Loan Credit Quality | 9 Months Ended |
Sep. 30, 2013 |
Loan Credit Quality [Abstract] | ' |
Loan Credit Quality [Text Block] | ' |
(10) Loan Credit Quality |
For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Generally, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. |
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The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of September 30, 2013: |
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(Dollars in thousands) | | 30-59 | | 60-89 | | 90 or | | Total | | Current | | Total | | Loans | |
Days | Days | More | Past Due | Loans | Receivable |
Past Due | Past | Days | | Receivable | Greater Than |
| Due | | | | 90 Days Past |
| | | | | Due and |
| | | | | Accruing |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 828 | | $ | 210 | | $ | 2,150 | | $ | 3,188 | | $ | 121,139 | | $ | 124,327 | | $ | 628 | |
Multi-family | | | — | | | — | | | — | | | — | | | 23,253 | | | 23,253 | | | — | |
Commercial | | | 677 | | | 1,034 | | | 505 | | | 2,216 | | | 113,552 | | | 115,768 | | | — | |
Land and construction | | | — | | | — | | | — | | | — | | | 13,461 | | | 13,461 | | | — | |
Commercial business | | | — | | | — | | | — | | | — | | | 10,590 | | | 10,590 | | | — | |
Consumer | | | 116 | | | 136 | | | 368 | | | 620 | | | 4,094 | | | 4,714 | | | 368 | |
Total | | $ | 1,621 | | $ | 1,380 | | $ | 3,023 | | $ | 6,024 | | $ | 286,089 | | $ | 292,113 | | $ | 996 | |
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The following table presents the classes of the loan portfolio summarized by the past due status as of December 31, 2012: |
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(Dollars in thousands) | | 30-59 | | 60-89 | | | 90 or | | | Total | | Current | | Total | | Loans | |
Days | Days | More | Past Due | Loans | Receivable |
Past Due | Past | Days | | Receivable | Greater Than |
| Due | | | | 90 Days Past |
| | | | | Due and |
| | | | | Accruing |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 1,723 | | $ | 496 | | $ | 2,406 | | $ | 4,625 | | $ | 122,051 | | $ | 126,676 | | $ | 1,742 | |
Multi-family | | | — | | | — | | | — | | | — | | | 20,953 | | | 20,935 | | | — | |
Commercial | | | 2,155 | | | 276 | | | 2,873 | | | 5,304 | | | 106,005 | | | 111,309 | | | — | |
Land and construction | | | — | | | — | | | — | | | — | | | 10,654 | | | 10,654 | | | — | |
Commercial business | | | — | | | — | | | — | | | — | | | 9,852 | | | 9,852 | | | — | |
Consumer | | | 148 | | | 124 | | | 324 | | | 596 | | | 4,752 | | | 5,348 | | | 324 | |
Total | | $ | 4,026 | | $ | 896 | | $ | 5,603 | | $ | 10,525 | | $ | 274,249 | | $ | 284,774 | | $ | 2,066 | |
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The following table presents nonaccrual loans by classes of the loan portfolio as of September 30, 2013 and December 31, 2012: |
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| | September 30, | | December 31, | | | | | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | | | | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 1,522 | | $ | 644 | | | | | | | | | | | | | | | | |
Multi-family | | | — | | | — | | | | | | | | | | | | | | | | |
Commercial | | | 505 | | | 2,873 | | | | | | | | | | | | | | | | |
Land and construction | | | — | | | — | | | | | | | | | | | | | | | | |
Commercial business | | | — | | | — | | | | | | | | | | | | | | | | |
Consumer | | | — | | | — | | | | | | | | | | | | | | | | |
Total non-accruing loans | | $ | 2,027 | | $ | 3,537 | | | | | | | | | | | | | | | | |
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Allowance for Loan Losses |
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The allowance for loan losses is increased by charges to income and decreased by chargeoffs (net of recoveries). Allowances are provided for specific loans when losses are probable and can be estimated. When this occurs, management considers the remaining principal balance, fair value and estimated net realizable value of the property collateralizing the loan. Current and future operating and/or sales conditions are also considered. These estimates are susceptible to changes that could result in material adjustments to results of operations. Recovery of the carrying value of such loans is dependent to a great extent on economic, operating and other conditions that may be beyond management’s control. |
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The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. |
