Loans Receivable, Net | Loans Receivable Loans receivable consisted of the following at the dates indicated: June 30, 2016 2015 Real estate: One-to-four family $ 61,230 $ 57,944 Multi-family 53,742 43,249 Commercial 149,527 128,306 Construction 21,793 11,731 Land 6,839 4,069 Total real estate 293,131 245,299 Consumer: Home equity 16,599 17,604 Credit cards 2,969 3,289 Automobile 597 686 Other consumer 1,933 2,347 Total consumer 22,098 23,926 Commercial business 36,848 18,987 Total loans 352,077 288,212 Less: Deferred loan fees and loan premiums, net 947 1,047 Allowance for loan losses 3,779 3,721 Loans receivable, net $ 347,351 $ 283,444 A summary of activity in the allowance for loan losses follows: June 30, 2016 2015 2014 Beginning balance $ 3,721 $ 4,624 $ 5,147 Provision for losses 340 — — Charge-offs (957 ) (1,497 ) (2,434 ) Recoveries 675 594 1,911 Ending balance $ 3,779 $ 3,721 $ 4,624 The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, 2016 : One-to- four family Multi- family Commercial real estate Construction Land Consumer (1) Commercial business Unallocated Total Allowance for loan losses : Beginning balance $ 1,113 $ 95 $ 262 $ 247 $ 75 $ 445 $ 1,405 $ 79 $ 3,721 Provision (benefit) for loan losses (251 ) 353 1,295 (325 ) — 343 (996 ) (79 ) 340 Charge-offs (258 ) — (225 ) — — (390 ) (84 ) — (957 ) Recoveries 194 6 1 349 — 118 7 — 675 Ending balance $ 798 $ 454 $ 1,333 $ 271 $ 75 $ 516 $ 332 $ — $ 3,779 (1) Consumer loans include home equity, credit cards, auto, and other consumer loans. The only consumer loans with impairment are home equity loans. The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, 2015 : One-to- four family Multi- family Commercial real estate Construction Land Consumer (1) Commercial business Unallocated Total Allowance for loan losses : Beginning balance $ 1,550 $ 229 $ 682 $ 190 $ 74 $ 587 $ 1,231 $ 81 $ 4,624 Provision (benefit) for loan losses (5 ) 25 (80 ) (197 ) 1 94 164 (2 ) — Charge-offs (561 ) (159 ) (340 ) — — (351 ) (86 ) — (1,497 ) Recoveries 129 — — 254 — 115 96 — 594 Ending balance $ 1,113 $ 95 $ 262 $ 247 $ 75 $ 445 $ 1,405 $ 79 $ 3,721 (1) Consumer loans include home equity, credit cards, auto, and other consumer loans. The only consumer loans with impairment are home equity loans. The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, 2014: One-to- four family Multi- Commercial Construction Land Consumer Commercial Unallocated Total Allowance for loan losses: Beginning balance $ 1,393 $ 156 $ 671 $ 356 $ 531 $ 817 $ 1,172 $ 51 $ 5,147 Provision (benefit) for loan losses 665 73 (558 ) (540 ) (457 ) 508 279 30 — Charge-offs (897 ) — (403 ) — — (876 ) (258 ) — (2,434 ) Recoveries 389 — 972 374 — 138 38 — 1,911 Ending balance $ 1,550 $ 229 $ 682 $ 190 $ 74 $ 587 $ 1,231 $ 81 $ 4,624 (1) Consumer loans include home equity, credit cards, auto, and other consumer loans. The only consumer loans with impairment are home equity loans. The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2016 : Recorded Investments Unpaid Principal Balance Related Allowance With no allowance recorded One-to-four family $ 2,049 $ 2,269 $ — Commercial real estate 319 547 — Land 174 188 — Home equity 60 62 — Commercial business 64 125 — With an allowance recorded One-to-four family 7,234 7,284 419 Land 316 316 4 Home equity 367 367 145 Commercial business 124 138 22 Total One-to-four family 9,283 9,553 419 Commercial real estate 319 547 — Land 490 504 4 Home equity 427 429 145 Commercial business 188 263 22 Total $ 10,707 $ 11,296 $ 590 The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2015 : Recorded Investments Unpaid Principal Balance Related Allowance With no allowance recorded One-to-four family $ 1,557 $ 1,860 $ — Land 231 245 — Home equity 64 65 — Other consumer 31 32 — Commercial business 64 126 — With an allowance recorded One-to-four family 7,716 7,743 500 Land 408 408 3 Home equity 212 212 26 Commercial business 868 868 211 Total One-to-four family 9,273 9,603 500 Land 639 653 3 Home equity 276 277 26 Other consumer 31 32 — Commercial business 932 994 211 Total $ 11,151 $ 11,559 $ 740 The following table presents the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the year ended June 30, 2016 : Year Ended June 30, 2016 Average Recorded Investment Interest Income Recognized With no allowance recorded One-to-four family $ 1,913 $ 62 Commercial real estate — 15 Land 210 11 Home equity 63 3 Other consumer 16 — Commercial business 95 9 With an allowance recorded One-to-four family 7,500 310 Land 362 22 Home equity 290 19 Commercial business 503 2 Total One-to-four family 9,413 372 Commercial real estate — 15 Land 572 33 Home equity 353 