Loans Receivable | Loans Receivable Loans receivable are summarized as follows at the dates indicated: September 30, 2017 December 31, 2016 (In thousands) One-to-four family residential: Permanent owner occupied $ 139,736 $ 137,834 Permanent non-owner occupied 126,711 111,601 266,447 249,435 Multifamily 173,681 123,250 Commercial real estate 320,416 303,694 Construction/land: One-to-four family residential 85,593 67,842 Multifamily 115,345 111,051 Commercial 5,325 — Land 38,423 30,055 244,686 208,948 Business 22,243 7,938 Consumer 9,301 6,922 Total loans 1,036,774 900,187 Less: Loans in process ("LIP") 91,316 72,026 Deferred loan fees, net 1,486 2,167 Allowance for loan and lease losses ("ALLL") 12,110 10,951 Loans receivable, net $ 931,862 $ 815,043 At September 30, 2017 , loans totaling $457.5 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 September 30, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 2,627 $ 1,231 $ 3,733 $ 2,942 $ 457 $ 295 $ 11,285 Charge-offs — — — — — — — Recoveries 247 — 78 — — — 325 Provision (recapture) (157 ) 472 (68 ) 40 211 2 500 Ending balance $ 2,717 $ 1,703 $ 3,743 $ 2,982 $ 668 $ 297 $ 12,110 At or For the Nine Months Ended September 30, 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 280 — 78 — — 1 359 Provision (recapture) (114 ) 504 (228 ) 190 431 17 800 Ending balance $ 2,717 $ 1,703 $ 3,743 $ 2,982 $ 668 $ 297 $ 12,110 ALLL by category: General reserve $ 2,582 $ 1,703 $ 3,723 $ 2,982 $ 668 $ 297 $ 11,955 Specific reserve 135 — 20 — — — 155 Loans: (1) Total loans $ 266,447 $ 173,681 $ 319,872 $ 153,914 $ 22,243 $ 9,301 $ 945,458 Loans collectively evaluated for impairment (2) 251,141 172,541 316,656 153,914 22,243 9,205 925,700 Loans individually evaluated for impairment (3) 15,306 1,140 3,216 — — 96 19,758 ____________ (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 September 30, 2016 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 2,747 $ 1,194 $ 3,771 $ 1,880 $ 217 $ 325 $ 10,134 Charge-offs — — — — — (28 ) (28 ) Recoveries — — — — — — — Provision (recapture) (60 ) (215 ) 486 678 25 (14 ) 900 Ending balance $ 2,687 $ 979 $ 4,257 $ 2,558 $ 242 $ 283 $ 11,006 At or For the Nine Months Ended September 30, 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 — — — — — (47 ) (47 ) Recoveries 84 — 104 — — 2 190 Provision (recapture) (425 ) (214 ) 758 1,365 13 (97 ) 1,400 Ending balance $ 2,687 $ 979 $ 4,257 $ 2,558 $ 242 $ 283 $ 11,006 ALLL by category: General reserve $ 2,369 $ 979 $ 4,150 $ 2,477 $ 242 $ 283 $ 10,500 Specific reserve 318 — 107 81 — — 506 Loans: (1) Total loans $ 255,905 $ 135,414 $ 329,204 $ 124,134 $ 8,023 $ 6,530 $ 859,206 Loans collectively evaluated for impairment (2) 227,650 133,839 324,782 123,638 8,023 6,400 824,332 Loans individually evaluated for impairment (3) 28,255 1,575 4,422 496 — 130 34,874 _____________ (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 September 30, 2017 , past due loans were 0.01% of total loans receivable, net of LIP. In comparison, past due loans were 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 September 30, 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 $ 84 $ — $ — $ 84 $ 139,652 $ 139,736 Non-owner occupied — — — — 126,711 126,711 Multifamily — — — — 173,681 173,681 Commercial real estate — — — — 319,872 319,872 Construction/land — — — — 153,914 153,914 Total real estate 84 — — 84 913,830 913,914 Business — — — — 22,243 22,243 Consumer — — — — 9,301 9,301 Total loans $ 84 $ — $ — $ 84 $ 945,374 $ 945,458 ________________ (1) There were no loans 90 days and greater past due and still accruing interest at September 30, 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: September 30, 2017 December 31, 2016 (In thousands) One-to-four family residential $ 132 $ 798 Consumer 53 60 Total nonaccrual loans $ 185 $ 858 During the three and nine months ended September 30, 2017 , interest income that would have been recognized had these nonaccrual loans been performing in accordance with their original terms was $3,000 and $ 21,000 , respectively. For the three and nine months ended September 30, 2016 , foregone interest on nonaccrual loans was $13,000 and $ 40,000 , respectively. The following tables summarize the loan portfolio by type and payment status at the dates indicated: September 30, 2017 One-to-Four Multifamily Commercial Construction / Business Consumer Total (1) (In thousands) Performing (2) $ 266,315 $ 173,681 $ 319,872 $ 153,914 $ 22,243 $ 9,248 $ 945,273 Nonperforming (3) 132 — — — — 53 185 Total loans $ 266,447 $ 173,681 $ 319,872 $ 153,914 $ 22,243 $ 9,301 $ 945,458 _____________ (1) Net of LIP. (2) There were $139.6 million of owner-occupied one-to-four family residential loans and $126.7 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $132,000 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 September 30, 2017 , or December 31, 2016 . The following tables present a summary of loans individually evaluated for impairment by loan type at the dates indicated: September 30, 2017 Recorded Investment (1) Unpaid Principal Balance (2) Related Allowance (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 1,334 $ 1,527 $ — Non-owner occupied 10,125 10,125 — Multifamily 1,140 1,140 — Commercial real estate 2,473 2,473 — Consumer 96 144 — Total 15,168 15,409 — Loans with an allowance: One-to-four family residential: Owner occupied 524 570 8 Non-owner occupied 3,323 3,345 127 Commercial real estate 743 743 20 Total 4,590 4,658 155 Total impaired loans: One-to-four family residential: Owner occupied 1,858 2,097 8 Non-owner occupied 13,448 13,470 127 Multifamily 1,140 1,140 — Commercial real estate 3,216 3,216 20 Consumer 96 144 — Total $ 19,758 $ 20,067 $ 155 _________________ (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 3,029 — Consumer 103 223 — Total 23,469 23,943 — 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 3,784 26 Construction/land 495 495 81 Consumer 103 223 — Total $ 30,941 $ 31,505 $ 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 and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 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 $ 1,658 $ 22 $ 1,886 $ 69 Non-owner occupied 11,395 158 13,445 485 Multifamily 1,143 19 1,251 56 Commercial real estate 2,693 49 2,818 135 Consumer 97 2 99 6 Total 16,986 250 19,499 751 Loans with an allowance: One-to-four family residential: Owner occupied 1,099 10 1,495 22 Non-owner occupied 3,343 47 3,773 128 Commercial real estate 745 10 749 31 Construction/land — — 124 — Total 5,187 67 6,141 181 Total impaired loans: One-to-four family residential: Owner occupied 2,757 32 3,381 91 Non-owner occupied 14,738 205 17,218 613 Multifamily 1,143 19 1,251 56 Commercial real estate 3,438 59 3,567 166 Construction/land — — 124 — Consumer 97 2 99 6 Total $ 22,173 $ 317 $ 25,640 $ 932 Three Months Ended September 30, 2016 Nine Months Ended September 30, 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 $ 2,434 $ 57 $ 2,679 $ 123 Non-owner occupied 20,208 296 21,234 878 Multifamily 1,576 26 1,189 79 Commercial real estate 1,796 31 2,089 77 Consumer 119 3 123 8 Total 26,133 413 27,314 1,165 Loans with an allowance: One-to-four family residential: Owner occupied 2,003 28 2,042 78 Non-owner occupied 5,050 76 5,874 202 Multifamily — — 393 — Commercial real estate 2,638 52 2,499 152 Construction/land 495 5 495 14 Consumer — — 25 — Total 10,186 161 11,328 446 Total impaired loans: One-to-four family residential: Owner occupied 4,437 85 4,721 201 Non-owner occupied 25,258 372 27,108 1,080 Multifamily 1,576 26 1,582 79 Commercial real estate 4,434 83 4,588 229 Construction/land 495 5 495 14 Consumer 119 3 148 8 Total $ 36,319 $ 574 $ 38,642 $ 1,611 Troubled Debt Restructurings. Certain loan modifications are accounted for as troubled debt restructured loans (“TDRs”). At September 30, 2017 , the TDR portfolio totaled $19.6 million , all of which were performing in accordance with their restructured payment terms. 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. The following tables present loans that were modified as TDRs during the periods indicated and their recorded investment both before and after the modification: Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Number of Loans Pre-Modification Outstanding Post-Modification Outstanding Number of Loans Pre-Modification Outstanding Post-Modification Outstanding (Dollars in thousands) One-to-four family residential: Principal and interest with interest rate concession and advancement of maturity date 1 $ 524 $ 524 8 $ 2,492 $ 2,492 Total 1 $ 524 $ 524 8 $ 2,492 $ 2,492 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Number of Loans Pre-Modification Outstanding Post-Modification Outstanding 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 $ 316 $ 316 15 $ 3,490 $ 3,490 Advancement of maturity date 5 1,119 1,119 5 1,119 1,119 Commercial real estate: Interest-only payments with interest rate concession and advancement of maturity date — — — 1 495 495 Advancement of maturity date 1 434 434 1 434 434 Total 7 $ 1,869 $ 1,869 22 $ 5,538 $ 5,538 At September 30, 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 and nine months ended September 30, 2017 and September 30, 2016 , were all on existing TDRs and included extensions of existing interest rate concessions and advancing maturity dates 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 and nine months ended September 30, 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 and nine months ended September 30, 2017 , and September 30, 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 September 30, 2017 and December 31, 2016 . The following tables represent a summary of loans by type and risk category at the dates indicated: September 30, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 262,951 $ 173,681 $ 317,396 $ 153,914 $ 22,243 $ 9,060 $ 939,245 Special mention 2,817 — 2,476 — — 188 5,481 Substandard 679 — — — — 53 732 Total loans $ 266,447 $ 173,681 $ 319,872 $ 153,914 $ 22,243 $ 9,301 $ 945,458 _____________ (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. |