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The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. An unallocated component, if any, is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. |
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The general component covers pools of loans by loan class including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include: |
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1. | Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices. | | | | | | | | | | | | | | | | | | | | | |
2. | National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans. | | | | | | | | | | | | | | | | | | | | | |
3. | Nature and volume of the portfolio and terms of loans. | | | | | | | | | | | | | | | | | | | | | |
4 | Experience, ability, and depth of lending management and staff. | | | | | | | | | | | | | | | | | | | | | |
5. | Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications. | | | | | | | | | | | | | | | | | | | | | |
6 | Quality of the Company’s loan review system, and the degree of oversight by the Company’s Board of Directors. | | | | | | | | | | | | | | | | | | | | | |
7. | Existence and effect of any concentrations of credit and changes in the level of such concentrations. | | | | | | | | | | | | | | | | | | | | | |
8 | Effect of external factors, such as competition and legal and regulatory requirements. | | | | | | | | | | | | | | | | | | | | | |
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Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation. |
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Single family real estate loans involve certain risks such as interest rate risk and risk of non repayment. Adjustable-rate single family real estate loans decreases the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy or the borrower. |
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Multi-family and commercial real estate lending entails significant risks. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for multi-family and commercial real estate as well as economic conditions generally. |
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Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property's value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Company than construction loans to individuals on their personal residences. |
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Commercial business lending is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business assets. Commercial business loans are primarily secured by inventories and other business. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance. |
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Consumer loans generally have shorter terms and higher interest rates than other lending but generally involve high credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. In addition, consumer lending collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan. |
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The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial and construction loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans criticized special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. |
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While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, our estimates of the allowance for loan losses have not required significant adjustments from management’s initial estimates. In addition, the Department and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses. The Department and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods. |
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The following table presents the activity in the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for the three and nine months ended September 30, 2013: |
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(Dollars in thousands) | | Single | | Multi | | Commercial | | Land and | | Consumer | | Commercial | | Total | |
Family | Family | Real Estate | Construction | Business |
Real | Real | | | |
Estate | Estate | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses for the three months ended September 30, 2013: | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 953 | | $ | 148 | | $ | 2,395 | | $ | 651 | | $ | 10 | | $ | 225 | | $ | 4,382 | |
Charge-offs | | | -8 | | | — | | | -18 | | | — | | | -4 | | | — | | | -30 | |