22 Other consumer 16 — Commercial business 598 11 Total $ 10,952 $ 453 The following table presents the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the year ended June 30, 2015 : Year Ended June 30, 2015 Average Recorded Investment Interest Income Recognized With no allowance recorded One-to-four family $ 3,802 $ 67 Multi-family 1,132 — Commercial real estate 984 — Land 355 12 Home equity 153 3 Other consumer — 1 Commercial business 723 8 With an allowance recorded One-to-four family 7,989 308 Land 765 25 Home equity 325 10 Commercial business 469 36 Total One-to-four family 11,791 375 Multi-family 1,132 — Commercial real estate 984 — Land 1,120 37 Home equity 478 13 Other consumer — 1 Commercial business 1,192 44 Total $ 16,697 $ 470 The following table presents the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the year ended June 30, 2014: Year Ended June 30, 2014 Average Recorded Investment Interest Income With no allowance recorded One-to-four family $ 4,199 $ 97 Multi-family 1,132 — Commercial real estate 1,094 12 Land 393 18 Home equity 194 6 Commercial business 723 8 With an allowance recorded One-to-four family 8,360 379 Multi-family 79 — Commercial real estate 925 21 Land 815 32 Home equity 330 11 Commercial business 231 20 Total One-to-four family 12,559 476 Multi-family 1,211 — Commercial real estate 2,019 33 Land 1,208 50 Home equity 524 17 Commercial business 954 28 Total $ 18,475 $ 604 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2016 : One-to-four family Multi- family Commercial real estate Construction Land Consumer(1) Commercial business Unallocated Total Allowance for loan losses: Ending balance $ 798 $ 454 $ 1,333 $ 271 $ 75 $ 516 $ 332 $ — $ 3,779 Ending balance: individually evaluated for impairment 419 — — — 4 145 22 — 590 Ending balance: collectively evaluated for impairment $ 379 $ 454 $ 1,333 $ 271 $ 71 $ 371 $ 310 $ — $ 3,189 Loans receivable: Ending balance $ 61,230 $ 53,742 $ 149,527 $ 21,793 $ 6,839 $ 22,098 $ 36,848 $ — $ 352,077 Ending balance: individually evaluated for impairment 9,283 — 319 — 490 427 188 — 10,707 Ending balance: collectively evaluated for impairment $ 51,947 $ 53,742 $ 149,208 $ 21,793 $ 6,349 $ 21,671 $ 36,660 $ — $ 341,370 (1) Consumer loans include home equity, credit cards, auto and other consumer loans. The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2015 : One-to-four family Multi- family Commercial real estate Construction Land Consumer (1) Commercial business Unallocated Total Allowance for loan losses: Ending balance $ 1,113 $ 95 $ 262 $ 247 $ 75 $ 445 $ 1,405 $ 79 $ 3,721 Ending balance: individually evaluated for impairment 500 — — — 3 26 211 — 740 Ending balance: collectively evaluated for impairment $ 613 $ 95 $ 262 $ 247 $ 72 $ 419 $ 1,194 $ 79 $ 2,981 Loans receivable: Ending balance $ 57,944 $ 43,249 $ 128,306 $ 11,731 $ 4,069 $ 23,926 $ 18,987 $ — $ 288,212 Ending balance: individually evaluated for impairment 9,273 — — — 639 307 932 — 11,151 Ending balance: collectively evaluated for impairment $ 48,671 $ 43,249 $ 128,306 $ 11,731 $ 3,430 $ 23,619 $ 18,055 $ — $ 277,061 (1) Consumer loans include home equity, credit cards, auto, and other consumer loans. The following table presents the recorded investment in nonaccrual and loans past due 90 days still on accrual by type of loans as of the dates indicated: June 30, 2016 2015 One-to-four family $ 1,539 $ 1,263 Commercial real estate 319 — Home equity 16 — Credit cards — 6 Other consumer 1 31 Commercial business 97 711 Total $ 1,972 $ 2,011 The table above includes $2.0 million in nonaccrual and no loans past due 90 days or more and still accruing interest, net of partial loan charge-offs at June 30, 2016 . There were $2.0 million in nonaccrual and $6 of loans past due 90 days or more and still accruing interest, net of partial loan charge-offs at June 30, 2015 . Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents past due loans, net of partial loan charge-offs, by class of loans, as of June 30, 2016 : 30-59 Days Past Due 60-89 Days Past Due 90 Days Or More Past Due (1) Total Past Due Current Total Loans One-to-four family $ 566 $ 623 $ 1,539 $ 2,728 $ 58,502 $ 61,230 Multi-family — — — — 53,742 53,742 Commercial real estate — — 319 319 149,208 149,527 Construction — — — — 21,793 21,793 Land — — — — 6,839 6,839 Home equity 14 8 16 38 16,561 16,599 Credit cards 77 — — 77 2,892 2,969 Automobile 1 — — 1 596 597 Other consumer 12 — 1 13 1,920 1,933 Commercial business — — 97 97 36,751 36,848 Total $ 670 $ 631 $ 1,972 $ 3,273 $ 348,804 $ 352,077 (1) Includes loans on nonaccrual status, that may be less than 90 days contractually past due. The