LOANS | 6. LOANS Portfolio loans consist of the following: June 30, December 31, 2017 2016 (Dollars in thousands) Commercial loans Multifamily $ 121,565 $ 93,597 Nonresidential 342,300 231,401 Land 10,867 8,373 Construction 96,765 68,158 Secured 162,109 95,343 Unsecured 8,649 7,386 Total commercial loans 742,255 504,258 Residential mortgage loans One-to four-family 834,349 762,926 Construction 56,946 35,695 Total residential mortgage loans 891,295 798,621 Consumer loans Home equity 187,762 165,054 Auto 50,389 39,609 Marine 1,601 1,796 Recreational vehicle 6,401 7,602 Other 4,998 2,537 Total consumer loans 251,151 216,598 Total loans 1,884,701 1,519,477 Less: Allowance for loan losses 19,660 19,087 Deferred loan costs, net (4,054 ) (3,187 ) Total 15,606 15,900 Loans, net $ 1,869,095 $ 1,503,577 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and are based on impairment method as of June 30, 2017 and December 31, 2016 and activity for the three and six months ended June 30, 2017 and 2016. Allowance For Loan Losses Commercial Loans Residential Loans Consumer Loans Total (Dollars in thousands) For the three months ended June 30, 2017 Beginning balance $ 10,182 $ 5,912 $ 2,876 $ 18,970 Provision 503 295 44 842 Charge-offs (12 ) (273 ) (150 ) (435 ) Recoveries 148 34 101 283 Ending balance $ 10,821 $ 5,968 $ 2,871 $ 19,660 For the six months ended June 30, 2017 Beginning balance $ 10,824 $ 5,538 $ 2,725 $ 19,087 Provision (recovery) 1,025 865 427 2,317 Charge-offs (1,323 ) (503 ) (479 ) (2,305 ) Recoveries 295 68 198 561 Ending balance $ 10,821 $ 5,968 $ 2,871 $ 19,660 June 30, 2017 Period-end amount allocated to: Loans individually evaluated for impairment $ 5 $ 1,171 $ 440 1,616 Loans collectively evaluated for impairment 10,816 4,797 2,431 18,044 Loans acquired with deteriorated credit quality — — — — Ending balance $ 10,821 $ 5,968 $ 2,871 $ 19,660 Period-end balances: Loans individually evaluated for impairment 2,532 16,190 7,588 26,310 Loans collectively evaluated for impairment 738,502 875,105 243,563 1,857,170 Loans acquired with deteriorated credit quality 1,221 — — 1,221 Ending balance $ 742,255 $ 891,295 $ 251,151 $ 1,884,701 Allowance For Loan Losses Commercial Loans Residential Loans Consumer Loans Total For the three months ended June 30, 2016 Beginning balance $ 8,521 $ 5,736 $ 2,646 $ 16,903 Provision (recovery) 489 (33 ) (61 ) 395 Charge-offs (147 ) (84 ) (276 ) (507 ) Recoveries 95 25 261 381 Ending balance $ 8,958 $ 5,644 $ 2,570 $ 17,172 For the six months ended June 30, 2016 Beginning balance $ 8,077 $ 6,630 $ 3,005 $ 17,712 Provision (recovery) 3,213 (627 ) (36 ) 2,550 Charge-offs (2,493 ) (446 ) (755 ) (3,694 ) Recoveries 161 87 356 604 Ending balance $ 8,958 $ 5,644 $ 2,570 $ 17,172 December 31, 2016 Period-end amount allocated to: Loans individually evaluated for impairment $ 1,271 $ 1,245 $ 500 $ 3,016 Loans collectively evaluated for impairment 9,553 4,293 2,225 16,071 Ending balance $ 10,824 $ 5,538 $ 2,725 $ 19,087 Period-end balances: Loans individually evaluated for impairment $ 6,018 $ 17,485 $ 8,045 $ 31,548 Loans collectively evaluated for impairment 498,240 781,136 208,553 1,487,929 Ending balance $ 504,258 $ 798,621 $ 216,598 $ 1,519,477 The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required based on an analysis using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, general economic conditions in the market area and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Other loans not reviewed specifically by management are evaluated as a homogenous group of loans (generally single-family residential mortgage loans and all consumer credits except marine loans) using a loss factor applied to the outstanding loan balance to determine the level of reserve required. This loss factor consists of two components, a quantitative and a qualitative component. The quantitative component is based on a historical analysis of all charged-off loans, net of recoveries. In determining the qualitative factors, consideration is given to such attributes as lending policies, economic conditions, nature and volume of the portfolio, management, loan quality trend, loan review, collateral value, concentrations, economic cycles and other external factors. As of June 30, 2017, the Company evaluated 20 quarters of net charge-off history and applied this information to the