Recoveries | | | — | | | — | | | — | | | — | | | 2 | | | — | | | 2 | |
Provisions | | | 45 | | | 97 | | | 199 | | | -209 | | | 3 | | | 15 | | | 150 | |
Ending balance | | $ | 990 | | $ | 245 | | $ | 2,576 | | $ | 442 | | $ | 11 | | $ | 240 | | $ | 4,504 | |
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Allowance for loan losses for the nine months ended September 30, 2013: | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,027 | | $ | 623 | | $ | 2,674 | | $ | 352 | | $ | 18 | | $ | 225 | | $ | 4,919 | |
Charge-offs | | | -241 | | | -359 | | | -310 | | | — | | | -6 | | | — | | | -916 | |
Recoveries | | | 18 | | | — | | | — | | | 30 | | | — | | | 3 | | | 51 | |
Provisions | | | 186 | | | -19 | | | 212 | | | 60 | | | -1 | | | 12 | | | 450 | |
Ending balance | | $ | 990 | | $ | 245 | | $ | 2,576 | | $ | 442 | | $ | 11 | | $ | 240 | | $ | 4,504 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | | $ | 18 | | $ | — | | $ | 755 | | $ | — | | $ | — | | $ | — | | $ | 773 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | | $ | 972 | | $ | 245 | | $ | 1,821 | | $ | 442 | | $ | 11 | | $ | 240 | | $ | 3,731 | |
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Loans receivable: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 124,327 | | $ | 23,253 | | $ | 115,768 | | $ | 13,461 | | $ | 4,714 | | $ | 10,590 | | $ | 292,113 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | | $ | 555 | | $ | — | | $ | 9,969 | | $ | — | | $ | — | | $ | — | | $ | 10,524 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | | $ | 123,772 | | $ | 23,253 | | $ | 105,799 | | $ | 13,461 | | $ | 4,714 | | $ | 10,590 | | $ | 281,589 | |
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The following table presents the activity in the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for the three and nine months ended September 30, 2012: |
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(Dollars in thousands) | | Single | | Multi | | Commercial | | Land and | | Consumer | | Commercial | | Total | |
Family | Family | Real Estate | Construction | Business |
Real | Real | | | |
Estate | Estate | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses for the three months ended September 30, 2012: | |
Beginning balance | | $ | 720 | | $ | 650 | | $ | 2,240 | | $ | 432 | | $ | 22 | | $ | 235 | | $ | 4,299 | |
Charge-offs | | | -23 | | | — | | | -59 | | | — | | | -2 | | | — | | | -84 | |
Recoveries | | | — | | | — | | | 12 | | | — | | | 1 | | | — | | | 13 | |
Provisions | | | 10 | | | -78 | | | 303 | | | -8 | | | -1 | | | -1 | | | 225 | |
Ending balance | | $ | 707 | | $ | 572 | | $ | 2,496 | | $ | 424 | | $ | 20 | | $ | 234 | | $ | 4,453 | |
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Allowance for loan losses for the nine months ended September 30, 2012: | |
Beginning balance | | $ | 693 | | $ | 234 | | $ | 2,289 | | $ | 525 | | $ | 20 | | $ | 239 | | $ | 4,000 | |
Charge-offs | | | -42 | | | — | | | -59 | | | -439 | | | -7 | | | — | | | -547 | |
Recoveries | | | 9 | | | — | | | 12 | | | 2 | | | 2 | | | — | | | 25 | |
Provisions | | | 47 | | | 338 | | | 254 | | | 336 | | | 5 | | | -5 | | | 975 | |
Ending balance | | $ | 707 | | $ | 572 | | $ | 2,496 | | $ | 424 | | $ | 20 | | $ | 234 | | $ | 4,453 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | | $ | — | | $ | 482 | | $ | 689 | | $ | — | | $ | — | | $ | — | | $ | 1,171 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | | $ | 707 | | $ | 90 | | $ | 1,807 | | $ | 424 | | $ | 20 | | $ | 234 | | $ | 3,282 | |
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Loans receivable: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 120,466 | | $ | 12,900 | | $ | 116,978 | | $ | 16,551 | | $ | 9,207 | | $ | 5,477 | | $ | 281,579 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | | $ | — | | $ | 3,569 | | $ | 7,965 | | $ | 3,161 | | $ | — | | $ | — | | $ | 14,695 | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | | $ | 120,466 | | $ | 9,331 | | $ | 109,013 | | $ | 13,390 | | $ | 9,207 | | $ | 5,477 | | $ | 266,884 | |
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The following table presents the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of December 31, 2012: |
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(Dollars in thousands) | Single | | Multi | | Commercial | | Land and | | Consumer | | Commercial | | Total | | |
Family | Family | Real Estate | Construction | Business | |
Real | Real | | | | |
