6. LOANS

Portfolio loans consist of the following:


	June 30,			December 31,
	2013			2012
	(Dollars in thousands)
Real Estate:
One-to four-family residential	$	572,575		$	577,249
Multi-family residential		62,559			80,923
Nonresidential		120,586			138,188
Land		9,821			15,808
Construction:
One-to four-family residential and land development		32,512			28,318
Multi-family and nonresidential		4,584			4,534

Total real estate		802,637			845,020
Consumer
Home equity		167,414			177,230
Auto		6,390			7,648
Marine		4,544			4,942
Recreational vehicles		19,191			22,250
Other		2,095			2,523

Total consumer		199,634			214,593
Commercial
Secured		23,236			24,243
Unsecured		1,290			2,300

Total commercial		24,526			26,543

Total loans		1,026,797			1,086,156

Less:
Allowance for loan losses		19,037			21,130
Deferred loan costs, net		(1,083	)		(1,214	)

Total		17,954			19,916

Loans, net	$	1,008,843		$	1,066,240

Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments extend over various periods of time with the majority of such commitments disbursed within a sixty-day period. Commitments generally have fixed expiration dates or other termination clauses, may require payment of a fee and may expire unused. Commitments to extend credit at fixed rates expose Home Savings to some degree of interest rate risk. Home Savings evaluates each customer’s creditworthiness on a case-by-case basis. The type or amount of collateral obtained varies and is based on management’s credit evaluation of the potential borrower. Home Savings normally has a number of outstanding commitments to extend credit.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2013 and December 31, 2012 and activity for the three and six months ended June 30, 2013 and 2012. In accordance with GAAP, the net losses associated with loans sold as part of the bulk asset sale in the third quarter of 2012 were recorded as net chargeoffs of $38.2 million through the allowance for loan losses.


Allowance For Loan Losses
(Dollars in thousands)
	Permanent Real Estate Loans			Construction Loans			Consumer Loans			Commercial Loans			Total
For the three months ended June 30, 2013
Beginning balance (03/31/13)	$	14,907		$	1,443		$	4,254		$	1,223		$	21,827
Provision		749			464			335			(435	)		1,113
Chargeoffs		(3,937	)		(139	)		(514	)		0			(4,590	)
Recoveries		410			35			127			115			687

Ending balance (06/30/13)	$	12,129		$	1,803		$	4,202		$	903		$	19,037

For the six months ended June 30, 2013
Beginning balance (12/31/12)	$	13,819		$	1,404		$	4,459		$	1,448		$	21,130
Provision		2,778			446			573			(620	)		3,177
Chargeoffs		(5,143	)		(365	)		(1,114	)		(128	)		(6,750	)
Recoveries		675			318			284			203			1,480

Ending balance (06/30/13)	$	12,129		$	1,803		$	4,202		$	903		$	19,037

June 30, 2013
Period-end amount allocated to:
Loans individually evaluated for impairment	$	351		$	685		$	—		$	10		$	1,046
Loans collectively evaluated for impairment		11,778			1,118			4,202			893			17,991

Ending balance	$	12,129		$	1,803		$	4,202		$	903		$	19,037

Period-end balances:
Loans individually evaluated for impairment	$	26,033		$	4,397		$	11,763		$	4,717		$	46,910
Loans collectively evaluated for impairment		739,508			32,699			187,871			19,809			979,887

Ending balance	$	765,541		$	37,096		$	199,634		$	24,526		$	1,026,797

The ASC 310 reserve, or where applicable the ASC 450 reserve, as it related to loans included in the bulk asset sale were treated as chargeoffs in the ASC 450 methodology of determining loan loss ratios.


Allowance For Loan Losses
(Dollars in thousands)
	Permanent Real Estate Loans			Construction Loans			Consumer Loans			Commercial Loans			Total
For the three months ended June 30, 2012
Beginning balance (03/31/12)	$	24,601		$	2,918		$	4,962		$	2,042		$	34,523
Provision		6,171			92			3			(2	)		6,264
Chargeoffs		(8,705	)		(526	)		(499	)		(550	)		(10,280	)
Recoveries		54			6			339			27			426

