LOANS | NOTE 6 - LOANS September 30, December 31, 2016 2015 (unaudited) (In Thousands) Real estate loans: One-to four- family residential $ 132,440 $ 104,861 Commercial 25,521 21,848 Multi-family 18,850 16,559 Home equity loans and lines of credit 2,230 2,093 Construction 23,952 18,755 Commercial and industrial loans 2,975 3,964 Consumer loans: Consumer lines of credit 17 20 Other consumer loans 2,166 3,060 208,151 171,160 Net deferred loan origination fees, costs and discounts 377 153 Allowance for loan losses (1,013) (886) Net loans $ 207,515 $ 170,427 Real Estate: Consumer One- to four-family Home Equity Loans Commercial and Consumer Residential Commercial Multi-family and Lines of Credit Construction Industrial Loans Line of Credit Other Consumer Unallocated Total (In Thousands) Nine months ended September 30, 2016 (unaudited): Allowance for loan losses: Beginning balance $ 373 $ 146 $ 62 $ 14 $ 216 $ 13 $ 1 $ 29 $ 32 $ 886 Charge-offs - - - - - - - (7) - (7) Recoveries - - - - - - - - - - Provision (benefit) 72 1 9 (2) 60 (3) - (1) (2) 134 Ending balance $ 445 $ 147 $ 71 $ 12 $ 276 $ 10 $ 1 $ 21 $ 30 $ 1,013 Nine months ended September 30, 2015 (unaudited): Allowance for loan losses: Beginning balance $ 362 $ 134 $ 36 $ 27 $ 121 $ 8 $ 1 $ 20 $ 34 $ 743 Charge-offs - - - - - - - - - - Recoveries - - - - - - - - - - Provision (benefit) 8 (14) 19 (13) 99 9 - 12 (24) 96 Ending balance $ 370 $ 120 $ 55 $ 14 $ 220 $ 17 $ 1 $ 32 $ 10 $ 839 At September 30, 2016 (unaudited): Allowance for loan losses: Ending balance: Individually evaluated for impairment $ 21 $ - $ - $ - $ - $ - $ - $ - $ - $ 21 Ending balance: Collectively evaluated for impairment 424 147 71 12 276 10 1 21 30 992 Total allowance for loan losses ending balance $ 445 $ 147 $ 71 $ 12 $ 276 $ 10 $ 1 $ 21 $ 30 $ 1,013 Loans: Ending balance: Individually evaluated for impairment $ 3,423 $ 659 $ - $ 6 $ - $ - $ - $ - $ - $ 4,088 Ending balance: Collectively evaluated for impairment 129,017 24,862 18,850 2,224 23,952 2,975 17 2,166 - 204,063 Total loans ending balance $ 132,440 $ 25,521 $ 18,850 $ 2,230 $ 23,952 $ 2,975 $ 17 $ 2,166 $ - $ 208,151 Real Estate: Consumer One- to four-family Home Equity Loans Commercial and Consumer Residential Commercial Multi-family and Lines of Credit Construction Industrial Loans Line of Credit Other Consumer Unallocated Total At December 31, 2015: Allowance for loan losses: Ending balance: Individually evaluated for impairment $ 21 $ - $ - $ - $ - $ - $ - $ - $ - $ 21 Ending balance: Collectively evaluated for impairment 352 146 62 14 216 13 1 29 32 865 Total allowance for loan losses ending balance $ 373 $ 146 $ 62 $ 14 $ 216 $ 13 $ 1 $ 29 $ 32 $ 886 Loans: Ending balance: Individually evaluated for impairment $ 5,665 $ 679 $ - $ 59 $ - $ - $ - $ - $ - $ 6,403 Ending balance: Collectively evaluated for impairment 99,196 21,169 16,559 2,034 18,755 3,964 20 3,060 - 164,757 Total loans ending balance $ 104,861 $ 21,848 $ 16,559 $ 2,093 $ 18,755 $ 3,964 $ 20 $ 3,060 $ - $ 171,160 90 Days 90 Days or More or More Total Total Past Due Nonaccrual 30-59 Days 60-89 Days Past Due Past Due Current Total and Accruing Loans (In Thousands) September 30, 2016 (unaudited): Real estate loans: One- to four-family residential $ 567 $ - $ - $ 567 $ 131,873 $ 132,440 $ - $ 11 Commercial - - - 25,521 25,521 - - Multi-family - - - - 18,850 18,850 - - Home equity loans and lines of credit 6 - - 6 2,224 2,230 - - Construction - - - - 23,952 23,952 - - Commercial and industrial loans - - - - 2,975 2,975 - - Consumer loans: Consumer lines of credit - - - - 17 17 - - Other consumer - - - 2,166 2,166 - - Total $ 573 $ - $ - $ 573 $ 207,578 $ 208,151 $ - $ 11 December 31, 2015: Real estate loans: One- to four-family residential $ 1,088 $ 18 $ 1,393 $ 2,499 $ 102,362 $ 104,861 $ - $ 1,410 Commercial - - - - 21,848 21,848 - - Multi-family - - - - 16,559 16,559 - - Home equity loans and lines of credit - 59 - 59 2,034 2,093 - - Construction - - - - 18,755 18,755 - - Commercial and industrial loans - - - - 3,964 3,964 - - Consumer loans: Consumer lines of credit - - - - 20 20 - - Other consumer 16 - - 16 3,044 3,060 - - Total $ 1,104 $ 77 $ 1,393 $ 2,574 $ 168,586 $ 171,160 $ - $ 1,410 Unpaid Recorded Principal Related Investment Balance Allowance (In Thousands) September 30, 2016 (unaudited): With no related allowance recorded: Real estate loans: One- to four-family residential $ 2,856 $ 2,856 $ - Commercial 659 659 - Home equity loans and lines of credit 6 88 - Total impaired with no related allowance $ 3,521 $ 3,603 $ - With an allowance recorded: Real estate loans: One- to four-family residential $ 567 $ 567 $ 21 Commercial - - - Home equity loans and lines of credit - - - Total impaired with an allowance recorded $ 567 $ 567 $ 21 Total Real estate loans: One- to four-family residential $ 3,423 $ 3,423 $ 21 Commercial 659 659 - Home equity loans and lines of credit 6 88 - Total impaired loans $ 4,088 $ 4,170 $ 21 December 31, 2015: With no related allowance recorded: Real estate loans: One- to