Loans | Note 5 – Loans The following table sets forth the composition of our loan portfolio by segment and class, at the dates indicated. September 30, 2015 December 31, 2014 Amount Percent Amount Percent (Dollars in thousands) First mortgage loans: Secured by one- to four-family $ 29,934 52.24 % $ 31,430 50.98 % Secured by multi-family 7,665 13.38 9,834 15.95 Secured by commercial real estate 12,545 21.89 10,324 16.75 Secured by construction 174 0.30 260 0.42 Secured by land 198 0.35 213 0.35 Total first mortgage loans 50,516 88.16 52,061 84.45 Commercial, consumer and other loans: Home equity lines-of-credit 5,135 8.96 7,360 11.94 Commercial business loans 755 1.32 826 1.34 Automobile loans 892 1.56 1,401 2.27 Other consumer loans — 0.00 2 0.00 Total commercial, consumer and other loans 6,782 11.84 9,589 15.55 Gross loans 57,298 100.00 61,650 100.00 Premiums and net deferred loan costs (31 ) (39 ) Allowance for loan losses (967 ) (1,206 ) Total loans, net $ 56,300 $ 60,405 The following table presents the activity in the allowance for loan losses by portfolio segment and class for the three and nine months ended September 30, 2015 and 2014. First Mortgages Commercial, Consumer and Other (Dollars in thousands) One-to-four Multi- Commercial Land Construction Home equity Commercial Automobile Other Total For the three months ended September 30, 2015 Allowance for loan losses Beginning balance $ 462 $ 185 $ 375 $ 6 $ 7 $ 86 $ 7 $ 54 $ — $ 1,182 Provision for loan losses 123 (16 ) (7 ) (1 ) (16 ) (17 ) — (11 ) — 55 Loans charged-off (284 ) — — — — — — — — (284 ) Recoveries — — — — 14 — — — — 14 Total ending allowance balance September 30, 2015 $ 301 $ 169 $ 368 $ 5 $ 5 $ 69 $ 7 $ 43 $ — $ 967 For the three months ended September 30, 2014 Allowance for loan losses Beginning balance $ 609 $ 186 $ 273 $ 7 $ — $ 120 $ 11 $ 88 $ — $ 1,294 Provision for loan losses (53 ) 28 26 — (1 ) (18 ) (7 ) (2 ) 27 — Loans charged-off (12 ) — — — — — — — — (12 ) Recoveries 6 — — — 1 — 6 — — 13 Total ending allowance balance September 30, 2014 $ 550 $ 214 $ 299 $ 7 $ — $ 102 $ 10 $ 86 $ 27 $ 1,295 For the nine months ended September 30, 2015 Allowance for loan losses Beginning balance $ 392 $ 354 $ 277 $ 6 $ 7 $ 96 $ 8 $ 66 $ — $ 1,206 Provision for loan losses 193 (157 ) 91 (1 ) (20 ) (27 ) (1 ) (22 ) (1 ) 55 Loans charged-off (284 ) (28 ) — — — — — (1 ) — (313 ) Recoveries — — — — 18 — — — 1 19 Total ending allowance balance September 30, 2015 $ 301 $ 169 $ 368 $ 5 $ 5 $ 69 $ 7 $ 43 $ — $ 967 For the nine months ended September 30, 2014 Allowance for loan losses Beginning balance $ 589 $ 252 $ 300 $ 7 $ — $ 78 $ 20 $ 56 $ — $ 1,302 Provision for loan losses (30 ) (38 ) (187 ) 6 (4 ) 42 140 44 27 — Loans charged-off (15 ) — — (6 ) — (18 ) (166 ) (16 ) — (221 ) Recoveries 6 — 186 — 4 — 16 2 — 214 Total ending allowance balance September 30, 2014 $ 550 $ 214 $ 299 $ 7 $ — $ 102 $ 10 $ 86 $ 27 $ 1,295 The following table represents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and class based on the impaired method at the dates indicated. The recorded investment in loans excludes accrued interest and loan origination fees due to immateriality. Loan Balance Allowance (Dollars in thousands) Individually Collectively Total Individually Collectively Total September 30, 2015 One-to-four-family $ 1,648 $ 28,286 $ 29,934 $ 41 $ 260 $ 301 Multi-family 1,359 6,306 7,665 58 111 169 Commercial real estate — 12,545 12,545 — 368 368 Land — 198 198 — 5 5 Construction — 174 174 — 5 5 Home equity lines of credit — 5,135 5,135 — 69 69 Commercial 41 714 755 — 7 7 Automobile — 892 892 — 43 43 Other consumer — — — — — — Total $ 3,048 $ 54,250 $ 57,298 $ 99 $ 868 $ 967 December 31, 2014 One-to-four-family $ 1,403 $ 30,027 $ 31,430 $ 78 $ 314 $ 392 Multi-family 2,985 