Ending balance (06/30/12)	$	22,121		$	2,490		$	4,805		$	1,517		$	30,933

For the six months ended June 30, 2012
Beginning balance (12/31/11)	$	31,323		$	4,493		$	4,576		$	1,879		$	42,271
Provision		4,634			615			1,134			561			6,944
Chargeoffs		(14,061	)		(2,670	)		(1,359	)		(974	)		(19,064	)
Recoveries		225			52			454			51			782

Ending balance (06/30/12)	$	22,121		$	2,490		$	4,805		$	1,517		$	30,933

December 31, 2012
Period-end amount allocated to:
Loans individually evaluated for impairment	$	2,380		$	478		$	—		$	166		$	3,024
Loans collectively evaluated for impairment		11,439			926			4,459			1,282			18,106

Ending balance	$	13,819		$	1,404		$	4,459		$	1,448		$	21,130

Period-end balances:
Loans individually evaluated for impairment	$	43,013		$	7,547		$	8,784		$	1,673		$	61,017
Loans collectively evaluated for impairment		769,155			25,305			205,809			24,870			1,025,139

Ending balance	$	812,168		$	32,852		$	214,593		$	26,543		$	1,086,156

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 chargeoffs or partial chargeoffs 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 six months ended June 30, 2013:


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
Permanent real estate
One-to four-family residential	$	19,608	$	17,484	$	—	$	16,870	$	305	$	323
Multifamily residential		755		660		—		734		2		4
Nonresidential		6,461		5,313		—		8,688		10		27
Land		3,913		487		—		2,951		—		—

Total		30,737		23,944		—		29,243		317		354
Construction loans
One-to four-family residential		13,409		2,081		—		2,435		—		2
Multifamily and nonresidential		—		—		—		—		—		—

Total		13,409		2,081		—		2,435		—		2
Consumer loans
Home Equity		11,041		10,423		—		8,053		232		255
Auto		65		44		—		44		1		2
Marine		186		186		—		184		—		5
Recreational vehicle		1,252		1,110		—		835		16		17
Other		—		—		—		4		—		—

Total		12,544		11,763		—		9,120		249		279
Commercial loans
Secured		5,380		4,512		—		2,061		—		33
Unsecured		4,371		1		—		199		1		28

Total		9,751		4,513		—		2,260		1		61

Total	$	66,441	$	42,301	$	—	$	43,058	$	567	$	696


(Continued) 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 a specific allowance recorded
Permanent real estate
One-to four-family residential	$	17	$	10	$	1	$	370	$	—	$	—
Multifamily residential		185		85		25		785		—		—
Nonresidential		2,326		1,994		325		6,477		5		35
Land		—		—		—		1,656		—		—

Total		2,528		2,089		351		9,288		5		35
Construction loans
One-to four-family residential		3,921		2,316		685		4,280		—		—
Multifamily and nonresidential		—		—		—		—		—		—

Total		3,921		2,316		685		4,280		—		—
Consumer loans
Home Equity		—		—		—		—		—		—
Auto		—		—		—		—		—		—
Marine		—		—		—		—		—		—
Recreational vehicle		—		—		—		9		—		—
Other		—		—		—		—		—		—

Total		—		—		—		9		—		—
Commercial loans
Secured		571		204		10		314		—		—
Unsecured		—		—		—		—		—		—

Total		571		204		10		314		—		—

Total		7,020		4,609		1,046		13,891		5		35

Total	$	73,461	$	46,910	$	1,046	$	56,949	$	572	$	731

The following table presents loans individually evaluated for impairment by class of loans as of and for the six months ended June 30, 2012:


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
Permanent real estate
One-to four-family residential	$	33,074	$	29,040	$	—	$	27,751	$	311	$	426
Multifamily residential		7,190		4,861		—		4,317		19		97
Nonresidential		26,409		24,740		—		27,257		69		201
Land		7,091		5,796		—		6,308		16		52

Total		73,764		64,437		—		65,633		415		776
Construction loans
One-to four-family residential		14,116		7,760		—		10,267		53		137
Multifamily and nonresidential		707		—		—		—		—		—

Total		14,823		7,760		—		10,267		53		137
Consumer loans
Home Equity		6,122		4,953		—		3,388		90		109
Auto		78		58		—		60		1		3
Marine		368		354		—		178		—		9
Recreational vehicle		940		659		—		367		—		21
Other		7		7		—		7		—		—