following table presents past due loans, net of partial loan charge-offs, by class of loans as of June 30, 2015 : 30-59 Days Past Due 60-89 Days Past Due 90 Days Or More Past Due (1) Total Past Due Current Total Loans One-to-four family $ 616 $ 552 $ 1,263 $ 2,431 $ 55,513 $ 57,944 Multi-family — — — — 43,249 43,249 Commercial real estate — — — — 128,306 128,306 Construction — — — — 11,731 11,731 Land — — — — 4,069 4,069 Home equity 15 16 — 31 17,573 17,604 Credit cards 8 26 6 40 3,249 3,289 Automobile 9 — — 9 677 686 Other consumer 16 — 31 47 2,300 2,347 Commercial business 64 273 711 1,048 17,939 18,987 Total $ 728 $ 867 $ 2,011 $ 3,606 $ 284,606 $ 288,212 (1) Includes loans on nonaccrual status, that may be less than 90 days contractually past due. Credit Quality Indicators . The Bank utilizes a ten-point risk rating system and assign 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 7 are considered to be “pass” credits. Pass credits can be assets where there is virtually no credit risk, such as cash secured loans with funds on deposit with the Bank. Pass credits also include credits that are on our Watch and Special Mention lists, 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. A seasoned loan with a Debt Service Coverage Ratio ("DSCR") of greater than 1.00 is the minimum acceptable level for a "Pass Credit". Particular attention is paid to the coverage trend analysis as any loan with a declining DSCR trend may warrant a higher risk grade even if the current coverage is at or above the 1.00 threshold. Credits classified as Watch are risk rated 6 and possess weaknesses that deserve management's close attention. These assets do not expose the Bank to sufficient risk to warrant adverse classification in the substandard, doubtful or loss categories. The Bank uses this rating when a material documentation deficiency exists but correction is anticipated within an acceptable time frame. A loan classified as Watch may have the following characteristics: • Acceptable asset quality, but requiring increased monitoring. Strained liquidity and less than anticipated performance. The loan may be fully leveraged. • Apparent management weakness, perhaps demonstrated by an irregular flow of adequate and/or timely performance information required to support the credit. • The borrower has a plausible plan to correct problem(s) in the near future that is devoid of material uncertainties. • Lacks reserve capacity, so the risk rating will improve or decline in relatively short time (results of corrective actions should be apparent within six months or less). Credits classified as Special Mention are risk rated 7. These credits have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. A loan classified as Special Mention may have the following characteristics: • Performance is poor or significantly less than expected. A debt service deficiency either exists or cannot be ruled out. • Generally an undesirable business credit. Assets in this category are protected, but are potentially weak. These assets constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of Substandard. Special mention assets have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Bank's credit position at some future date. • Assets which might be detailed in this category include credits that the lending officer may be unable to supervise properly because of lack of expertise, an inadequate loan agreement, the condition of and control over collateral, failure to obtain proper documentation, or any other deviations from prudent lending practices. • An adverse trend in the borrower's operations or an imbalanced position in the balance sheet which does not jeopardize liquidation may best be handled by this classification. • A Special Mention classification should not be used as a compromise between a pass and substandard rating. Assets in which actual, not potential, weaknesses are evident and significant, and should be considered for more serious criticism. A loan classified as Substandard is risk rated 8. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 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. A loan classified as Substandard may have the following characteristics: • Unacceptable business credit. The asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. • Though no loss is envisioned, the outlook is sufficiently uncertain to preclude ruling out the possibility. Some liquidation of assets will likely be necessary as a corrective measure. • Assets in this category may demonstrate performance problems such as debt servicing deficiencies with no immediate relief, including having a DSCR of less than 1.00 . Borrowers have an inability to adjust to prolonged and unfavorable industry or economic trends. Management's character and/or effectiveness have become suspect. A loan classified as Doubtful is risk rated 9 and has all the inherent weaknesses as those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values highly questionable is improbable. A loan classified as Doubtful is risk rated 9 and has the following characteristics: • The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. • Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. A loan risk rated 10 is a loan for which a total loss is expected. A loan classified as a Loss has the following characteristics: • An uncollectible asset or one of such little value that it does not warrant classification as an active, earning asset. Such an asset may, however, have recovery or salvageable value, but not to the point of deferring full write off, even though some recovery may occur in the future. • The Bank will charge off such assets as a loss during the accounting period in which they were identified. • Loan to be eliminated from the active loan reporting system via charge off. The following table represents the internally assigned grade as of June 30, 2016 , by class of loans: One-to- four family Multi- family Commercial real estate Construction Land Home equity Credit cards Automobile Other consumer Commercial business Total Grade: Pass $ 52,438 $ 53,002 $ 146,587 $ 21,793 $ 6,349 $ 15,377 $ 2,892 $ 542 $ 1,839 $ 35,149 $ 335,968 Watch 4,875 740 1,978 — 316 836 77 55 94 1,005 9,976 Special Mention 1,789 — 644 — 174 220 — — — 533 3,360 Substandard 2,128 — 318 — — 166 — — — 161 2,773 Doubtful — — — — — — — — — — — Total $ 61,230 $ 53,742 $ 149,527 $ 21,793 $ 6,839 $ 16,599 $ 2,969 $ 597 $ 1,933 $ 36,848 $ 352,077 The following table represents the internally assigned grade as of June 30, 2015 , by class of loans: One-to- four family Multi-family Commercial real estate Construction Land Home equity Credit cards Automobile Other consumer Commercial business Total Grade: Pass $ 49,119 $ 42,884 $ 125,586 $ 11,731 $ 3,430 $ 16,585 $ 3,249 $ 615 $ 2,214 $ 16,981 $ 272,394 Watch 2,151 — 2,044 — — 697 34 71 102 915 6,014 Special Mention 4,755 — 676 — 231 301 — — — 159 6,122 Substandard 1,919 365 — — 408 21 6 — 31 932 3,682 Doubtful — — — — — — — — — — — Total $ 57,944 $ 43,249 $ 128,306 $ 11,731 $ 4,069 $ 17,604 $ 3,289 $ 686 $ 2,347 $ 18,987 $ 288,212 Troubled Debt Restructured Loans . A troubled debt restructured ("TDR") is a loan where the Company, for economic or legal reasons related to the borrower's financial condition, has granted a concession to the borrower that it would otherwise not consider so that the borrower can continue to make payments while minimizing the Company's potential loss. The modifications have included items such as lowering the interest rate on the loan for a period of time and extending the maturity date of the loan. These modifications are made only when there is a reasonable and attainable workout plan that has been agreed to by the borrower and is in the Bank's best interest. The Bank has utilized a combination of rate and term modifications for its TDRs. The following table represents TDRs by accrual versus nonaccrual status and by class of loans as of June 30, 2016 : June 30, 2016 Accrual Status Nonaccrual Total Modifications One-to-four family $ 7,503 $ 411 $ 7,914 Land 490 — 490 Home equity 261 — 261 Commercial business 90 — 90 Total $ 8,344 $ 411 $ 8,755 The following table represents TDRs by accrual versus nonaccrual status and by class of loans as of June 30, 2015 : June 30, 2015 Accrual Status Nonaccrual Total Modifications One-to-four family $ 8,010 $ 681 $ 8,691 Land 639 — 639 Home equity 276 — 276 Commercial business 221 — 221 Total $ 9,146 $ 681 $ 9,827 The following tables present TDRs and their recorded investment prior to the modification and after the modification for TDR transactions that originated during the years ended June 30, 2016 , 2015 and 2014: Year Ended June 30, 2016 Number of Pre-TDR Recorded Investment Post -TDR Recorded Investment One-to-four family 1 $ 273 $ 240 Total 1 $ 273 $ 240 Year Ended June 30, 2015 Number of Pre-TDR Recorded Investment Post -TDR Recorded Investment One-to-four family 1 $ 197 $ 194 Total 1 $ 197 $ 194 Year Ended June 30, 2014 Number of Pre-TDR Recorded Investment Post -TDR Recorded Investment One-to-four family 7 $ 1,530 $ 1,545 Home equity 1 75 67 Commercial business 1 145 158 Total 9 $ 1,750 $ 1,770 There were no TDRs for which there was a payment default within the first 12 months of modification during the years ended June 30, 2016, 2015 and 2014. |