LOANS

3 Months Ended

Mar. 31, 2018

Loans and Leases Receivable Disclosure [Abstract]

LOANS

NOTE 3 – LOANS

Loans, net of deferred costs and fees, consist of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	At March 31, 2018			At December 31, 2017
Real estate
Commercial	$	847,798		$	783,745
Construction		35,850			36,960
Multifamily		184,271			190,097
One-to-four family		25,226			25,568
Total Real Estate		1,093,145			1,036,370
Commercial and industrial		342,965			340,001
Consumer		91,824			44,595
Total loans		1,527,934			1,420,966
Deferred fees		(1,768	)		(1,070	)
Loans, net of deferred fees		1,526,166			1,419,896
Allowance for loan losses		(16,260	)		(14,887	)
Balance at the end of the period	$	1,509,906		$	1,405,009

The following table presents the activity in the Allowance for Loan and Lease Losses (“ALLL”) by segment for the three months ending March 31, 2018 and 2017 (dollars in thousands):

Three months ended March 31, 2018	Commercial Real Estate		Commercial & Industrial			Construction			Multi Family		One-to-four Family		Consumer			Total
Allowance for loan losses:
Beginning balance	$	7,136	$	5,578		$	519		$	1,156	$	138	$	360		$	14,887
Provision/(credit) for loan losses		611		277			(16	)		54		245		306			1,477
Loans charged-off		-		(71	)		-			-		-		(86	)		(157	)
Recoveries		53		-			-			-		-		-			53
Total ending allowance balance	$	7,800	$	5,784		$	503		$	1,210	$	383	$	580		$	16,260

Three months ended March 31, 2017	Commercial Real Estate		Commercial & Industrial			Construction		Multi Family		One-to-four Family			Consumer			Total
Allowance for loan losses:
Beginning balance	$	5,206	$	5,364		$	409	$	620	$	109		$	107			11,815
Provision/(credit) for loan losses		647		(269	)		93		67		(4	)		36			570
Loans charged-off		-		(132	)		-		-		-			(17	)		(149	)
Recoveries		-		-			-		-		-			-			-
Total ending allowance balance	$	5,853	$	4,963		$	502	$	687	$	105		$	126		$	12,236

The following tables present the balance in the ALLL and the recorded investment in loans by portfolio segment based on impairment method as of March 31, 2018 and December 31, 2017 (dollars in thousands):

At March 31, 2018	Commercial Real Estate		Commercial & Industrial		Construction		Multi Family		One-to-four Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	42	$	42
Collectively evaluated for impairment		7,800		5,784		503		1,210		383		538		16,218
Total ending allowance balance	$	7,800	$	5,784	$	503	$	1,210	$	383	$	580	$	16,260
Loans:
Individually evaluated for impairment	$	1,546	$	-	$	-	$	-	$	1,109	$	85	$	2,740
Collectively evaluated for impairment		846,252		342,965		35,850		184,271		24,117		91,739		1,525,194
Total ending loan balance	$	847,798	$	342,965	$	35,850	$	184,271	$	25,226	$	91,824	$	1,527,934

At December 31, 2017	Commercial Real Estate		Commercial & Industrial		Construction		Multi Family		One-to-four Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	9	$	77	$	86
Collectively evaluated for impairment		7,136		5,578		519		1,156		129		283	$	14,801
Total ending allowance balance	$	7,136	$	5,578	$	519	$	1,156	$	138	$	360	$	14,887
Loans:
Individually evaluated for impairment	$	2,368	$	-	$	-	$	-	$	3,566	$	155	$	6,089
Collectively evaluated for impairment		781,377		340,001		36,960		190,097		22,002		44,440		1,414,877
Total ending loan balance	$	783,745	$	340,001	$	36,960	$	190,097	$	25,568	$	44,595	$	1,420,966

The following table presents loans individually evaluated for impairment recognized as of March 31, 2018 and December 31, 2017 (dollars in thousands):

At March 31, 2018	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
One-to-four family	$	-	$	-	$	-
Consumer		96		85		42
Total	$	96	$	85	$	42
Without an allowance recorded:
Commercial real estate	$	2,015	$	1,546	$	-
One-to-four family		1,386		1,109		-
Total	$	3,401	$	2,655	$	-

At December 31, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
One-to-four family	$	686	$	556	$	9
Consumer		155		155		77
Total	$	841	$	711	$	86
Without an allowance recorded:
Commercial real estate	$	2,890	$	2,368	$	-
One-to-four family		3,157		3,010		-
Total	$	6,047	$	5,378	$	-

The following table presents the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans as of and for the three month periods ended March 31, 2018 and 2017 (in thousands):

Three months ended March 31, 2018	Average Recorded Investment		Interest Income Recognized
With an allowance recorded:
One-to-four family	$	278	$	-
Consumer		120		2
Total	$	398	$	2
Without an allowance recorded:
Commercial real estate	$	1,957	$	46
One-to-four family		2,060		14
Total	$	4,017	$	60

Three months ended March 31, 2017	Average Recorded Investment		Interest Income Recognized
With an allowance recorded:
One-to-four family	$	564	$	5
Commercial and industrial		3,660		-
Consumer		15		1
Total	$	4,239	$	6
Without an allowance recorded:
Commercial real estate	$	5,926	$	99
Commercial and industrial		1,215		12
One-to-four family		565		6
Total	$	7,707	$	117

Interest on non-accrual loans not recognized was $1,500 and $37,000 for the three months ended March 31, 2018 and March 31, 2017, respectively.

Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following tables present the recorded investment in non-accrual loans and loans past due over 90 days still on accrual by class of loans as of March 31, 2018 and December 31, 2017 (dollars in thousands):

At March 31, 2018	Nonaccrual		Loans Past Due Over 90 Days Still Accruing
Commercial real estate	$	-	$	-
Commercial & industrial		-		-
One-to-four family		-		-
Consumer		85		-
Total	$	85	$	-

At December 31, 2017	Nonaccrual		Loans Past Due Over 90 Days Still Accruing
Commercial real estate	$	787	$	-
Commercial & industrial		-		-
One-to-four family		2,447		-
Consumer		155		-
Total	$	3,389	$	-

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2018 and December 31, 2017 (dollars in thousands):

At March 31, 2018	30-59 Days		60-89 Days		Greater than 90 days		Total Past Due		Loans not Past Due		Total
Commercial real estate	$	96	$	-	$	-	$	96	$	847,702	$	847,798
Commercial & industrial		29		-		-		29		342,936		342,965
Construction		-		-		-		-		35,850		35,850
Multifamily		-		-		-		-		184,271		184,271
One-to-four family		-		-		-		-		25,226		25,226
Consumer		85		116		85		286		91,538		91,824
Total	$	210	$	116	$	85	$	411	$	1,527,523	$	1,527,934

At December 31, 2017	30-59 Days		60-89 Days		Greater than 90 days		Total Past Due		Loans not Past Due		Total
Commercial real estate	$	836	$	-	$	787	$	1,623	$	782,122	$	783,745
Commercial & industrial		85		142		-		227		339,774		340,001
Construction		-		-		-		-		36,960		36,960
Multifamily		-		-		-		-		190,097		190,097
One-to-four family		-		-		-		-		25,568		25,568
Consumer		149		21		155		325		44,270		44,595
Total	$	1,070	$	163	$	942	$	2,175	$	1,418,791	$	1,420,966

Troubled Debt Restructurings:

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired. Included in impaired loans at March 31, 2018 and December 31, 2017, were $2.7 million of loans modified in TDRs. The Bank has not allocated specific reserves to those customers with loans modified in TDRs as of March 31, 2018, down from $9 thousand allocated at December 31, 2017. The Bank had not committed to lend additional amounts as of March 31, 2018 and December 31, 2017, to customers with outstanding loans that are classified as TDRs. During the three months ended March 31, 2018 and 2017, there were no loans modified as TDRs. During the three months ended March 31, 2018 and March 31, 2017 there were no payment defaults on any loans previously identified as TDRs. A loan is considered to be in payment default once it is 90 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 under the Bank’s internal underwriting policy.

Credit Quality Indicators:

The Bank 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 Bank analyzes all loans individually by classifying the loans as to credit risk at least annually. An analysis is performed on a quarterly basis for loans classified as special mention, substandard, or doubtful. The Bank uses the following definitions for risk ratings:

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.

Loans not meeting the criteria above are considered to be pass-rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows (dollars in thousands):

At March 31, 2018	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate	$	846,252	$	396	$	1,150	$	-	$	847,798
Commercial & industrial		335,024		7,941		-		-		342,965
Construction		35,850		-		-		-		35,850
Multifamily		184,271		-		-		-		184,271
Total	$	1,401,397	$	8,337	$	1,150	$	-	$	1,410,884

At December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate	$	777,410	$	4,369	$	1,966	$	-	$	783,745
Commercial & industrial		331,775		8,226		-		-		340,001
Construction		36,960		-		-		-		36,960
Multifamily		190,097		-		-		-		190,097
Total	$	1,336,242	$	12,595	$	1,966	$	-	$	1,350,803

For one-to-four family loans and consumer loans, the Bank evaluates credit quality based on the aging status of the loan, which was previously presented, and by performance status. Non-performing loans are loans past due over 90 days or more still accruing interest and loans on non-accrual status. The following table presents the recorded investment in one-to-four family and consumer loans based on performance status as of March 31, 2018 and December 31, 2017 (dollars in thousands):

At March 31, 2018	Performing		Non-Performing		Total
One-to-four family	$	25,226	$	-	$	25,226
Consumer		91,739		85		91,824
Total	$	116,965	$	85	$	117,050

At December 31, 2017	Performing		Non-Performing		Total
One-to-four family	$	23,121	$	2,447	$	25,568
Consumer		44,440		155		44,595
Total	$	67,561	$	2,602	$	70,163