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Loans Receivable Held for Investment
 3 Months Ended
Mar. 31, 2017
Loans Receivable Held for Investment  
Loans Receivable Held for Investment  
Loans Receivable Held for Investment

NOTE (5) – Loans Receivable Held for Investment

 

Loans receivable held for investment were as follows as of the periods indicated:

 

 

 

March 31, 2017

 

December 31, 2016

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

Single family (1)

 

$  
98,676

 

$  
104,807

 

Multi-family

 
220,556

 
229,566

 

Commercial real estate

 
7,766

 
8,914

 

Church

 
36,153

 
37,826

 

Construction

 
862

 
837

 

Commercial – other

 
307

 
308

 

Consumer

 
15

 
6

 

 

 

 

 

 

 

Gross loans receivable before deferred loan costs and premiums

 
364,335

 
382,264

 

Unamortized net deferred loan costs and premiums

 
1,795

 
1,793

 

 

 

 

 

 

 

Gross loans receivable

 
366,130

 
384,057

 

Allowance for loan losses

 
(4,392)

 
(4,603)

 

 

 

 

 

 

 

Loans receivable, net

 

$  
361,738

 

$  
379,454

 

 

 

 

 

 

 

 

 

 

    __

(1)

Includes $78.5 million and $81.9 million of non-impaired purchased loans at March 31, 2017 and December 31, 2016, respectively, with no allowance for loan losses.

 

The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:

 

 

 

Three Months Ended March 31, 2017

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Beginning balance

 

  $
367

 

  $
2,659

 

  $
215

 

  $
1,337

 

  $
8

 

  $
17

 

  $

-

 

  $
4,603

Provision for (recapture of) loan losses

 
(37)

 
52

 
(140)

 
(226)

 
1

 
(1)

 
1

 
(350)

Recoveries

 

-

 

-

 

-

 
139

 

-

 

-

 

-

 
139

Loans charged off

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

  $
330

 

  $
2,711

 

  $
75

 

  $
1,250

 

  $
9

 

  $
16

 

  $
1

 

  $
4,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2016

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Beginning balance

 

  $
597

 

  $
1,658

 

  $
469

 

  $
2,083

 

  $
3

 

  $
18

 

  $

-

 

  $
4,828

Provision for (recapture of) loan losses

 
(69)

 
208

 
(25)

 
(413)

 

-

 
(1)

 

-

 
(300)

Recoveries

 

-

 

-

 

-

 
6

 

-

 

-

 

-

 
6

Loans charged off

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

  $
528

 

  $
1,866

 

  $
444

 

  $
1,676

 

  $
3

 

  $
17

 

  $

-

 

  $
4,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following tables present the balance in the allowance for loan losses and the recorded investment (unpaid contractual principal balance less charge-offs, less interest applied to principal, plus unamortized deferred costs and premiums) by loan type and based on impairment method as of and for the periods indicated:

 

 

 

March 31, 2017

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

  $
118

 

  $
2

 

  $

-

 

  $
468

 

  $

-

 

  $
14

 

  $

-

 

  $
602

Collectively evaluated for impairment

 
212

 
2,709

 
75

 
782

 
9

 
2

 
1

 
3,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

  $
330

 

  $
2,711

 

  $
75

 

  $
1,250

 

  $
9

 

  $
16

 

  $
1

 

  $
4,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for impairment

 

  $
640

 

  $
638

 

  $
1,323

 

  $
9,845

 

  $

-

 

  $
66

 

  $

-

 

  $
12,512

Loans collectively evaluated for impairment

 
98,539

 
221,740

 
6,449

 
25,779

 
855

 
241

 
15

 
353,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending loans balance

 

  $
99,179

 

  $
222,378

 

  $
7,772

 

  $
35,624

 

  $
855

 

  $
307

 

  $
15

 

  $
366,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

  $
125

 

  $

-

 

  $

-

 

  $
516

 

  $

-

 