Estate | Estate | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 1,027 | | $ | 623 | | $ | 2,674 | | $ | 352 | | $ | 18 | | $ | 225 | | $ | 4,919 | | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | $ | 8 | | $ | 436 | | $ | 802 | | $ | — | | $ | — | | $ | — | | $ | 1,246 | | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | $ | 1,019 | | $ | 187 | | $ | 1,872 | | $ | 352 | | $ | 18 | | $ | 225 | | $ | 3,673 | | |
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Loans receivable: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 126,676 | | $ | 20,935 | | $ | 111,309 | | $ | 10,654 | | $ | 5,348 | | $ | 9,852 | | $ | 284,774 | | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for impairment | $ | 564 | | $ | 3,815 | | $ | 7,895 | | $ | — | | $ | — | | $ | — | | $ | 12,274 | | |
Ending balance: | | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for impairment | $ | 126,112 | | $ | 17,120 | | $ | 103,414 | | $ | 10,654 | | $ | 5,348 | | $ | 9,852 | | $ | 272,500 | | |
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The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of September 30, 2013: |
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| | | | Special | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Total | | | | | | | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 120,433 | | $ | 1,745 | | $ | 2,149 | | $ | — | | $ | 124,327 | | | | | | | |
Multi-family | | | 23,253 | | | — | | | — | | | — | | | 23,253 | | | | | | | |
Commercial | | | 105,799 | | | 1,822 | | | 8,147 | | | — | | | 115,768 | | | | | | | |
Land and construction | | | 13,461 | | | — | | | — | | | — | | | 13,461 | | | | | | | |
Commercial business | | | 10,590 | | | — | | | — | | | — | | | 10,590 | | | | | | | |
Consumer | | | 4,714 | | | — | | | — | | | — | | | 4,714 | | | | | | | |
Total | | $ | 278,250 | | $ | 3,567 | | $ | 10,296 | | $ | — | | $ | 292,113 | | | | | | | |
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The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of December 31, 2012: |
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| | | | Special | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Total | | | | | | | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 122,821 | | $ | 1,409 | | $ | 2,446 | | $ | — | | $ | 126,676 | | | | | | | |
Multi-family | | | 17,120 | | | — | | | 3,815 | | | — | | | 20,935 | | | | | | | |
Commercial | | | 101,911 | | | 2,680 | | | 6,718 | | | — | | | 111,309 | | | | | | | |
Land and construction | | | 10,654 | | | — | | | — | | | — | | | 10,654 | | | | | | | |
Commercial business | | | 9,852 | | | — | | | — | | | — | | | 9,852 | | | | | | | |
Consumer | | | 5,348 | | | — | | | — | | | — | | | 5,348 | | | | | | | |
Total | | $ | 267,706 | | $ | 4,089 | | $ | 12,979 | | $ | — | | $ | 284,774 | | | | | | | |
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Loan Impairment |
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A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and industrial loans, commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. |
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An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. Currently, estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral. |
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The Company does not separately identify individual single-family loans secured by real estate unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment. |
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For multi-family, land and construction, and commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. |
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For commercial business loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. |
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The Company does not separately identify consumer and other loans unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment. |
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Loans whose terms are modified are classified as troubled debt restructurings if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a below market rate reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired. |
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The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the three months ended September 30, 2013: |