6,849 9,834 247 107 354 Commercial real estate — 10,324 10,324 — 277 277 Land — 213 213 — 6 6 Construction — 260 260 — 7 7 Home equity lines of credit — 7,360 7,360 — 96 96 Commercial 95 731 826 — 8 8 Automobile — 1,401 1,401 — 66 66 Other consumer — 2 2 — — — Total $ 4,483 $ 57,167 $ 61,650 $ 325 $ 881 $ 1,206 The following tables present information related to loans individually evaluated for impairment by class of loans as of and for the nine months ended September 30, 2015 and 2014 and as of and for the year ended December 31, 2014. Unpaid Recorded Allowance for Average Interest Cash Basis (Dollars in thousands) September 30, 2015 With no related allowance recorded: One-to-four-family $ 1,523 $ 1,103 $ — $ 1,020 $ — $ — Multi-family 798 623 — 1,329 46 46 Commercial real estate — — — — — — Land — — — — — — Construction — — — — — — Home equity line of credit — — — — — — Commercial 244 41 — 65 — — Automobile — — — — — — Other consumer — — — — — — Total with no related allowance recorded 2,565 1,767 — 2,414 46 46 With an allowance recorded: One-to-four-family 545 545 41 550 22 22 Multi-family 736 736 58 743 28 28 Commercial real estate — — — — — — Land — — — — — — Construction — — — — — — Home equity line of credit — — — — — — Commercial — — — — — — Automobile — — — — — — Other consumer — — — — — — Total with a related allowance recorded 1,281 1,281 99 1,293 50 50 Total $ 3,846 $ 3,048 $ 99 $ 3,707 $ 96 $ 96 Unpaid Recorded Allowance for Average Interest Cash Basis (Dollars in thousands) September 30, 2014 With no related allowance recorded: One-to-four-family $ 999 $ 612 $ — $ 514 $ — $ — Multi-family 2,828 2,477 — 2,503 67 67 Commercial real estate — — — 132 1 1 Land — — — 90 — — Construction — — — — — — Home equity line of credit — — — — — — Commercial 361 158 — 194 — — Automobile — — — — — — Other consumer — — — — — — Total with no related allowance recorded 4,188 3,247 — 3,433 68 68 With an allowance recorded: One-to-four-family 559 559 106 576 24 24 Multi-family 760 760 83 768 35 35 Commercial real estate — — — 95 — — Land — — — — — — Construction — — — — — — Home equity line of credit — — — — — — Commercial — — — — — — Automobile — — — — — — Other consumer — — — — — — Total with a related allowance recorded 1,319 1,319 189 1,439 59 59 Total $ 5,507 $ 4,566 $ 189 $ 4,872 $ 127 $ 127 Unpaid Recorded Allowance for Average Interest Cash Basis (Dollars in thousands) December 31, 2014 With no related allowance recorded: One-to-four-family $ 1,011 $ 543 $ — $ 541 $ — $ — Multi-family 811 636 — 889 14 14 Commercial real estate — — — 99 — — Land — — — 68 — — Construction — — — — — — Home equity line of credit — — — — — — Commercial 339 95 — 178 — — Automobile — — — — — — Other consumer — — — — — Total with no related allowance recorded 2,161 1,274 — 1,775 14 14 With an allowance recorded: One-to-four-family 860 860 78 588 27 27 Multi-family 2,349 2,349 247 2,369 103 103 Commercial real estate — — — 71 — — Land — — — — — — Construction — — — — — — Home equity line of credit — — — — — — Commercial — — — — — — Automobile — — — — — — Other consumer — — — — — — Total with a related allowance recorded 3,209 3,209 325 3,028 130 130 Total $ 5,370 $ 4,483 $ 325 $ 4,803 $ 144 $ 144 The following table presents the aging of the recorded investment in past due loans at the dates indicated by class of loans. 