  $
15

 

  $

-

 

  $
656

Collectively evaluated for impairment

 
242

 
2,659

 
215

 
821

 
8

 
2

 

-

 
3,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

  $
367

 

  $
2,659

 

  $
215

 

  $
1,337

 

  $
8

 

  $
17

 

  $

-

 

  $
4,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for impairment

 

  $
644

 

  $
642

 

  $

-

 

  $
10,545

 

  $

-

 

  $
66

 

  $

-

 

  $
11,897

Loans collectively evaluated for impairment

 
104,688

 
230,798

 
8,921

 
26,678

 
827

 
242

 
6

 
372,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending loans balance

 

  $
105,332

 

  $
231,440

 

  $
8,921

 

  $
37,223

 

  $
827

 

  $
308

 

  $
6

 

  $
384,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents information related to loans individually evaluated for impairment by loan type as of the periods indicated:

 

 

 

March 31, 2017

 

December 31, 2016

 

 

 

Unpaid
Principal
Balance

 

Recorded
Investment

 

Allowance
for Loan
Losses
Allocated

 

Unpaid
Principal
Balance

 

Recorded
Investment

 

Allowance
for Loan
Losses
Allocated

 

 

 

(In thousands)

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

 

$

-

 

$

-

 

$

-

 

$
642

 

$
642

 

$

-

 

Commercial real estate

 
1,323

 
1,323

 

-

 

-

 

-

 

-

 

Church

 
6,620

 
4,226

 

-

 
5,946

 
3,589

 

-

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 
640

 
640

 
118

 
644

 
644

 
125

 

Multi-family

 
638

 
638

 
2

 

-

 

-

 

-

 

Church

 
5,780

 
5,619

 
468

 
7,330

 
6,956

 
516

 

Commercial - other

 
66

 
66

 
14

 
66

 
66

 
15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
15,067

 

$
12,512

 

$
602

 

$
14,628

 

$
11,897

 

$
656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The recorded investment in loans excludes accrued interest receivable due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

 

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated.

 

 

 

Three Months Ended March 31, 2017

 

Three Months Ended March 31, 2016

 

 

Average
Recorded
Investment

 

Cash Basis
Interest
Income
Recognized

 

Average
Recorded
Investment

 

Cash Basis
Interest
Income
Recognized

 

 

(In thousands)

Single family

 

 

$
642

 

 

 

$
7

 

 

 

$
951

 

 

 

$
7

 

Multi-family

 

 
640

 

 

 
11

 

 

 
1,206

 

 

 
41

 

Commercial real estate

 

 
331

 

 

 

-

 

 

 
1,933

 

 

 
56

 

Church

 

 
10,471

 

 

 
227

 

 

 
11,191

 

 

 
126

 

Commercial –other

 

 
66

 

 

 
1

 

 

 
67

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$
12,150

 

 

 

$
246

 

 

 

$
15,348

 

 

 

$
230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non-accrual loans that were paid off.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible or paid off.  When a loan is returned to accrual status, the total interest payments that were previously applied to principal, is deferred and amortized over the remaining life of the loan. Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $46 thousand and $119 thousand for the three months ended March 31, 2017 and 2016, respectively, and were not included in the consolidated results of operations.

 

The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated:

 

 

 

March 31, 2017

 

 

30-59
Days
Past Due

 

60-89
Days
Past Due

 

Greater than
90 Days
Past Due

 

Total
Past Due

 

Current

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

 

$

-

 

 

 

$
60

 

 

 

$

-

 

 

 

$
60

 

 

 

$
99,119

 

Multi-family

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
222,378

 

Commercial real estate

 

 

-

 

 

 
1,323

 

 

 

-

 

 

 
1,323

 

 

 
6,449

 

Church

 

 
412

 

 

 

-

 

 

 

-

 

 

 
412

 

 

 
35,212

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
855

 

Commercial - other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
307

 

Consumer

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$
412

 