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| | | | Unpaid | | | | Average | | Interest Income | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Recognized | | | | | | | |
(Dollars in Thousands) | | Investment | | Balance | | Allowance | | Investment | | While Impaired | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 364 | | $ | 364 | | $ | — | | $ | 364 | | $ | 4 | | | | | | | |
Commercial | | $ | 3,490 | | $ | 3,490 | | $ | — | | $ | 3,490 | | $ | 48 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 191 | | $ | 191 | | $ | 18 | | $ | 191 | | $ | 4 | | | | | | | |
Commercial | | $ | 6,479 | | $ | 6,555 | | $ | 755 | | $ | 6,479 | | $ | 84 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 555 | | $ | 555 | | $ | 18 | | $ | 555 | | $ | 8 | | | | | | | |
Commercial | | $ | 9,969 | | $ | 10,045 | | $ | 755 | | $ | 9,969 | | $ | 132 | | | | | | | |
|
The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the nine months ended September 30, 2013: |
|
| | | | Unpaid | | | | Average | | Interest Income | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Recognized | | | | | | | |
(Dollars in Thousands) | | Investment | | Balance | | Allowance | | Investment | | While Impaired | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 364 | | $ | 364 | | $ | — | | $ | 364 | | $ | 10 | | | | | | | |
Commercial | | $ | 3,490 | | $ | 3,490 | | $ | — | | $ | 2,904 | | $ | 143 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 191 | | $ | 191 | | $ | 18 | | $ | 191 | | $ | 9 | | | | | | | |
Commercial | | $ | 6,479 | | $ | 6,555 | | $ | 755 | | $ | 6,479 | | $ | 217 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 555 | | $ | 555 | | $ | 18 | | $ | 555 | | $ | 19 | | | | | | | |
Commercial | | $ | 9,969 | | $ | 10,045 | | $ | 755 | | $ | 9,383 | | $ | 360 | | | | | | | |
|
The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the three months ended September 30, 2012: |
|
| | | | Unpaid | | | | Average | | Interest Income | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Recognized | | | | | | | |
(Dollars in Thousands) | | Investment | | Balance | | Allowance | | Investment | | While Impaired | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,335 | | $ | 1,335 | | $ | — | | $ | 1,335 | | $ | 47 | | | | | | | |
Land and construction | | $ | 3,161 | | $ | 6,188 | | $ | — | | $ | 3,161 | | $ | — | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Multi-family | | $ | 3,569 | | $ | 3,569 | | $ | 482 | | $ | 3,569 | | $ | 23 | | | | | | | |
Commercial | | $ | 6,630 | | $ | 6,630 | | $ | 689 | | $ | 6,630 | | $ | 75 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Multi-family | | $ | 3,569 | | $ | 3,569 | | $ | 482 | | $ | 3,569 | | $ | 23 | | | | | | | |
Commercial | | $ | 7,965 | | $ | 7,965 | | $ | 689 | | $ | 7,496 | | $ | 122 | | | | | | | |
Land and construction | | $ | 3,161 | | $ | 6,188 | | $ | — | | $ | 3,161 | | $ | — | | | | | | | |
|
The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the nine months ended September 30, 2012: |
|
| | | | Unpaid | | | | Average | | Interest Income | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Recognized | | | | | | | |
(Dollars in Thousands) | | Investment | | Balance | | Allowance | | Investment | | While Impaired | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,335 | | $ | 1,335 | | $ | — | | $ | 1,335 | | $ | 56 | | | | | | | |
Land and construction | | $ | 3,161 | | $ | 6,188 | | $ | — | | $ | 3,161 | | $ | — | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Multi-family | | $ | 3,569 | | $ | 3,569 | | $ | 482 | | $ | 3,569 | | $ | 82 | | | | | | | |
Commercial | | $ | 6,630 | | $ | 6,630 | | $ | 689 | | $ | 6,630 | | $ | 236 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Multi-family | | $ | 3,569 | | $ | 3,569 | | $ | 482 | | $ | 3,569 | | $ | 82 | | | | | | | |
Commercial | | $ | 7,965 | | $ | 7,965 | | $ | 689 | | $ | 7,496 | | $ | 292 | | | | | | | |
Land and construction | | $ | 3,161 | | $ | 6,188 | | $ | — | | $ | 3,161 | | $ | — | | | | | | | |
|
The following table summarizes information in regards to loans classified as impaired loans by loan portfolio class as of and during the year ended December 31, 2012: |
|
| | | | Unpaid | | | | Average | | Interest Income | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Recognized | | | | | | | |
(Dollars in Thousands) | | Investment | | Balance | | Allowance | | Investment | | While Impaired | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 423 | | $ | 423 | | $ | — | | $ | 336 | | $ | 33 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 564 | | $ | 564 | | $ | 8 | | $ | 424 | | $ | 18 | | | | | | | |
