Loans Receivable | Loans Receivable Loans receivable are summarized as follows at the dates indicated: June 30, 2018 December 31, 2017 (In thousands) One-to-four family residential: Permanent owner occupied $ 169,275 $ 148,304 Permanent non-owner occupied 134,297 130,351 303,572 278,655 Multifamily 194,853 184,902 Commercial real estate 372,233 361,842 Construction/land: One-to-four family residential 85,218 87,404 Multifamily 75,433 108,439 Commercial 5,735 5,325 Land 12,911 36,405 179,297 237,573 Business 22,121 23,087 Consumer 12,329 9,133 Total loans 1,084,405 1,095,192 Less: Loans in process ("LIP") 81,616 92,498 Deferred loan fees, net 779 1,150 Allowance for loan and lease losses ("ALLL") 12,754 12,882 Loans receivable, net $ 989,256 $ 988,662 At June 30, 2018 , loans totaling $468.7 million were pledged to secure borrowings from the FHLB of Des Moines compared to $422.6 million at December 31, 2017 . 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 June 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 3,237 $ 1,884 $ 4,490 $ 2,454 $ 740 $ 331 $ 13,136 Charge-offs — — — — — — — Recoveries 6 — — 12 — — 18 Provision (recapture) 22 44 4 (345 ) (66 ) (59 ) (400 ) Ending balance $ 3,265 $ 1,928 $ 4,494 $ 2,121 $ 674 $ 272 $ 12,754 At or For the Six Months Ended June 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 2,837 $ 1,820 $ 4,418 $ 2,816 $ 694 $ 297 $ 12,882 Charge-offs — — — — — — — Recoveries 4,246 — 14 12 — — 4,272 (Recapture) provision (3,818 ) 108 62 (707 ) (20 ) (25 ) (4,400 ) Ending balance $ 3,265 $ 1,928 $ 4,494 $ 2,121 $ 674 $ 272 $ 12,754 ALLL by category: General reserve $ 3,191 $ 1,928 $ 4,484 $ 2,121 $ 674 $ 272 $ 12,670 Specific reserve 74 — 10 — — — 84 Loans: (1) Total loans $ 303,572 $ 194,853 $ 371,690 $ 98,224 $ 22,121 $ 12,329 $ 1,002,789 Loans collectively evaluated for impairment (2) 293,466 193,731 369,066 98,224 22,121 12,238 988,846 Loans individually evaluated for impairment (3) 10,106 1,122 2,624 — — 91 13,943 ____________ (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 June 30, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 2,542 $ 1,188 $ 4,027 $ 2,791 $ 311 $ 299 $ 11,158 Charge-offs — — — — — — — Recoveries 27 — — — — — 27 Provision (recapture) 58 43 (294 ) 151 146 (4 ) 100 Ending balance $ 2,627 $ 1,231 $ 3,733 $ 2,942 $ 457 $ 295 $ 11,285 At or For the Six Months Ended June 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 33 — — — — 1 34 (Recapture) provision 43 32 (160 ) 150 220 15 300 Ending balance $ 2,627 $ 1,231 $ 3,733 $ 2,942 $ 457 $ 295 $ 11,285 ALLL by category: General reserve $ 2,446 $ 1,231 $ 3,710 $ 2,942 $ 457 $ 295 $ 11,081 Specific reserve 181 — 23 — — — 204 Loans: (1) Total loans $ 256,632 $ 125,884 $ 316,675 $ 152,082 $ 15,206 $ 9,031 $ 875,510 Loans collectively evaluated for impairment (2) 236,951 124,738 313,015 152,082 15,206 8,933 850,925 Loans individually evaluated for impairment (3) 19,681 1,146 3,660 — — 98 24,585 _____________ (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 June 30, 2018 , past due loans were 0.05% of total loans receivable, net of LIP. In comparison, past due loans were 0.01% of total loans receivable, net of LIP at December 31, 2017 . The following tables represent a summary of the aging of loans by type at the dates indicated: Loans Past Due as of June 30, 2018 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 $ 532 $ — $ — $ 532 $ 168,743 $ 169,275 Non-owner occupied — — — — 134,297 134,297 Multifamily — — — — 194,853 194,853 Commercial real estate — — — — 371,690 371,690 Construction/land — — — — 98,224 98,224 Total real estate 532 — — 532 967,807 968,339 Business — — — — 22,121 22,121 Consumer — — — — 12,329 12,329 Total loans $ 532 $ — $ — $ 532 $ 1,002,257 $ 1,002,789 ________________ (1) There were no loans 90 days and greater past due and still accruing interest at June 30, 2018 . (2) Net of LIP. Loans Past Due as of December 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 $ 101 $ — $ — $ 101 $ 148,203 $ 148,304 Non-owner occupied — — — — 130,351 130,351 Multifamily — — — — 184,902 184,902 Commercial real estate — — — — 361,299 361,299 Construction/land — — — — 145,618 145,618 Total real estate 101 — — 101 970,373 970,474 Business — — — — 23,087 23,087 Consumer — — — — 9,133 9,133 Total loans $ 101 $ — $ — $ 101 $ 1,002,593 $ 1,002,694 _________________ (1) There were no loans 90 days and greater past due and still accruing interest at December 31, 2017 . (2) Net of LIP. Nonaccrual Loans. The following table is a summary of nonaccrual loans by loan type at the dates indicated: June 30, 2018 December 31, 2017 (In thousands) One-to-four family residential $ 116 $ 128 Consumer 48 51 Total nonaccrual loans $ 164 $ 179 During the three and six months ended June 30, 2018 , interest income that would have been recognized had these nonaccrual loans been performing in accordance with their original terms was $3,000 and $7,000 , respectively. For the three and six months ended June 30, 2017 , foregone interest on nonaccrual loans was $9,000 and $18,000 , respectively. The following tables summarize the loan portfolio by type and payment status at the dates indicated: June 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Performing (2) $ 303,456 $ 194,853 $ 371,690 $ 98,224 $ 22,121 $ 12,281 $ 1,002,625 Nonperforming (3) 116 — — — — 48 164 Total loans $ 303,572 $ 194,853 $ 371,690 $ 98,224 $ 22,121 $ 12,329 $ 1,002,789 _____________ (1) Net of LIP. (2) There were $169.2 million of owner-occupied one-to-four family residential loans and $134.3 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $116,000 of one-to-four family residential loans classified as nonperforming are all owner-occupied. December 31, 2017 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Performing (2) $ 278,527 $ 184,902 $ 361,299 $ 145,618 $ 23,087 $ 9,082 $ 1,002,515 Nonperforming (3) 128 — — — — 51 179 Total loans $ 278,655 $ 184,902 $ 361,299 $ 145,618 $ 23,087 $ 9,133 $ 1,002,694 _____________ (1) Net of LIP. (2) There were $148.2 million of owner-occupied one-to-four family residential loans and $130.3 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $128,000 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 June 30, 2018 , or December 31, 2017 . The following tables present a summary of loans individually evaluated for impairment by loan type at the dates indicated: June 30, 2018 Recorded Investment (1) Unpaid Principal Balance (2) Related Allowance (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 1,054 $ 1,220 $ — Non-owner occupied 5,366 5,366 — Multifamily 1,122 1,122 — Commercial real estate 2,248 2,248 — Consumer 91 142 — Total 9,881 10,098 — Loans with an allowance: One-to-four family residential: Owner occupied 518 564 1 Non-owner occupied 3,168 3,189 73 Commercial real estate 376 377 10 Total 4,062 4,130 84 Total impaired loans: One-to-four family residential: Owner occupied 1,572 1,784 1 Non-owner occupied 8,534 8,555 73 Multifamily 1,122 1,122 — Commercial real estate 2,624 2,625 10 Consumer 91 142 — Total $ 13,943 $ 14,228 $ 84 _________________ (1) Represents the loan balance less charge-offs. (2) Contractual loan principal balance. December 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 $ 1,321 $ 1,516 $ — Non-owner occupied 8,409 8,409 — Multifamily 1,134 1,134 — Commercial real estate 1,065 1,065 — Consumer 94 144 — Total 12,023 12,268 — Loans with an allowance: One-to-four family residential: Owner occupied 522 568 5 Non-owner occupied 3,310 3,332 111 Commercial real estate 2,129 2,129 19 Total 5,961 6,029 135 Total impaired loans: One-to-four family residential: Owner occupied 1,843 2,084 5 Non-owner occupied 11,719 11,741 111 Multifamily 1,134 1,134 — Commercial real