1,673,093 $ 75,601 $ 138,654 $ 72,320 $ 1,368 $ - $ 2,200,998 _____________________________ (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 set forth the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2018, and the related portion of the allowances 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: $ 2,368 $ 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 - - 15 9 42 - 368 Acquired loans initially recorded at fair value: 72 - - - 6 - - 78 Sub-total: 374 - - 15 15 42 - 446 Recoveries: Originated Loans: 1 - - 6 - - - 7 Acquired loans initially recorded at fair value: 85 - - 27 3 - - 115 Acquired loans with deteriorated credit: - - - 143 1 - - 144 Sub-total: 86 - - 176 4 - - 266 Provisions: Originated Loans: 319 2,627 134 1,202 (16) 36 (158) 4,144 Acquired loans initially recorded at fair value: 25 - - (27) 3 - - 1 Acquired loans with deteriorated credit: (2) 241 - (80) 5 - - 164 Sub-total: 342 2,868 134 1,095 (8) 36 (158) 4,309 Totals: Originated Loans: 2,386 14,283 652 3,211 313 - 19 20,864 Acquired loans initially recorded at fair value: 280 - - - - - - 280 Acquired loans with deteriorated credit: 38 253 - 63 6 - - 360 Ending Balance, September 30, 2018 $ 2,704 $ 14,536 $ 652 $ 3,274 $ 319 $ - $ 19 $ 21,504 _____________________________ (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 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 Total Allowance for credit losses: Originated Loans: $ 2,098 $ 10,621 $ 736 $ 3,079 $ 374 $ 2 $ 16,979 Acquired loans initially 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 17,209 Charge-offs: Originated Loans: - 190 - 1,553 - 11 1,754 Acquired loans initially 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 1,674 Acquired loans initially 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 2,110 Totals: Originated Loans: 2,368 11,656 518 2,018 338 6 17,081 Acquired loans initially 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 $ 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 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 September 30, 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 September 30, 2017 (In thousands): Residential Commercial & Multi-family Construction Commercial Business (1) Home Equity (2) Consumer Unallocated Total Allowance for credit losses: Originated Loans: $ 2,092 $ 11,182 $ 753 $ 3,229 $ 347 $ 5 $ 99 $ 17,707 Acquired loans initially recorded at fair value: 203 - - - - - - 203 Acquired loans with deteriorated credit: 41 13 - - - - - 54 Beginning Balance, June 30, 2017 2,336 11,195 753 3,229 347 5 99 17,964 Charge-offs: Originated Loans: - - - 1 - 5 - 6 Acquired loans initially recorded at fair value: - - - - 20 - - 20 Sub-total: - - - 1 20 5 - 26 Provisions: Originated Loans: 234 304 (135) 46 (20) 7 7 443 Acquired loans initially recorded at fair value: 47 3 - - 20 - - 70 Acquired loans with deteriorated credit: (1) (1) - - - - - (2) Sub-total: 280 306 (135) 46 - 7 7 511 Totals: Originated Loans: 2,326 11,486 618 3,274 327 7 106 18,144 Acquired loans initially recorded at fair value: 250 3 - - - - - 253 Acquired loans with deteriorated credit: 40 12 - - - - - 52 Ending Balance, September 30, 2017 $ 2,616 $ 11,501 $ 618 $ 3,274 $ 327 $ 7 $ 106 $ 18,449 Loans Receivable: Ending Balance Originated Loans: $ 178,533 1,182,098 60,699 63,705 38,297 1,239 - $ 1,524,571 Ending Balance Acquired loans initially recorded at fair value: 50,602 49,546 - 3,355 9,216 156 - 112,875 Ending Balance Acquired loans with deteriorated credit: 1,419 737 - - - - - 2,156 Total Gross Loans: $ 230,554 $ 1,232,381 $ 60,699 $ 67,060 $ 47,513 $ 1,395 $ - $ 1,639,602 Ending Balance: Loans individually evaluated for impairment: Ending Balance Originated Loans: $ 8,257 12,469 - 3,539 1,055 - - $ 25,320 Ending Balance Acquired loans initially recorded at fair value: 7,647 5,662 - - 429 - - 13,738 Ending Balance Acquired loans with deteriorated credit: 