current period. This component is combined with the qualitative component to arrive at the loss factor, which is applied to the outstanding balance of homogenous loans. The following table presents loans individually evaluated for impairment by class of loans as of and for six months ended June 30, 2017: Impaired Loans (Dollars in thousands) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized With no specific allowance recorded Commercial loans Multifamily $ 470 $ 413 $ — $ 277 $ 3 $ 3 Nonresidential 2,030 1,464 — 1,040 50 49 Land 3,922 9 — 17 — — Construction 3,593 — — — — — Secured 242 190 — 190 — — Unsecured 500 — — — — — Total commercial loans 10,757 2,076 — 1,524 53 52 Residential mortgage loans One-to four-family 7,704 5,762 — 6,095 50 41 Construction — — — — — — Total residential mortgage loans 7,704 5,762 — 6,095 50 41 Consumer loans Home equity 1,965 1,535 — 1,577 8 7 Auto 34 18 — 11 — — Marine 540 169 — 210 — — Recreational vehicle 560 152 — 164 5 5 Other — — — — — — Total consumer loans 3,099 1,874 — 1,962 13 12 Total $ 21,560 $ 9,712 $ — $ 9,581 $ 116 $ 105 With a specific allowance recorded Commercial loans Multifamily $ — $ — $ — $ — $ — $ — Nonresidential 501 456 5 2,164 12 11 Land — — — — — — Construction — — — — — — Secured — — — 57 — — Unsecured — — — — — — Total commercial loans 501 456 5 2,221 12 11 Residential mortgage loans One-to four-family 10,526 10,428 1,171 10,764 273 229 Construction — — — — — — Total residential mortgage loans 10,526 10,428 1,171 10,764 273 229 Consumer loans Home equity 4,973 4,919 377 5,212 151 134 Auto — — — — — — Marine 104 104 1 106 3 3 Recreational vehicle 702 691 62 681 14 13 Other — — — — — — Total consumer loans 5,779 5,714 440 5,999 168 150 Total 16,806 16,598 1,616 18,984 453 390 Total impaired loans $ 38,366 $ 26,310 $ 1,616 $ 28,565 $ 569 $ 495 The following table presents loans individually evaluated for impairment by class of loans as of and for six months ended June 30, 2016: Impaired Loans (Dollars in thousands) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized With no specific allowance recorded Commercial loans Multifamily $ 95 $ — $ — $ — $ — $ — Nonresidential 1,382 326 — 281 3 3 Land 3,922 384 — 384 — — Construction 3,594 — — — — — Secured 3,745 3,700 — 3,700 — — Unsecured 1,118 — — — — — Total commercial loans 13,856 4,410 — 4,365 3 3 Residential mortgage loans One-to four-family 8,102 6,522 — 6,156 52 42 Construction — — — — — — Total residential mortgage loans 8,102 6,522 — 6,156 52 42 Consumer loans Home equity 1,858 1,339 — 1,463 4 4 Auto 16 9 — 11 — — Marine 544 302 — 292 — — Recreational vehicle 518 273 — 213 2 2 Other 4 4 — 3 — — Total consumer loans 2,940 1,927 — 1,982 6 6 Total $ 24,898 $ 12,859 $ — $ 12,503 $ 61 $ 51 With a specific allowance recorded Commercial loans Multifamily $ — $ — $ — $ — $ — $ — Nonresidential 10,854 8,571 922 7,493 124 122 Land — — — — — — Construction — — — — — — Secured 1,027 933 93 739 — — Unsecured — — — — — — Total commercial loans 11,881 9,504 1,015 8,232 124 122 Residential mortgage loans One-to four-family 12,033 12,033 1,333 12,742 297 251 Construction — — — — — — Total residential mortgage loans 12,033 12,033 1,333 12,742 297 251 Consumer loans Home equity 6,279 6,279 447 6,791 188 167 Auto — — — — — — Marine 156 156 4 159 4 4 Recreational vehicle 793 793 85 868 15 14 Other — — — 3 — — Total consumer loans 7,228 7,228 536 7,821 207 185 Total 31,142 28,765 2,884 28,795 628 558 Total impaired loans $ 56,040 $ 41,624 $ 2,884 $ 41,298 $ 689 $ 609 The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2016: Impaired Loans (Dollars in thousands) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated With no specific allowance recorded Commercial loans Multifamily $ 55 $ — $ — Nonresidential 2,278 1,489 — Land 3,922 34 — Construction 3,594 — — Secured 242 190 — Unsecured 713 — — Total commercial loans 10,804 1,713 — Residential mortgage loans One-to four-family 8,736 6,758 — Construction — — — Total residential mortgage loans 8,736 6,758 — Consumer loans Home equity 2,159 1,583 — Auto 11 3 — Marine 585 267 — Recreational vehicle 433 120 — Other — — — Total consumer loans 3,188 1,973 — Total $ 22,728 $ 10,444 $ — With a specific allowance recorded Commercial loans Multifamily $ — $ — $ — Nonresidential 6,930 4,133 1,193 Land — — — Construction — — — Secured 237 172 78 Unsecured — — — Total commercial loans 7,167 4,305 1,271 Residential mortgage loans One-to four-family 10,810 10,727 1,245 Construction — — — Total residential mortgage loans 10,810 10,727 1,245 Consumer loans Home equity 5,390 5,335 426 Auto — — — Marine 108 108 1 Recreational vehicle 639 629 73 Other — — — Total consumer loans 6,137 6,072 500 Total 24,114 21,104 3,016 Total impaired loans $ 46,842 $ 31,548 $ 3,016 The unpaid principal balance is the total amount of the loan that is due to Home Savings. The recorded investment includes the unpaid principal balance less any charge-offs or partial charge-offs applied to specific loans. The unpaid principal balance and the recorded investment both exclude accrued interest receivable and deferred loan costs, both of which are immaterial. The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended June 30, 2017: Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized With no specific allowance recorded Commercial loans Multifamily $ 416 $ — $ — Nonresidential 815 25 25 Land 9 — — Construction — — — Secured 190 — — Unsecured — — — Total commercial loans 1,430 25 25 Residential mortgage loans One-to four-family 5,763 20 20 Construction — — — Total residential mortgage loans 5,763 20 20 Consumer loans Home equity 1,574 3 3 Auto 16 — — Marine 182 — — Recreational vehicle 186 2 2 Other — — Total consumer loans 1,958 5 5 Total $ 9,151 $ 50 $ 50 With a specific allowance recorded Commercial loans Multifamily $ — $ — $ — Nonresidential 1,179 5 5 Land — — — Construction — — — Secured — — Unsecured — — — Total commercial loans 1,179 5 5 Residential mortgage loans One-to four-family 10,783 114 111 Construction — — — Total residential mortgage loans 10,783 114 111 Consumer loans Home equity 5,151 66 66 Auto — — — Marine 105 1 1 Recreational vehicle 708 7 6 Other — — — Total consumer loans 5,964 74 73 Total 17,926 193 189 Total impaired loans $ 27,077 $ 243 $ 239 The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended June 30, 2016: Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized With no specific allowance recorded Commercial loans Multifamily $ — $ — $ — Nonresidential 269 1 1 Land 384 — Construction — — — Secured 3,700 — — Unsecured — — — Total commercial loans 4,353 1 1 Residential mortgage loans One-to four-family 6,302 17 17 Construction — — — Total residential mortgage loans 6,302 17 17 Consumer loans Home equity 1,336 1 1 Auto 9 — — Marine 303 — — Recreational vehicle 281 1 1 Other 4 — — Total consumer loans 1,933 2 2 Total $ 12,588 $ 20 $ 20 With a specific allowance recorded Commercial loans Multifamily $ — $ — $ — Nonresidential 8,748 15 15 Land — — — Construction — — — Secured 947 — — Unsecured — — — Total commercial loans 9,695 15 15 Residential mortgage loans One-to four-family 12,372 124 122 Construction — — — Total residential mortgage loans 12,372 124 122 Consumer loans Home equity 6,568 84 82 Auto — — — Marine 158 2 2 Recreational vehicle 741 8 8 Other — — — Total consumer loans 7,467 94 92 Total 29,534 233 229 Total impaired loans $ 42,122 $ 253 $ 249 Home Savings reclassifies a collateralized mortgage loan and a consumer loan secured by real estate to real estate owned and other repossessed assets once it has either obtained legal title to the real estate collateral or the borrower voluntarily conveys all interest in the real property to the Bank to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The table below presents loans that are in the process of foreclosure at June 30, 2017 and December 31, 2016, but legal title, deed in lieu of foreclosure or similar legal agreement to the property has not yet been obtained: June 30, 2017 December 31, 2016 Unpaid Principal Balance Recorded Investment Unpaid Principal Balance Recorded Investment (Dollars in thousands) (Dollars in thousands) Mortgage loans in process of foreclosure $ 3,188 $ 2,816 $ 3,025 $ 2,576 Consumer loans in process of foreclosure 931 751 1,069 795 The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days and still on accrual by class of loans as of June 30, 2017: Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing As of June 30, 2017 Nonaccrual Loans past due over 90 days and still accruing (Dollars in thousands) Commercial loans Multifamily $ 413 $ — Nonresidential 1,331 — Land 9 — Construction — — Secured 190 — Unsecured — — Total commercial loans 1,943 — Residential mortgage loans One-to four-family 6,701 — Construction — — Total residential mortgage loans 6,701 — Consumer Loans Home equity 1,707 — Auto 94 — Marine 169 — Recreational vehicle 166 — Other 1 2 Total consumer loans 2,137 2 Total nonaccrual loans and loans past due over 90 days and still accruing $ 10,781 $ 2 The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days and still on accrual by class of loans as of December 31, 2016: Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing As of December 31, 2016 Nonaccrual Loans past due over 90 days and still accruing (Dollars in thousands) Commercial loans Multifamily $ — $ — Nonresidential 3,546 — Land 34 — Construction — — Secured 361 — Unsecured — — Total commercial loans 3,941 — Residential mortgage loans One-to four-family 6,084 — Construction — — Total residential mortgage loans 6,084 — Consumer Loans Home equity 1,936 — Auto 31 — Marine 267 — Recreational vehicle 178 — Other 2 — Total consumer loans 2,414 — Total nonaccrual loans and loans past due over 90 days and still accruing $ 12,439 $ — The following table presents an age analysis of past-due loans, segregated by class of loans as of June 30, 2017: Past Due Loans (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Total Past Due Current Loans Total Loans Commercial loans Multifamily $ — $ 187 $ — $ 187 $ 121,378 $ 121,565 Nonresidential 199 — 153 352 341,948 342,300 Land — — 9 9 10,858 10,867 Construction — — — — 96,765 96,765 Secured 135 22 189 346 161,763 162,109 Unsecured — — — — 8,649 8,649 Total commercial loans 334 209 351 894 741,361 742,255 Residential mortgage loans One-to four-family 2,643 1,584 5,646 9,873 824,476 834,349 Construction — — — — 56,946 56,946 Total residential mortgage loans 2,643 1,584 5,646 9,873 881,422 891,295 Consumer Loans: Home equity 1,141 113 1,429 2,683 185,079 187,762 Automobile 123 119 17 259 50,130 50,389 Marine — — 169 169 1,432 1,601 Recreational vehicle 199 149 95 443 5,958 6,401 Other 2 4 3 9 4,989 4,998 Total consumer loans 1,465 385 1,713 3,563 247,588 251,151 Total loans $ 4,442 $ 2,178 $ 7,710 $ 14,330 $ 1,870,371 $ 1,884,701 The following table presents an age analysis of past-due loans, segregated by class of loans as of December 31, 2016: Past Due Loans (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Total Past Due Current Loans Total Loans Commercial loans Multifamily $ — $ — $ — $ — $ 93,597 $ 93,597 Nonresidential 3,511 — 61 3,572 227,829 231,401 Land — — 34 34 8,339 8,373 Construction — — — — 68,158 68,158 Secured — — 361 361 94,982 95,343 Unsecured — — — — 7,386 7,386 Total commercial loans 3,511 — 456 3,967 500,291 504,258 Residential mortgage loans One-to four-family 3,774 1,717 5,461 10,952 751,974 762,926 Construction — — — — 35,695 35,695 Total residential mortgage loans 3,774 1,717 5,461 10,952 787,669 798,621 Consumer Loans: Home equity 941 458 1,669 3,068 161,986 165,054 Automobile 130 — 3 133 39,476 39,609 Marine — — 267 267 1,529 1,796 Recreational vehicle 131 347 — 478 7,124 7,602 Other 1 3 2 6 2,531 2,537 Total consumer loans 1,203 808 1,941 3,952 212,646 216,598 Total loans $ 8,488 $ 2,525 $ 7,858 $ 18,871 $ 1,500,606 $ 1,519,477 As of June 30, 2017 and December 31, 2016, the Company has a recorded investment in troubled debt restructurings of $22.2 million and $26.6 million, respectively. The Company allocated $1.6 million of specific allowance for those loans at June 30, 2017 and $3.0 million at December 31, 2016. The Company has committed to lend additional amounts totaling up to $35,000 and $31,000 at June 30, 2017 and December 31, 2016, respectively. There were no loans modified as troubled debt restructurings that occurred during the three months ended June 30, 2017. The troubled debt restructurings described above had no effect on the allowance for loan losses and resulted in no charge-offs during the three months ended June 30, 2017. The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2017: Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Recorded Investment (In thousands) Commercial loans Multifamily — $ — $ — Nonresidential Land — — — Construction — — — Secured — — — Unsecured — — — Total commercial loans — — — Residential mortgage loans One-to four-family 1 75 84 Construction — — — Total residential mortgage loans 1 75 84 Consumer loans Home equity — — — Auto — — — Marine — — — Recreational vehicle 1 115 115 Other — — — Total consumer loans 1 115 115 Total restructured loans 2 $ 190 $ 199 The troubled debt restructurings described above increased the allowance for loan losses by $6,000 and resulted in no charge-offs during the six months ended June 30, 2017. The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended June 30, 2016: Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Recorded Investment (Dollars in thousands) Commercial loans Multifamily — $ — $ — Nonresidential 1 4,000 4,000 Land — — — Construction — — — Secured — — — Unsecured — — — Total commercial loans 1 4,000 4,000 Residential mortgage loans One-to four-family 1 97 98 Construction — — — Total residential mortgage loans 1 97 98 Consumer loans Home equity 2 110 114 Auto — — — Marine — — — Recreational vehicle — — — Other — — — Total consumer loans 2 110 114 Total restructured loans 4 $ 4,207 $ 4,212 The troubled debt restructurings described above increased the allowance for loan losses by $6,000, and resulted in no charge-offs during the three months ended June 30, 2016. The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2016: Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Recorded Investment (Dollars in thousands) Commercial loans Multifamily — $ — $ — Nonresidential 2 4,088 4,088 Land — — — Construction — — — Secured — — — Unsecured — — — Total commercial loans 2 4,088 4,088 Residential mortgage loans One-to four-family 3 316 335 Construction — — — Total residential mortgage loans 3 316 335 Consumer loans Home equity 3 130 134 Auto — — — Marine — — — Recreational vehicle — — — Other — — — Total consumer loans 3 130 134 Total restructured loans 8 $ 4,534 $ 4,557 The troubled debt restructurings described above increased the allowance for loan losses by $11,000 and resulted in no charge-offs during the six months ended June 30, 2017. The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within a twelve-month cycle following the modification during the period ended June 30, 2017. Number of loans Recorded Investment (Dollars in thousands) Commercial loans Multifamily — $ — Nonresidential — — Land — — Construction — — Secured — — Unsecured — — Total commercial loans — — Residential mortgage loans One-to four-family 1 164 Construction — — Total residential mortgage loans 1 164 Consumer loans Home equity 1 47 Auto — — Marine — — Recreational vehicle — — Other — — Total consumer loans 1 47 Total restructured loans 2 $ 211 The troubled debt restructurings that subsequently defaulted described above resulted in no charge-offs during the three and six months ended June 30, 2017, and had no effect on the provision for loan losses. The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within a twelve month cycle following the modification during the period ended June 30, 2016: Number of loans Recorded Investment (Dollars in thousands) Commercial loans Multifamily — $ — Nonresidential — — Land — — Construction — — Secured — — Unsecured — — Total commercial loans — — Residential mortgage loans One-to four-family — — Construction — — Total residential mortgage loans — — Consumer loans Home equity — — Auto — — Marine — — Recreational vehicle — — Other — — Total consumer loans — — Total restructured loans — $ — The troubled debt restructurings that subsequently defaulted described above resulted in no of charge-offs during the three and six months ended June 30, 2016, and had no effect on the provision for loan losses. A troubled debt restructuring is considered to be in payment default once it is 30 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s internal underwriting policy. Credit Quality Indicators: 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. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans past due 90 cumulative days, and all non-homogeneous loans, including commercial loans and commercial real estate loans. Smaller balance homogeneous loans are primarily monitored by payment status. Asset quality ratings are divided into two groups: Pass (unclassified) and Classified. Within the unclassified group, certain loans that display potential weakness are risk rated as special mention. In addition, there are three classified risk ratings: substandard, doubtful and loss. These specific credit risk categories are defined as follows: Special Mention. Loans classified as special mention have potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. 