30 - 59 60 - 89 Greater than Nonaccrual Loans Not Total (Dollars in thousands) September 30, 2015 One-to-four-family $ — $ — $ — $ 1,103 $ 28,831 $ 29,934 Multi-family — — — — 7,665 7,665 Commercial real estate — — — — 12,545 12,545 Land — — — — 198 198 Construction — — — — 174 174 Home equity line of credit — — — — 5,135 5,135 Commercial — — — 41 714 755 Automobile — — — — 892 892 Other consumer — — — — — — Total $ — $ — $ — $ 1,144 $ 56,154 $ 57,298 December 31, 2014 One-to-four-family $ — $ — $ — $ 847 $ 30,583 $ 31,430 Multi-family — — — 353 9,481 9,834 Commercial real estate — — — — 10,324 10,324 Land — — — — 213 213 Construction — — — — 260 260 Home equity line of credit — — — — 7,360 7,360 Commercial — — — 95 731 826 Automobile — — — — 1,401 1,401 Other consumer — — — — 2 2 Total $ — $ — $ — $ 1,295 $ 60,355 $ 61,650 Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Credit Quality Indicators The Bank categorizes loans into risk categories based on relevant information about the ability of a borrower to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. The analysis includes the non-homogeneous loans, such as multi- family, commercial real estate, construction, and commercial loans. The analysis is performed on a quarterly basis. Homogeneous loans are monitored based on past due status of the loan. The risk category of these loans is evaluated at origination, when a loan becomes delinquent or when a borrower requests a concession. Substandard Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful Loans classified as doubtful have all the weaknesses inherent in those classified as 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 and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. The following table reflects the risk category by loans at the dates indicated based on the most recent analysis performed. Pass Substandard Doubtful Total (Dollars in thousands) September 30, 2015 One-to-four-family $ 28,831 $ 1,103 $ — $ 29,934 Multi-family 7,665 — — 7,665 Commercial real estate 12,545 — — 12,545 Land 198 — — 198 Construction 174 — — 174 Home equity lines of credit 5,135 — — 5,135 Commercial 714 41 — 755 Automobile 892 — — 892 Other consumer — — — — Total $ 56,154 $ 1,144 $ — $ 57,298 December 31, 2014 One-to-four-family $ 30,583 $ 847 $ — $ 31,430 Multi-family 9,481 353 — 9,834 Commercial real estate 10,324 — — 10,324 Land 213 — — 213 Construction 260 — — 260 Home equity lines of credit 7,360 — — 7,360 Commercial 731 95 — 826 Automobile 1,401 — — 1,401 Other consumer 2 — — 2 Total $ 60,355 $ 1,295 $ — $ 61,650 Troubled Debt Restructurings Our troubled debt restructurings totaled $2,018 at September 30, 2015 and $3,736 at December 31, 2014. There was one loan totaling $1,561 that paid off during the nine months ended September 30, 2015 which resulted in a $28 charge-off. There were no loans modified as troubled debt restructurings during the nine months ended September 30, 2015 or the year ended December 31, 2014. There were two loans modified as troubled debt restructurings but paying as agreed under the terms of the modification with a balance of $114 as of September 30, 2015, which are being reported as nonaccrual. There were three loans modified as troubled debt restructurings with a balance of $548 which are being reported as nonaccrual as of December 31, 2014, two of which totaling $448 are paying as agreed under the terms of the modification. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no loans with payments in default during the nine months ended September 30, 2015. During the year ended December 31, 2014 one loan totaling $231, secured by a multi-family building, had payments in default and subsequently paid off resulting in a $60 recovery. The Company has allocated $99 to specific reserves on $1,281 of loans to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2015. At December 31, 2014, the Company has allocated $293 to specific reserves on $2,904 of loans to customers whose loan terms have been modified in troubled debt restructurings. The Company has not committed to lend additional amounts as of September 30, 2015 and December 31, 2014 to customers with outstanding loans that are classified as troubled debt restructurings. |