1,419 515 - - - - - 1,934 Ending Balance Loans individually evaluated for impairment: $ 17,323 $ 18,646 $ - $ 3,539 $ 1,484 $ - $ - $ 40,992 Ending Balance: Loans collectively evaluated for impairment: Ending Balance Originated Loans: $ 170,276 1,169,629 60,699 60,166 37,242 1,239 - $ 1,499,251 Ending Balance Acquired loans initially recorded at fair value: 42,955 43,884 - 3,355 8,787 156 - 99,137 Ending Balance Acquired loans with deteriorated credit: - 222 - - - - - 222 Ending Balance Loans collectively evaluated for impairment: $ 213,231 $ 1,213,735 $ 60,699 $ 63,521 $ 46,029 $ 1,395 $ - $ 1,598,610 _____________________________ (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 loans losses for the nine months ended September 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 initially 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 - 11 - 202 Acquired loans initially recorded at fair value: 308 - - - 54 - - 362 Sub-total: 308 190 - 1 - - - 564 Recoveries: Acquired loans with deteriorated credit: - - - 19 - - - 19 Sub-total: - - - 19 - - - 19 Provisions: Originated Loans: 228 1,055 (118) 196 (47) 16 37 1,367 Acquired loans initially recorded at fair value: 388 3 - - 50 - - 441 Acquired loans with deteriorated credit: (3) (1) - (19) - - - (23) Sub-total: 613 1,057 (118) 177 3 16 37 1,785 Totals: Originated Loans: 2,326 11,486 618 3,274 327 7 106 18,144 Acquired loans initially recorded at fair value: 250 3 - - - - - 253 Acquired loans with deteriorated credit: 40 12 - - - - - 52 Ending Balance, September 30, 2017 $ 2,616 $ 11,501 $ 618 $ 3,274 $ 327 $ 7 $ 106 $ 18,449 _____________________________ (1) Includes business lines of credit. (2) Includes home equity lines of credit. Note 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 September 30, 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 September 30, 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 September 30, 2018 As of December 31, 2017 (In thousands) (In thousands) Non-Accruing Loans: Originated loans: Residential one-to-four family $ 1,457 $ 2,545 Commercial and multi-family 5,572 6,762 Commercial business (1) 251 299 Home equity (2) 338 201 Sub-total: 7,618 9,807 Acquired loans initially recorded at fair value: Residential one-to-four family 2,590 2,372 Commercial and multi-family 590 850 Commercial business (1) 295 - Home equity (2) - 7 Sub-total: 3,475 3,229 Total $ 11,093 $ 13,036 __________ (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 $10.8 million at September 30, 2018, and $0 at December 31, 2017. 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 months and nine months ended September 30, 2018 and 2017 (In thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 2017 2017 2018 2018 2017 2017 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 $ 1,921 $ 7 $ 2,761 $ 10 $ 1,910 $ 22 $ 3,121 $ 30 Commercial and Multi-family 12,345 86 12,269 68 12,090 257 12,397 205 Commercial business (1) 1,074 43 664 - 910 130 528 - Home equity (2) 912 7 879 10 910 22 875 29 Sub-total: $ 16,252 $ 143 $ 16,573 $ 88 $ 15,820 $ 431 $ 16,921 $ 264 Acquired loans initially recorded at fair value With no related allowance recorded: Residential one-to-four family $ 3,349 $ 16 $ 4,360 $ 35 $ 3,443 $ 76 $ 4,970 $ 105 Commercial and Multi-family 3,733 53 4,036 56 3,760 168 4,070 168 Commercial business (1) 51 1 - - 34 2 - - Home equity (2) 223 3 462 - 230 10 533 10 Consumer 11 - - 4 7 - - - Sub-total $ 7,367 $ 73 $ 8,858 $ 95 $ 7,474 $ 256 $ 9,573 $ 283 Acquired loans with deteriorated credit With no related allowance recorded: Residential one-to-four family (3) $ 1,030 $ 16 $ 1,422 $ 22 $ 1,032 $ 48 $ 1,426 $ 65 Commercial and Multi-family (3) 10,980 7 517 7 7,490 20 518 20 Construction (3) 1,335 - - - 890 - - - Commercial business (1)(3) 922 - - - 614 - - - Home equity (2)(3) 226 - - - 151 - - - Consumer (3) 27 - - - 18 - - - Sub-total: $ 14,520 $ 23 $ 