Loans Receivable | Loans Receivable Loans receivable are summarized as follows at the dates indicated: September 30, 2018 December 31, 2017 (In thousands) One-to-four family residential: Permanent owner occupied $ 184,698 $ 148,304 Permanent non-owner occupied 143,226 130,351 327,924 278,655 Multifamily 176,521 184,902 Commercial real estate 360,485 361,842 Construction/land: One-to-four family residential 84,912 87,404 Multifamily 80,607 108,439 Commercial 21,385 5,325 Land 7,113 36,405 194,017 237,573 Business 29,655 23,087 Consumer 12,419 9,133 Total loans 1,101,021 1,095,192 Less: Loans in process ("LIP") 91,232 92,498 Deferred loan fees, net 1,116 1,150 Allowance for loan and lease losses ("ALLL") 13,116 12,882 Loans receivable, net $ 995,557 $ 988,662 At September 30, 2018 , loans totaling $475.9 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 September 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) ALLL: Beginning balance $ 3,265 $ 1,928 $ 4,494 $ 2,121 $ 674 $ 272 $ 12,754 Recoveries 2 — — 160 — — 162 Provision (recapture) 265 (189 ) (16 ) (84 ) 236 (12 ) 200 Ending balance $ 3,532 $ 1,739 $ 4,478 $ 2,197 $ 910 $ 260 $ 13,116 At or For the Nine Months Ended September 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 Recoveries 4,248 — 14 172 — — 4,434 (Recapture) provision (3,553 ) (81 ) 46 (791 ) 216 (37 ) (4,200 ) Ending balance $ 3,532 $ 1,739 $ 4,478 $ 2,197 $ 910 $ 260 $ 13,116 ALLL by category: General reserve $ 3,446 $ 1,739 $ 4,471 $ 2,197 $ 910 $ 260 $ 13,023 Specific reserve 86 — 7 — — — 93 Loans: (1) Total loans $ 327,924 $ 176,521 $ 360,261 $ 103,009 $ 29,655 $ 12,419 $ 1,009,789 Loans collectively evaluated for impairment (2) 318,353 175,405 357,335 103,009 29,655 12,330 996,087 Loans individually evaluated for impairment (3) 9,571 1,116 2,926 — — 89 13,702 ____________ (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, 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 Recoveries 247 — 78 — — — 325 (Recapture) provision (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 Recoveries 280 — 78 — — 1 359 (Recapture) provision (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. 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, 2018 , past due loans were 0.08% 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 September 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 $ 496 $ — $ — $ 496 $ 184,202 $ 184,698 Non-owner occupied — — — — 143,226 143,226 Multifamily — — — — 176,521 176,521 Commercial real estate 325 — — 325 359,936 360,261 Construction/land — — — — 103,009 103,009 Total real estate 821 — — 821 966,894 967,715 Business — — — — 29,655 29,655 Consumer — — — — 12,419 12,419 Total loans $ 821 $ — $ — $ 821 $ 1,008,968 $ 1,009,789 ________________ (1) There were no loans 90 days and greater past due and still accruing interest at September 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: September 30, 2018 December 31, 2017 (In thousands) One-to-four family residential $ 113 $ 128 Commercial real estate 325 — Consumer 46 51 Total nonaccrual loans $ 484 $ 179 During the three and nine months ended September 30, 2018 , interest income that would have been recognized had these nonaccrual loans been performing in accordance with their original terms was $4,000 and $10,000 , respectively. For the three and nine months ended September 30, 2017 , foregone interest on nonaccrual loans was $3,000 and $21,000 , respectively. The following tables summarize the loan portfolio by type and payment status at the dates indicated: September 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Performing (2) $ 327,811 $ 176,521 $ 359,936 $ 103,009 $ 29,655 $ 12,373 $ 1,009,305 Nonperforming (3) 113 — 325 — — 46 484 Total loans $ 327,924 $ 176,521 $ 360,261 $ 103,009 $ 29,655 $ 12,419 $ 1,009,789 _____________ (1) Net of LIP. (2) There were $184.6 million of owner-occupied one-to-four family residential loans and $143.2 million of non-owner occupied one-to-four family residential loans classified as performing. (3) The $113,000 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 September 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: September 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 $ 1,045 $ 1,213 $ — Non-owner occupied 4,857 4,857 — Multifamily 1,116 1,116 — Commercial real estate 2,556 2,556 — Consumer 89 141 — Total 9,663 9,883 — Loans with an allowance: One-to-four family residential: Owner occupied 516 562 23 Non-owner occupied 3,153 3,174 63 Commercial real estate 370 370 7 Total 4,039 4,106 93 Total impaired loans: One-to-four family residential: Owner occupied 1,561 1,775 23 Non-owner occupied 8,010 8,031 63 Multifamily 1,116 1,116 — Commercial real estate 2,926 2,926 7 Consumer 89 141 — Total $ 13,702 $ 13,989 $ 93 _________________ (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 nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, 2018 Nine Months Ended September 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 $ 1,049 $ 18 $ 1,182 $ 55 Non-owner occupied 5,112 83 6,385 298 Multifamily 1,119 19 1,125 55 Commercial real estate 2,402 42 1,732 133 Consumer 90 2 92 6 Total 9,772 164 10,516 547 Loans with an allowance: One-to-four family residential: Owner occupied 517 9 519 26 Non-owner occupied 3,160 40 3,232 122 Commercial real estate 373 5 1,247 22 Total 4,050 54 4,998 170 Total impaired loans: One-to-four family residential: Owner occupied 1,566 27 1,701 81 Non-owner occupied 8,272 123 9,617 420 Multifamily 1,119 19 1,125 55 Commercial real estate 2,775 47 2,979 155 Consumer 90 2 92 6 Total $ 13,822 $ 218 $ 15,514 $ 717 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 Troubled Debt Restructurings. Certain loan modifications are accounted for as troubled debt restructured loans (“TDRs”). At September 30, 2018 , the TDR portfolio totaled $13.2 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 September 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 September 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 September 30, 2018 Nine Months Ended September 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) One-to-four family residential Advancement of maturity date 1 563 563 1 563 563 Commercial Advancement of maturity date — $ — $ — 1 $ 1,124 $ 1,124 Total 1 $ 563 $ 563 2 $ 1,687 $ 1,687 Three Months Ended September 30, 2017 Nine Months Ended September 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 1 $ 524 $ 524 8 $ 2,492 $ 2,492 Total 1 $ 524 $ 524 8 $ 2,492 $ 2,492 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, 2018 , and September 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 September 30, 2018 , and December 31, 2017 . The following tables represent a summary of loans by type and risk category at the dates indicated: September 30, 2018 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (1) (In thousands) Risk Rating: Pass $ 325,509 $ 176,521 $ 359,021 $ 103,009 $ 29,655 $ 12,373 $ 1,006,088 Special mention 1,762 — 370 — — — 2,132 Substandard 653 — 870 — — 46 1,569 Total loans $ 327,924 $ 176,521 $ 360,261 $ 103,009 $ 29,655 $ 12,419 $ 1,009,789 _____________ (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. |