 

 

$
1,383

 

 

 

$

-

 

 

 

$
1,795

 

 

 

$
364,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

30-59
Days
Past Due

 

60-89
Days
Past Due

 

Greater than
90 Days
Past Due

 

Total
Past Due

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

 

$

-

 

 

 

$
64

 

 

 

$

-

 

 

 

$
64

 

 

 

$
105,268

 

Multi-family

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
231,440

 

Commercial real estate

 

 
1,324

 

 

 

-

 

 

 

-

 

 

 
1,324

 

 

 
7,597

 

Church

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
37,223

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
827

 

Commercial - other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
308

 

Consumer

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 
6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$
1,324

 

 

 

$
64

 

 

 

$

-

 

 

 

$
1,388

 

 

 

$
382,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the recorded investment in non-accrual loans by loan type as of the periods indicated:

 

 

 

March 31, 2017

 

December 31, 2016

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

$
1,323

 

 

 

$

-

 

Church

 

 
2,841

 

 

 
2,944

 

 

 

 

 

 

 

 

 

 

Total non-accrual loans

 

 

$
4,164

 

 

 

$
2,944

 

 

 

 

 

 

 

 

 

 

 

 

 

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2017 or December 31, 2016.

 

Troubled Debt Restructurings

 

At March 31, 2017, loans classified as troubled debt restructurings (“TDRs”) totaled $10.8 million, of which $2.4 million were included in non-accrual loans and $8.4 million were on accrual status.  At December 31, 2016, loans classified as TDRs totaled $11.5 million, of which $2.5 million were included in non-accrual loans and $9.0 million were on accrual status.  The Company has allocated $602 thousand and $656 thousand of specific reserves for accruing TDRs as of March 31, 2017 and December 31, 2016, respectively.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified.  A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.  As of March 31, 2017 and December 31, 2016, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.  No loans were modified during the three months ended March 31, 2017 and 2016.

 

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, among other factors.  For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere herein.  The Company analyzes all other loans individually by classifying the loans as to credit risk.  This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

 

·

Watch.  Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors.  Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists but correction is anticipated within an acceptable time frame.

 

·

Special Mention.  Loans classified as special mention have a 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 to continue to carry the loan as an active asset is no longer warranted.

 

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor and/or by the value of the underlying collateral.  Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms.  Based on the most recent analysis performed, the risk categories of loans by loan type as of the periods indicated were as follows:

 

 

 

March 31, 2017

 

 

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

 

 

(In thousands)

 

Single family

 

  $
99,179

 

  $

-

 

  $

-

 

  $

-

 

  $

-

 

  $

-

 

Multi-family

 
220,746

 

-

 
340

 
1,292

 

-

 

-

 

Commercial real estate

 
6,449

 

-

 

-

 
1,323

 

-

 

-

 

Church

 
26,648

 
1,137

 
271

 
7,568

 

-

 

-

 

Construction

 
855

 

-

 

-

 

-

 

-

 

-

 

Commercial - other

 
241

 

-

 

-

 
66

 

-

 

-

 

Consumer

 
15

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

  $
354,133

 

  $
1,137

 

  $
611

 

  $
10,249

 

  $

-

 

  $

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Single family

 

  $
105,332

 

  $

-

 

  $

-

 

  $

-

 

  $

-

 

  $

-

 

Multi-family

 
228,522

 
1,274

 
342

 
1,302

 

-

 

-

 

Commercial real estate

 
6,965

 

-

 

-

 
1,956

 

-

 

-

 

Church

 
27,560

 
1,143

 
823

 
7,697

 

-

 

-

 

Construction

 
827

 

-

 

-

 

-

 

-

 

-

 

Commercial - other

 
242

 

-

 

-

 
66

 

-

 

-

 

Consumer

 
6

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

  $
369,454

 

  $
2,417

 

  $
1,165

 

  $
11,021

 

  $

-

 

  $

-