Loans | (4) Loans The loan portfolio segments and classes are as follows (in thousands) At March 31, 2017 At December 31, Real estate loans: One-to-four-family $ 139,754 $ 155,262 Commercial and multi-family 367,370 356,788 Construction and land 58,491 51,520 Home equity 21,519 21,902 Total real estate loans 587,134 585,472 Commercial loans 105,124 100,239 Consumer loans 1,230 1,478 Total loans 693,488 687,189 Deduct: Deferred loan fees, net (189 ) (131 ) Allowance for loan losses (3,643 ) (3,274 ) Loans, net $ 689,656 $ 683,784 The Company has divided the loan portfolio into three portfolio segments, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten in accordance with policies set forth and approved by the Company’s Board of Directors. The portfolio segments identified by the Company are as follows: Real Estate Loans. one-to-four-family One-to-four-family Commercial and multifamily real estate loans are secured by the subject property and are underwritten based on loan to value limits, cash flow coverage and general creditworthiness of the obligors. These loans are generally considered to have more credit risk than traditional one-to-four-family Construction and Land loans are to finance the construction of owner-occupied and lease properties. These loans are categorized as construction loans during the construction period, later converting to commercial or one-to- on-site pre-construction Home equity loans consists of either revolving line of credit, term, or second mortgage loans secured by one-to-four one-to-four Commercial Loans. Consumer Loans. An analysis of the change in the allowance for loan losses follows (in thousands) Real Estate Loans Commercial Loans Consumer Loans Unallocated Total Three Months Ended March 31, 2017: Beginning balance $ 2,473 469 6 326 $ 3,274 Provision (Credit) for loan losses 8 98 1 (107 ) — Charge-offs — — — — — Recoveries 350 19 — — 369 Ending balance $ 2,831 586 7 219 $ 3,643 Three Months Ended March 31, 2016: Beginning balance $ 1,354 583 23 551 $ 2,511 (Credit) Provision for loan losses — — — — — Charge-offs — (11 ) (2 ) — (13 ) Recoveries 14 19 1 — 34 Ending balance $ 1,368 591 22 551 $ 2,532 At March 31, 2017: Individually evaluated for impairment: Recorded investment $ 928 489 39 — $ 1,456 Balance in allowance for loan losses 16 — — — 16 Collectively evaluated for impairment: Recorded investment $ 289,959 66,037 440 — $ 356,436 Balance in allowance for loan losses $ 2,109 500 5 219 $ 2,833 Recorded investment in loans accounted for under ASC 310-20 Loan Receivables $ 293,088 38,598 751 — $ 332,437 Balance in allowance for loan losses $ 706 86 2 — $ 794 Recorded investment in loans accounted for under ASC 310-30 $ 3,159 — — — $ 3,159 Balance in allowance for loan losses — — — — — At December 31, 2016: Individually evaluated for impairment: Recorded investment $ 1,035 500 36 — $ 1,571 Balance in allowance for loan losses 21 9 1 — 31 Collectively evaluated for impairment: Recorded investment $ 274,513 59,586 608 — $ 334,707 Balance in allowance for loan losses $ 1,687 378 4 326 $ 2,395 Recorded investment in loans accounted for under ASC 310-20 Loan Receivables $ 307,605 40,153 834 — $ 348,592 Balance in allowance for loan losses $ 765 82 1 — $ 848 Recorded investment in loans accounted for under ASC 310-30 $ 2,319 — — — $ 2,319 Balance in allowance for loan losses — — — — — The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if they are appropriately classified and whether there is any impairment. All loans are graded upon initial issuance. Further, commercial, multi-family and commercial real estate loans are generally reviewed periodically to determine the appropriate loan grading. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Company will determine the appropriate loan grade. Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of a deterioration in the credit worthiness of the borrower; or (c) the borrower contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged-off. Pass Special Mention Substandard Doubtful Loss The following summarizes the loan credit quality (in thousands) Real Estate Loans One-to Commercial Construction Four-Family and and Home Residential Multi Family Land Equity Commercial Consumer Total Credit Risk Profile by Internally Assigned Grade: At March 31, 2017: Grade: Pass $ 138,922 $ 364,086 $ 58,128 $ 21,142 $ 103,510 $ 1,221 $ 687,009 Special mention 486 1,125 357 31 606 — 2,605 Substandard 346 2,159 6 346 1,008 9 3,874 Total $ 139,754 $ 367,370 $ 58,491 $ 21,519 $ 105,124 $ 1,230 $ 693,488 At December 31, 2016: Grade: Pass $ 153,965 $ 351,096 $ 49,901 $ 21,902 $ 98,714 $ 1,442 $ 677,020 Special mention 490 730 543 — 79 — 1,842 Substandard 807 4,962 1,076 — 1,446 36 8,327 Total $ 155,262 $ 356,788 $ 51,520 $ 21,902 $ 100,239 $ 1,478 $ 687,189 Age analysis of past-due (in thousands) Accruing Loans 30-59 Days Past Due 60-89 Days Past Due 90 Days Or Greater Past Due Total Past Due Current Nonaccrual Loans Total Loans At March 31, 2017: Real estate mortgage loans: One-to-four $ 1,348 989 — 2,337 137,071 346 $ 139,754 Commercial Real Estate and Multifamily 413 — — 413 366,785 172 367,370 Construction and Land 74 86 — 160 58,331 — 58,491 Home Equity — — — — 21,489 30 21,519 Commercial loans 109 — — 109 105,015 — 105,124 Consumer loans 11 — — 11 1,180 39 1,230 Total $ 1,955 1,075 — 3,030 $ 689,871 587 $ 693,488 At December 31, 2016: Real estate mortgage loans: One-to-four $ 501 274 — 775 154,487 — $ 155,262 Commercial Real Estate and Multifamily 778 — — 778 355,755 255 356,788 Construction and Land 1,519 — — 1,519 50,001 — 51,520 Home Equity 22 — — 22 21,880 — 21,902 Commercial loans 217 — — 217 100,022 — 100,239 Consumer loans 10 — — 10 1,432 36 1,478 Total $ 3,047 274 — 3,321 $ 683,577 291 $ 687,189 The following summarizes the amount of impaired loans (in thousands) With No Related Allowance Recorded With an Allowance Recorded Total Recorded Investment Unpaid Principal Balance Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance March 31, 2017 Real estate mortgage loans: One-to-four-family $ 346 $ 346 $ 313 $ 313 $ 16 $ 659 $ 659 $ 16 Commercial and Multifamily 239 647 — — — 239 647 — Home Equity 30 30 — — — 30 30 — Commercial loans 489 525 — — — 489 525 — Consumer Loans 39 39 — — — 39 39 — $ 1,143 $ 1,587 $ 313 $ 313 $ 16 $ 1,456 $ 1,900 $ 16 December 31, 2016: Real estate mortgage loans: One-to-four-family $ — $ — $ 448 $ 448 $ 21 $ 448 $ 448 $ 21 Commercial and Multifamily 587 1,568 — — — 587 1,568 — Commercial loans 427 457 73 77 9 500 534 9 Consumer Loans — — 36 36 1 36 36 1 $ 1,014 $ 2,025 $ 557 $ 561 $ 31 $ 1,571 $ 2,586 $ 31 The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands) Three Months Ended March 31, 2017 2016 Average Interest Interest Average Interest Interest Real estate mortgage loans: One-to-four-family $ 314 6 4 458 9 7 Commercial real estate and Multifamily 187 8 7 891 19 26 Land and construction — — — 157 — 2 Commercial loans 492 9 9 533 12 12 Total $ 933 23 20 2,039 40 47 During the three months ended March 31, 2017 and 2016, the Company did not enter into any debt restructurings and the Company had no loans restructured as troubled debt restructurings that subsequently defaulted that had been modified in the previous twelve month period. As of March 31, 2017 the Company had remaining approximately $436,000 in accruing TDRs and $76,000 of non-accruing At March 31, 2017 the contractually required principal of Purchased Credit Impaired (“PCI”) loans acquired was $3.6 million. The recorded investment of PCI loans was $3.2 million. There were no additional losses generated during the three months ended March 31, 2017 from these loans. |