Loans Receivable | Loans Receivable Loans receivable are summarized as follows at the dates indicated: March 31, 2017 December 31, 2016 (In thousands) One-to-four family residential: Permanent owner occupied $ 135,743 $ 137,834 Permanent non-owner occupied 113,476 111,601 249,219 249,435 Multifamily 121,718 123,250 Commercial real estate 317,719 303,694 Construction/land: One-to-four family residential 58,447 67,842 Multifamily 108,801 111,051 Land 39,687 30,055 206,935 208,948 Business 10,370 7,938 Consumer 7,878 6,922 Total loans 913,839 900,187 Less: Loans in process ("LIP") 61,735 72,026 Deferred loan fees, net 2,178 2,167 Allowance for loan and lease losses ("ALLL") 11,158 10,951 Loans receivable, net $ 838,768 $ 815,043 At March 31, 2017 , loans totaling $445.2 million were pledged to secure borrowings from the FHLB of Des Moines compared to $472.1 million at December 31, 2016 . ALLL . The Company maintains an ALLL as a reserve against probable and inherent risk of losses in its loan portfolios. The ALLL is comprised of a general reserve component for loans evaluated collectively for loss and a specific reserve component for loans evaluated individually. When an issue is identified and it is determined that the loan needs to be classified as nonperforming and/or impaired, an evaluation of the discounted expected cash flows is done and an appraisal may be obtained on the collateral. Based on this evaluation, additional provision for loan loss or charge-offs is recorded prior to the end of the financial reporting period. The following tables summarize changes in the ALLL and loan portfolio by loan type and impairment method at the dates and for the periods shown: At or For the Three Months Ended March 31, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 2,551 $ 1,199 $ 3,893 $ 2,792 $ 237 $ 279 $ 10,951 Charge-offs — — — — — — — Recoveries 7 — — — — — 7 (Recapture) Provision (16 ) (11 ) 134 (1 ) 74 20 200 Ending balance $ 2,542 $ 1,188 $ 4,027 $ 2,791 $ 311 $ 299 $ 11,158 ALLL by category: General reserve $ 2,357 $ 1,188 $ 4,003 $ 2,791 $ 311 $ 299 $ 10,949 Specific reserve 185 — 24 — — — 209 Loans: (1) Total loans $ 249,219 $ 121,718 $ 317,719 $ 145,200 $ 10,370 $ 7,878 $ 852,104 Loans collectively evaluated for impairment (2) 226,884 120,566 314,036 145,200 10,370 7,778 824,834 Loans individually evaluated for impairment (3) 22,335 1,152 3,683 — — 100 27,270 ____________ (1) Net of LIP. (2) Loans collectively evaluated for general reserves. (3) Loans individually evaluated for specific reserves. At or For the Three Months Ended March 31, 2016 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 3,028 $ 1,193 $ 3,395 $ 1,193 $ 229 $ 425 $ 9,463 Charge-offs — — — — — (19 ) (19 ) Recoveries 22 — 104 — — 1 127 (Recapture) Provision (210 ) (9 ) (2 ) 199 (32 ) (46 ) (100 ) Ending balance $ 2,840 $ 1,184 $ 3,497 $ 1,392 $ 197 $ 361 $ 9,471 ALLL by category: General reserve $ 2,389 $ 1,184 $ 3,383 $ 1,336 $ 197 $ 323 $ 8,812 Specific reserve 451 — 114 56 — 38 659 Loans: (1) Total loans $ 256,817 $ 129,553 $ 258,946 $ 71,362 $ 6,548 $ 5,972 $ 729,198 Loans collectively evaluated for impairment (2) 223,549 127,966 254,477 70,867 6,548 5,785 689,192 Loans individually evaluated for impairment (3) 33,268 1,587 4,469 495 — 187 40,006 _____________ (1) Net of LIP. (2) Loans collectively evaluated for general reserves. (3) Loans individually evaluated for specific reserves. Past Due Loans. Loans are considered past due if a scheduled principal or interest payment is due and unpaid for 30 days or more. At March 31, 2017 , there were no past due loans. In comparison, past due loans comprised 0.06% of total loans receivable, net of LIP at December 31, 2016 . The following tables represent a summary of the aging of loans by type at the dates indicated: Loans Past Due as of March 31, 2017 30-59 Days 60-89 Days 90 Days and Total Past Current Total (1) (2) (In thousands) Real estate: One-to-four family residential: Owner occupied $ — $ — $ — $ — $ 135,743 $ 135,743 Non-owner occupied — — — — 113,476 113,476 Multifamily — — — — 121,718 121,718 Commercial real estate — — — — 317,719 317,719 Construction/land — — — — 145,200 145,200 Total real estate — — — — 833,856 833,856 Business — — — — 10,370 10,370 Consumer — — — — 7,878 7,878 Total loans $ — $ — $ — $ — $ 852,104 $ 852,104 ________________ (1) There were no loans 90 days and greater past due and still accruing interest at March 31, 2017 . (2) Net of LIP. Loans Past Due as of December 31, 2016 30-59 Days 60-89 Days 90 Days and Total Past Current Total (1) (2) (In thousands) Real estate: One-to-four family residential: Owner occupied $ 304 $ — $ 169 $ 473 $ 137,361 $ 137,834 Non-owner occupied — — — — 111,601 111,601 Multifamily — — — — 123,250 123,250 Commercial real estate — — — — 303,694 303,694 Construction/land — — — — 136,922 136,922 Total real estate 304 — 169 473 812,828 813,301 Business — — — — 7,938 7,938 Consumer — — — — 6,922 6,922 Total loans $ 304 $ — $ 169 $ 473 $ 827,688 $ 828,161 _________________ (1) There were no loans 90 days and greater past due and still accruing interest at December 31, 2016 . (2) Net of LIP. Nonaccrual Loans. The following table is a summary of nonaccrual loans by loan type at the dates indicated: March 31, 2017 December 31, 2016 (In thousands) One-to-four family residential $ 545 $ 798 Consumer 57 60 Total nonaccrual loans $ 602 $ 858 During the three months ended March 31, 2017 , interest income that would have been recognized had these nonaccrual loans been performing in accordance with their original terms was $9,000 . For the three months ended March 31, 2016 , foregone interest on nonaccrual loans was $14,000 . The following tables summarize the loan portfolio by type and payment status at the dates indicated: March 31, 2017 One-to-Four Multifamily Commercial Construction / Business Consumer Total (1) (In thousands) Performing (2) $ 248,674 $ 121,718 $ 317,719 $ 145,200 $ 10,370 $ 7,821 $ 851,502 Nonperforming (3) 545 — — — — 57 602 Total loans $ 249,219 $ 121,718 $ 317,719 $ 145,200 $ 10,370 $ 7,878 $ 852,104 _____________ (1) Net of LIP. (2) There were $135.2 million of owner-occupied one-to-four family residential loans and $113.5 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $545,000 of one-to-four family residential loans classified as nonperforming are all owner-occupied. December 31, 2016 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Performing (2) $ 248,637 $ 123,250 $ 303,694 $ 136,922 $ 7,938 $ 6,862 $ 827,303 Nonperforming (3) 798 — — — — 60 858 Total loans $ 249,435 $ 123,250 $ 303,694 $ 136,922 $ 7,938 $ 6,922 $ 828,161 _____________ (1) Net of LIP. (2) There were $137.0 million of owner-occupied one-to-four family residential loans and $111.6 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $798,000 of one-to-four family residential loans classified as nonperforming are all owner-occupied. Impaired Loans. A loan is considered impaired when we have determined that we may be unable to collect payments of principal or interest when due under the terms of the original loan document. There were no funds committed to be advanced in connection with impaired loans at either March 31, 2017 , or December 31, 2016 . The following tables present a summary of loans individually evaluated for impairment by loan type at the dates indicated: March 31, 2017 Recorded Investment (1) Unpaid Principal Balance (2) Related Allowance (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 2,012 $ 2,284 $ — Non-owner occupied 14,356 14,374 — Multifamily 1,152 1,152 — Commercial real estate 2,932 2,997 — Consumer 100 146 — Total 20,552 20,953 — Loans with an allowance: One-to-four family residential: Owner occupied 1,888 1,958 48 Non-owner occupied 4,079 4,101 137 Commercial real estate 751 751 24 Total 6,718 6,810 209 Total impaired loans: One-to-four family residential: Owner occupied 3,900 4,242 48 Non-owner occupied 18,435 18,475 137 Multifamily 1,152 1,152 — Commercial real estate 3,683 3,748 24 Consumer 100 146 — Total $ 27,270 $ 27,763 $ 209 _________________ (1) Represents the loan balance less charge-offs. (2) Contractual loan principal balance. December 31, 2016 Recorded Investment (1) Unpaid Principal Balance (2) Related Allowance (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 2,216 $ 2,475 $ — Non-owner occupied 16,634 16,652 — Multifamily 1,564 1,564 — Commercial real estate 2,952 3,012 — Consumer 103 148 — Total 23,469 23,851 — Loans with an allowance: One-to-four family residential: Owner occupied 1,896 1,965 51 Non-owner occupied 4,326 4,347 151 Commercial real estate 755 755 26 Construction/land 495 495 81 Total 7,472 7,562 309 Total impaired loans: One-to-four family residential: Owner occupied 4,112 4,440 51 Non-owner occupied 20,960 20,999 151 Multifamily 1,564 1,564 — Commercial real estate 3,707 3,767 26 Construction/land 495 495 81 Consumer 103 148 — Total $ 30,941 $ 31,413 $ 309 _________________ (1) Represents the loan balance less charge-offs. (2) Contractual loan principal balance. The following table presents the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 2,114 $ 31 $ 2,872 $ 60 Non-owner occupied 15,495 211 23,108 321 Multifamily 1,358 19 1,001 27 Commercial real estate 2,942 53 2,466 39 Consumer 102 2 122 2 Total 22,011 316 29,569 449 Loans with an allowance: One-to-four family residential: Owner occupied 1,892 26 2,116 29 Non-owner occupied 4,203 55 6,587 78 Multifamily — — 590 — Commercial real estate 753 10 2,217 35 Construction/land 248 — 495 5 Consumer — — 76 1 Total 7,096 91 12,081 148 Total impaired loans: One-to-four family residential: Owner occupied 4,006 57 