estate 3,194 3,194 19 Consumer 94 144 — Total $ 17,984 $ 18,297 $ 135 _________________ (1) Represents the loan balance less charge-offs. (2) Contractual loan principal balance. The following tables present the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 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 $ 1,180 $ 18 $ 1,227 $ 36 Non-owner occupied 6,136 99 6,894 221 Multifamily 1,125 18 1,128 37 Commercial real estate 1,654 40 1,457 80 Consumer 92 2 93 4 Total 10,187 177 10,799 378 Loans with an allowance: One-to-four family residential: Owner occupied 519 9 520 18 Non-owner occupied 3,232 35 3,258 82 Commercial real estate 1,245 7 1,539 17 Total 4,996 51 5,317 117 Total impaired loans: One-to-four family residential: Owner occupied 1,699 27 1,747 54 Non-owner occupied 9,368 134 10,152 303 Multifamily 1,125 18 1,128 37 Commercial real estate 2,899 47 2,996 97 Consumer 92 2 93 4 Total $ 15,183 $ 228 $ 16,116 $ 495 Three Months Ended June 30, 2017 Six Months Ended June 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 $ 1,997 $ 30 $ 2,070 $ 61 Non-owner occupied 13,510 181 14,551 374 Multifamily 1,149 19 1,287 37 Commercial real estate 2,923 48 2,932 101 Consumer 99 2 100 4 Total 19,678 280 20,940 577 Loans with an allowance: One-to-four family residential: Owner occupied 1,781 20 1,819 43 Non-owner occupied 3,721 39 3,922 81 Commercial real estate 749 10 751 21 Construction/land — — 165 — Total 6,251 69 6,657 145 Total impaired loans: One-to-four family residential: Owner occupied 3,778 50 3,889 104 Non-owner occupied 17,231 220 18,473 455 Multifamily 1,149 19 1,287 37 Commercial real estate 3,672 58 3,683 122 Construction/land — — 165 — Consumer 99 2 100 4 Total $ 25,929 $ 349 $ 27,597 $ 722 Troubled Debt Restructurings. Certain loan modifications are accounted for as troubled debt restructured loans (“TDRs”). At June 30, 2018 , the TDR portfolio totaled $13.8 million . At December 31, 2017 , the TDR portfolio totaled $17.8 million . At both dates, all TDRs were performing according to their modified repayment terms. At June 30, 2018 , 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. No loans accounted for as TDRs were charged-off to the ALLL for the three months ended June 30, 2018 and 2017 . The following tables present TDR modifications for the periods indicated and their recorded investment prior to and after the modification: Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (Dollars in thousands) Multifamily Advancement of maturity date 1 $ 1,124 $ 1,124 1 $ 1,124 $ 1,124 Total 1 $ 1,124 $ 1,124 1 $ 1,124 $ 1,124 Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (Dollars in thousands) One-to-four family residential Principal and interest with interest rate concession and advancement of maturity date 7 $ 1,968 $ 1,968 7 $ 1,968 $ 1,968 Total 7 $ 1,968 $ 1,968 7 $ 1,968 $ 1,968 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 six months ended June 30, 2018 , and June 30, 2017 , 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 June 30, 2018 , and December 31, 2017 . The following tables represent a summary of loans by type and risk category at the dates indicated: June 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 301,137 $ 194,853 $ 369,071 $ 98,224 $ 22,121 $ 12,281 $ 997,687 Special mention 1,778 — 2,070 — — — 3,848 Substandard 657 — 549 — — 48 1,254 Total loans $ 303,572 $ 194,853 $ 371,690 $ 98,224 $ 22,121 $ 12,329 $ 1,002,789 _____________ (1) Net of LIP. December 31, 2017 One-to-Four Family Residential Multifamily Commercial Real Estate Construction/ Land Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 275,653 $ 184,902 $ 358,285 $ 145,618 $ 23,087 $ 8,893 $ 996,438 Special mention 2,329 — 2,459 — — 188 4,976 Substandard 673 — 555 — — 52 1,280 Total loans $ 278,655 $ 184,902 $ 361,299 $ 145,618 $ 23,087 $ 9,133 $ 1,002,694 _____________ (1) Net of LIP. |