four-family residential $ 5,098 $ 5,098 $ - Commercial 679 679 - Home equity loans and lines of credit 59 141 - Total impaired with no related allowance $ 5,836 $ 5,918 $ - With an allowance recorded: Real estate loans: One- to four-family residential $ 567 $ 567 $ 21 Commercial - - - Home equity loans and lines of credit - - - Total impaired with an allowance recorded $ 567 $ 567 $ 21 Total Real estate loans: One- to four-family residential $ 5,665 $ 5,665 $ 21 Commercial 679 679 - Home equity loans and lines of credit 59 141 - Total impaired loans $ 6,403 $ 6,485 $ 21 Nine Months Ended Nine Months Ended September 30, 2016 September 30, 2015 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized With no related allowance recorded: Real estate loans: One- to four-family residential $ 3,607 $ 135 $ 5,840 $ 147 Commercial 670 28 691 29 Home equity loans and lines of credit 48 4 53 1 Total impaired with no related allowance $ 4,325 $ 167 $ 6,584 $ 177 With an allowance recorded: Real estate loans: One- to four-family residential $ 567 $ 17 $ 573 $ 17 Commercial - - - - Home equity loans and lines of credit - - - - Total impaired with an allowance recorded $ 567 $ 17 $ 573 $ 17 Total Real estate loans: One- to four-family residential $ 4,174 $ 152 $ 6,413 $ 164 Commercial 670 28 691 29 Home equity loans and lines of credit 48 4 53 1 Total impaired loans $ 4,892 $ 184 $ 7,157 $ 194 The following tables present the Company’s loans by risk rating: Real Estate: Consumer One- to four-family Home Equity Loans Commercial and Consumer Residential Commercial Multi-family and Lines of Credit Construction Industrial Loans Lines of Credit Other Consumer Total (In Thousands) September 30, 2016 (unaudited): Grade: Pass $ - $ 24,862 $ 18,850 $ - $ 23,952 $ 2,975 $ - $ - $ 70,639 Special mention 2,026 659 - - - - - 2,685 Substandard 567 - - 6 - - - - 573 Loans not formally rated 129,847 - - 2,224 - - 17 2,166 134,254 Total $ 132,440 $ 25,521 $ 18,850 $ 2,230 $ 23,952 $ 2,975 $ 17 $ 2,166 $ 208,151 December 31, 2015: Grade: Pass $ - $ 21,169 $ 16,559 $ - $ 18,755 $ 3,964 $ - $ - $ 60,447 Special mention 539 - - 53 - - - - 592 Substandard 3,796 679 - 6 - - - - 4,481 Loans not formally rated 100,526 - - 2,034 - - 20 3,060 105,640 Total $ 104,861 $ 21,848 $ 16,559 $ 2,093 $ 18,755 $ 3,964 $ 20 $ 3,060 $ 171,160 At September 30, 2016 (unaudited) and December 31, 2015, there were no loans rated “doubtful” or “loss.” Credit Quality Information The Company utilizes a seven grade internal loan rating system for commercial real estate, construction and commercial loans as follows: Loans rated 1 - 3: Loans in these categories are considered “pass” rated loans with low to average risk. Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Loans rated 7: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted. On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. For residential real estate and consumer loans, the Company initially assesses credit quality based upon the borrower’s ability to pay and subsequently monitors these loans based on the borrower’s payment activity. The Company classifies loans modified as troubled debt restructurings (TDRs) as impaired loans with an allowance established as part of the allocated component of the allowance for loan losses when the discounted cash flows or value of the underlying collateral of the impaired loan is lower than its carrying value. During the three months ended September 30, 2016 (unaudited), there were no loans modified as TDRs. During the nine months ended September 30, 2016 (unaudited), five loans were modified as TDRs. Three of the modified loans paid off by September 30, 2016. During the nine months ended September 30, 2015 (unaudited), there were no loans modified as TDRs. The following table sets forth information regarding the remaining loans modified as TDRs during the nine months ended September 30, 2016. Pre-Modification Post-Modification Number of Outstanding Recorded Outstanding Recorded Contracts Investment Investment (Dollars In Thousands) September 30, 2016: Troubled Debt Restructurings: Real estate loans: One- to four- family residential 1 $ 567 $ 567 Home equity loans and lines of credit 1 6 6 2 $ 573 $ 573 At September 30, 2016 (unaudited) there were no loans modified as TDRs that subsequently defaulted. As of September 30, 2016 (unaudited), there were no commitments to lend additional funds to borrowers whose loans were modified as troubled debt restructurings. Rate Interest Only Rate Reduction and Reduction Period Interest Only Period (In Thousands) September 30, 2016 (unaudited): Real estate loans: One- to four- family residential $ - $ 567 $ - Home equity loans and lines of credit - 6 - Total $ - $ 573 $ - An analysis of the loans modified as TDRs was performed as of September 30, 2016 (unaudited). An allowance of $ 21,000 Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage and other loans serviced for others were $ 27.5 21.8 On March 25, 2016, the Company entered into an agreement to purchase $ 20.0 50 50 1 17.8 |