1,939 $ 29 $ 10,195 $ 68 $ 1,944 $ 85 Total Impaired Loans With no related allowance recorded: $ 38,139 $ 239 $ 27,370 $ 212 $ 33,489 $ 755 $ 28,438 $ 632 __________ (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 nine months ended September 30, 2018 and 2017. (In thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 2017 2017 2018 2018 2017 2017 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 $ 4,310 $ 47 $ 5,887 $ 46 $ 4,601 $ 141 $ 6,075 $ 137 Commercial and Multi-family 485 - 357 - 485 - 561 - Commercial business (1) 1,266 22 3,196 20 1,199 65 3,411 61 Home equity (2) 155 2 196 2 155 5 242 5 Consumer 21 - - - 14 - - - Sub-total: $ 6,237 $ 71 $ 9,636 $ 68 $ 6,454 $ 211 $ 10,289 $ 203 Acquired loans initially recorded at fair value with an allowance recorded: Residential one-to-four family $ 3,210 $ 24 $ 3,350 $ 21 $ 3,384 $ 73 $ 2,842 $ 64 Commercial and Multi-family 916 4 1,712 16 919 13 1,714 47 Commercial business (1) 124 - - - 82 Home equity (2) 85 1 96 2 85 4 99 5 Sub-total $ 4,335 $ 29 $ 5,158 $ 39 $ 4,470 $ 90 $ 4,655 $ 116 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ 369 $ 5 $ - $ - $ 369 $ 10 $ - $ - Sub-total: $ 369 $ 5 $ - $ - $ 369 $ 10 $ - $ - Total Impaired Loans with an allowance recorded: $ 10,941 $ 105 $ 14,794 $ 107 $ 11,293 $ 311 $ 14,944 $ 319 __________ (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 and unpaid principal balances where there is no related allowance on impaired loans by portfolio class at September 30, 2018 and December 31, 2017. (In thousands): As of September 30, 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 $ 1,908 $ 1,964 $ - $ 2,073 $ 2,236 $ - Commercial and multi-family 12,326 12,863 - 12,212 12,763 - Commercial business (1) 1,043 3,652 - 181 908 - Home equity (2) 879 898 - 885 932 - Sub-total: $ 16,156 $ 19,377 $ - $ 15,351 $ 16,839 $ - Acquired loans initially recorded at fair value with no related allowance recorded: Residential one-to-four family $ 3,560 $ 3,731 $ - $ 4,119 $ 4,285 $ - Commercial and Multi-family 4,001 4,001 - 3,772 3,773 - Commercial business (1) 102 605 - - - - Home equity (2) 202 202 - 216 268 - Sub-total: $ 7,865 $ 8,539 $ - $ 8,107 $ 8,326 $ - Acquired loans with deteriorated credit with no related allowance recorded: Residential one-to-four family $ 1,028 $ 1,587 $ - $ 1,413 $ 2,031 $ - Commercial and Multi-family 10,288 11,820 - 513 537 - Commercial business (1) 857 6,987 - - - - Home equity (2) 74 81 - - - - Sub-total: $ 12,247 $ 20,475 $ - $ 1,926 $ 2,568 $ - Total Impaired Loans with no related allowance recorded: $ 36,268 $ 48,391 $ - $ 25,384 $ 27,733 $ - __________ (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 September 30, 2018 and December 31, 2017. (In thousands): As of September 30, 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 $ 4,299 $ 4,299 $ 241 $ 5,871 $ 5,871 $ 508 Commercial and Multi-family 485 526 112 - - - Commercial business (1) 1,409 1,578 898 1,599 2,431 1,033 Home equity (2) 154 154 22 157 157 25 Sub-total: $ 6,347 $ 6,557 $ 1,273 $ 7,627 $ 8,459 $ 1,566 Acquired loans initially recorded at fair value with an allowance recorded: - Residential one-to-four family $ 3,024 $ 3,174 $ 493 $ 3,429 $ 3,580 $ 281 Commercial and Multi-family 912 965 284 1,260 1,313 179 Commercial business (1) 247 247 62 - - - Home equity (2) 85 85 6 86 86 7 Sub-total $ 4,268 $ 4,471 $ 845 $ 4,775 $ 4,979 $ 467 Acquired loans with deteriorated credit with an allowance recorded: Residential one-to-four family $ 368 $ 417 $ 11 $ - $ - $ - Sub-total: $ 368 $ 417 $ 11 $ - $ - $ - Total Impaired Loans with an allowance recorded: $ 10,983 $ 11,445 $ 2,129 $ 12,402 $ 13,438 $ 2,033 Total Impaired Loans with no related allowance recorded: $ 36,268 $ 48,391 $ - $ 25,384 $ 27,733 $ - Total Impaired Loans: $ 47,251 $ 59,836 $ 2,129 $ 37,786 $ 41,171 $ 2,033 __________ (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 interes |