4,988 89 Non-owner occupied 19,698 266 29,695 399 Multifamily 1,358 19 1,591 27 Commercial real estate 3,695 63 4,683 74 Construction/land 248 — 495 5 Consumer 102 2 198 3 Total $ 29,107 $ 407 $ 41,650 $ 597 Troubled Debt Restructurings. Certain loan modifications are accounted for as troubled debt restructured loans (“TDRs”). At March 31, 2017 , the TDR portfolio totaled $26.8 million , of which one loan of $109,000 was on nonaccrual status because it had previously not performed in accordance with the terms of its restructure. As of March 31, 2017 , it was current, however it will remain on nonaccrual status until it has performed for six months and is expected to continue to perform. At December 31, 2016 , the TDR portfolio totaled $30.3 million , of which one loan of $174,000 was not performing in accordance with the terms of its restructure and was on nonaccrual status. During the three months ended March 31, 2017, there were no loans modified as TDRs. In comparison, the following table presents loans that were modified as TDRs during the three months ended March 31, 2016, and their recorded investment both before and after the modification: Three Months Ended March 31, 2016 Number of Loans Pre-Modification Outstanding Post-Modification Outstanding (Dollars in thousands) One-to-four family residential: Principal and interest with interest rate concession 1 $ 558 $ 558 Commercial real estate: Interest-only payments with interest rate concession and advancement of maturity date 1 495 495 Total 2 $ 1,053 $ 1,053 At March 31, 2017 , the Company had no commitments to extend additional credit to borrowers whose loan terms have been modified in TDRs. All TDRs are also classified as impaired loans and are included in the loans individually evaluated for impairment as part of the calculation of the ALLL. The TDRs that occurred during the three months ended March 31, 2016 , included granting the borrower interest rate concessions and advancing the maturity date for a period of time ranging from one to three years. No loans accounted for as TDRs were charged-off to the ALLL for the three months ended March 31, 2017 and 2016 . TDRs that default after they have been modified are typically evaluated individually on a collateral basis. Any additional impairment is charged to the ALLL. For the three months ended March 31, 2017 , and the three months ended March 31, 2016, no loans that had been modified in the previous 12 months defaulted. Credit Quality Indicators . The Company utilizes a nine-category risk rating system and assigns a risk rating for all credit exposures. The risk rating system is designed to define the basic characteristics and identify risk elements of each credit extension. Credits risk rated 1 through 5 are considered to be “pass” credits. Pass credits include assets, such as cash secured loans with funds on deposit with the Bank, where there is virtually no credit risk. Pass credits also include credits that are on the Company’s watch list, where the borrower exhibits potential weaknesses, which may, if not checked or corrected, negatively affect the borrower’s financial capacity and threaten their ability to fulfill debt obligations in the future. Credits classified as special mention are risk rated 6 and possess weaknesses that deserve management’s close attention. Special mention assets do not expose the Company to sufficient risk to warrant adverse classification in the substandard, doubtful or loss categories. Substandard credits are risk rated 7 . An asset is considered substandard if it is inadequately protected by the current net worth and payment capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful are risk rated 8 and have all the weaknesses inherent in those credits classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are risk rated 9 and are considered uncollectible and cannot be justified as a viable asset for the Company. There were no loans classified as doubtful or loss at March 31, 2017 and December 31, 2016 . The following tables represent a summary of loans by type and risk category at the dates indicated: March 31, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 245,299 $ 121,718 $ 314,698 $ 145,200 $ 10,370 $ 7,633 $ 844,918 Special mention 2,824 — 3,021 — — 188 6,033 Substandard 1,096 — — — — 57 1,153 Total loans $ 249,219 $ 121,718 $ 317,719 $ 145,200 $ 10,370 $ 7,878 $ 852,104 _____________ (1) Net of LIP. December 31, 2016 One-to-Four Family Residential Multifamily Commercial Real Estate Construction / Land Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 245,237 $ 123,250 $ 300,655 $ 136,427 $ 7,938 $ 6,674 $ 820,181 Special mention 2,847 — 3,039 — — 188 6,074 Substandard 1,351 — — 495 — 60 1,906 Total loans $ 249,435 $ 123,250 $ 303,694 $ 136,922 $ 7,938 $ 6,922 $ 828,161 _____________ (1) Net of LIP. |