Multi-family | | $ | 3,815 | | $ | 3,815 | | $ | 436 | | $ | 3,351 | | $ | 111 | | | | | | | |
Commercial | | $ | 7,472 | | $ | 7,472 | | $ | 802 | | $ | 6,752 | | $ | 304 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Single-family | | $ | 564 | | $ | 564 | | $ | 8 | | $ | 424 | | $ | 18 | | | | | | | |
Multi-family | | $ | 3,815 | | $ | 3,815 | | $ | 436 | | $ | 3,351 | | $ | 111 | | | | | | | |
Commercial | | $ | 7,895 | | $ | 7,895 | | $ | 802 | | $ | 7,088 | | $ | 337 | | | | | | | |
|
There were no troubled debt restructurings during the three months ended September 30, 2013 or the three months ended September 30, 2012. There were no troubled debt restructurings with a payment default, with the payment default occurring within 12 months of restructure, during the three months ended September 30, 2013 or the three months ended September 30, 2012. |
|
The following table summarizes information in regards to loans classified as troubled debt restructurings during the nine months ended September 30, 2013: |
|
| | | | | | Post-Modification | | | | | | | | | | | | | |
| | | | Pre-Modification | | Outstanding | | | | | | | | | | | | | |
| | Number of | | Outstanding Recorded | | Recorded | | | | | | | | | | | | | |
(Dollars in Thousands) | | Contracts | | Investments | | Investments | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 2 | | $ | 891 | | $ | 921 | | | | | | | | | | | | | |
|
There were no troubled debt restructurings with a payment default, with the payment default occurring within 12 months of restructure, during the nine months ended September 30, 2013. |
|
The following table summarizes information in regards to loans classified as troubled debt restructurings during the nine months ended September 30, 2012: |
|
| | | | | | Post-Modification | | | | | | | | | | | | | |
| | | | Pre-Modification | | Outstanding | | | | | | | | | | | | | |
| | Number of | | Outstanding Recorded | | Recorded | | | | | | | | | | | | | |
(Dollars in Thousands) | | Contracts | | Investments | | Investments | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 7 | | $ | 3,445 | | $ | 3,445 | | | | | | | | | | | | | |
|
There were no troubled debt restructurings with a payment default, with the payment default occurring in within the 12 months of restructure, during the nine months ended September 30, 2012. |
|
At September 30, 2013, the Company had three single-family loans with a carrying value of $555,000 and eleven commercial real estate loans with a carrying value of $5.8 million classified as troubled debt restructurings. Of the three single-family real estate loans, two were classified as special mention and one as substandard in the Company’s allowance for loan losses, are to two borrowers, and had a total allowance of $18,000 against them. Of the eleven commercial real estate loans, six were classified as special mention and five were classified as substandard in the Company’s allowance for loan losses. The six loans classified as special mention loans are to two borrowers and have a total allowance of $73,000 against them. The five loans classified as substandard are to five borrowers and have a total allowance of $514,000 against them. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven. |
|
At December 31, 2012, the Company had one single-family loan with a carrying value of $191,000, two multi-family loans with a carrying value of $3.8 million, and eleven commercial real estate loans with a carrying value of $5.3 million classified as troubled debt restructurings. The one single-family loan was classified as substandard in the Company’s allowance for loan losses and had an $8,000 allowance against it. The two multi-family loans are to one borrower, were classified as substandard in the Company’s allowance for loan losses, and have $436,000 of allowances against them. The eleven commercial real estate loans are to four borrowers and have $557,000 of allowances against them. Eight of the eleven commercial real estate loans are to two borrowers and are classified as special mention in the Company’s allowance for loan losses. Three of the eleven commercial real estate loans and are classified as substandard in the Company’s allowance for loan losses. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven. |
| | | | | | | | | | | | | | | | | | | | | | |