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. Loss. Loans classified as loss are considered uncollectible and of such little value, that continuance as assets is not warranted. Although there may be a chance of recovery on these assets, it is not practical or desirable to defer writing off the asset. The Company monitors loans on a monthly basis to determine if they should be included in one of the categories listed above. All impaired non-homogeneous credits classified as substandard, doubtful or loss are analyzed on an individual basis for a specific reserve requirement. This analysis is performed on each individual credit at least annually or more frequently if warranted. As of June 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Loans June 30, 2017 (Dollars in thousands) Unclassified Classified Unclassified Special Mention Substandard Doubtful Loss Total Classified Total Loans Commercial Loans Multifamily $ 117,375 $ 3,482 $ 708 $ — $ — $ 708 $ 121,565 Nonresidential 333,010 3,208 6,082 — — 6,082 342,300 Land 10,858 — 9 — — 9 10,867 Construction 96,362 403 — — — — 96,765 Secured 134,433 10,839 16,837 — — 16,837 162,109 Unsecured 8,555 — 94 — — 94 8,649 Total commercial loans 700,593 17,932 23,730 — — 23,730 742,255 Residential mortgage loans One-to four-family 825,270 779 8,300 — — 8,300 834,349 Construction 56,946 — — — — — 56,946 Total residential mortgage loans 882,216 779 8,300 — — 8,300 891,295 Consumer Loans Home equity 186,055 — 1,707 — — 1,707 187,762 Auto 50,258 — 131 — — 131 50,389 Marine 1,432 — 169 — — 169 1,601 Recreational vehicle 6,234 — 167 — — 167 6,401 Other 4,997 — 1 — — 1 4,998 Total consumer loans 248,976 — 2,175 — — 2,175 251,151 Total loans $ 1,831,785 $ 18,711 $ 34,205 $ — $ — $ 34,205 $ 1,884,701 Loans December 31, 2016 (Dollars in thousands) Unclassified Classified Unclassified Special Mention Substandard Doubtful Loss Total Classified Total Loans Commercial Loans Multifamily $ 89,468 $ 3,564 $ 565 $ — $ — $ 565 $ 93,597 Nonresidential 217,204 6,037 8,160 — — 8,160 231,401 Land 8,339 — 34 — — 34 8,373 Construction 68,158 — — — — — 68,158 Secured 89,756 3,420 2,167 — — 2,167 95,343 Unsecured 7,291 — 95 — — 95 7,386 Total commercial loans 480,216 13,021 11,021 — — 11,021 504,258 Residential mortgage loans One-to four-family 754,996 104 7,826 — — 7,826 762,926 Construction 35,695 — — — — — 35,695 Total residential mortgage loans 790,691 104 7,826 — — 7,826 798,621 Consumer Loans Home equity 163,101 — 1,953 — — 1,953 165,054 Auto 39,577 1 31 — — 31 39,609 Marine 1,530 — 266 — — 266 1,796 Recreational vehicle 7,424 — 178 — — 178 7,602 Other 2,535 — 2 — — 2 2,537 Total consumer loans 214,167 1 2,430 — — 2,430 216,598 Total loans $ 1,485,074 $ 13,126 $ 21,277 $ — $ — $ 21,277 $ 1,519,477 Purchased Credit Impaired Loans: The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows: June 30, 2017 (Dollars in thousands) Commercial loans $ 1,221 Residential mortgage loans — Consumer loans — Outstanding balance $ 1,221 Carrying amount, net of allowance of $0 $ 1,221 Accretable yield, or income expected to be collected, is as follows: Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 (Dollars in thousands) Beginning of period $ 128 $ — New loans purchased — 158 Accretion of income 12 42 Balance at June 30 $ 116 $ 116 For the purchased credit impaired loans disclosed above, there was no change in the allowance for loan losses for the three and six months ended June 30, 2017. Purchased credit impaired loans purchased during the six months ended June 30, 2017 for which it was probable at acquisition that all contractually required payments would not be collected are as follows: June 30, 2017 (Dollars in thousands) Contractually required payments receivable of loans purchased during the year: Commercial loans $ 4,499 Residential mortgage loans — Consumer loans — $ 4,499 Cash flow expected to be collected at acquisition $ 1,955 Fair value of acquired loans at acquisition 1,797 Income is not recognized on purchased credit impaired loans if the Company cannot reasonably estimate cash flows expected to be collected. The carrying amounts of such loans are as follows: June 30, 2017 (Dollars in thousands) Loans at beginning of year $ — Loans purchased during the year 1,797 Loans at end of period 1,221 |