Total		7,515		6,031		—		4,000		91		142
Commercial loans
Secured		2,317		1,497		—		1,747		12		69
Unsecured		16,704		207		—		452		1		13

Total		19,021		1,704		—		2,199		13		82

Total	$	115,123	$	79,932	$	—	$	82,099	$	572	$	1,137


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 a specific allowance recorded
Permanent real estate
One-to four-family residential	$	3,969	$	3,604	$	648	$	2,608	$	49	$	61
Multifamily residential		5,572		5,193		731		3,201		41		76
Nonresidential		27,410		23,820		3,469		34,570		132		650
Land		5,332		3,139		480		4,129		—		—

Total		42,283		35,756		5,328		44,508		222		787
Construction loans
One-to four-family residential		29,580		12,398		1,498		17,140		10		29
Multifamily and nonresidential		—		—		—		—		—		—

Total		29,580		12,398		1,498		17,140		10		29
Consumer loans
Home Equity		—		—		—		—		—		—
Auto		—		—		—		—		—		—
Marine		—		—		—		121		—		—
Recreational vehicle		88		36		18		27		—		—
Other		—		—		—		—		—		—

Total		88		36		18		148		—		—
Commercial loans
Secured		943		585		185		2,161		—		3
Unsecured		—		—		—		119		—		—

Total		943		585		185		2,280		—		3

Total	$	72,894	$	48,775	$	7,029	$	64,076	$	232	$	819

Total	$	188,017	$	128,707	$	7,029	$	146,175	$	804	$	1,956

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended June 30, 2013:


Impaired Loans
(Dollars in thousands)
	Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Permanent real estate
One-to four-family residential	$	17,469	$	148	$	155
Multifamily residential		671		—		1
Nonresidential		5,485		2		5
Land		2,094		—		—

Total		25,719		150		161
Construction loans
One-to four-family residential		1,804		—		—
Multifamily and nonresidential		—		—		—

Total		1,804		—		—
Consumer loans
Home Equity		9,649		107		119
Auto		41		—		1
Marine		187		—		2
Recreational vehicle		1,055		5		6
Other		4		—		—

Total		10,936		112		128
Commercial loans
Secured		2,827		—		15
Unsecured		357		—		6

Total		3,184		—		21

Total	$	41,643	$	262	$	310


Impaired Loans
(Dollars in thousands)
	Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With a specific allowance recorded
Permanent real estate
One-to four-family residential	$	373	$	—	$	—
Multifamily residential		575		—		—
Nonresidential		7,045		—		17
Land		1,064		—		—

Total		9,057		—		17
Construction loans
One-to four-family residential		2,864		—		—
Multifamily and nonresidential		—		—		—

Total		2,864		—		—
Consumer loans
Home Equity		—		—		—
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—

Total		—		—		—
Commercial loans
Secured		204		—		—
Unsecured		—		—		—

Total		204		—		—

Total	$	12,125	$	—	$	17

Total	$	53,768	$	262	$	327

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended June 30, 2012:


Impaired Loans
(Dollars in thousands)
	Average Recorded Investment		Interest Income Recognized			Cash Basis Income Recognized
With no specific allowance recorded
Permanent real estate
One-to four-family residential	$	28,780	$	221		$	266
Multifamily residential		4,367		50			85
Nonresidential		26,959		(75	)		(45	)
Land		6,028		8			36

Total		66,134		204			342
Construction loans
One-to four-family residential		9,036		10			55
Multifamily and nonresidential		—		—			—

Total		9,036		10			55
Consumer loans
Home Equity		4,683		51			58
Auto		56		1			2
Marine		356		—			4
Recreational vehicle		704		—			11
Other		7		—			—

Total		5,806		52			75
Commercial loans
Secured		1,665		5			27
Unsecured		482		(5	)		—

Total		2,147		—			27

Total	$	83,123	$	266		$	499


Impaired Loans
(Dollars in thousands)
	Average Recorded Investment		Interest Income Recognized			Cash Basis Income Recognized
With a specific allowance recorded
Permanent real estate
One-to four-family residential	$	2,117	$	—		$	5
Multifamily residential		3,784		—			22
Nonresidential		28,931		(22	)		319
Land		2,957		—			—

Total		37,789		(22	)		346
Construction loans
One-to four-family residential		13,325		5			12
Multifamily and nonresidential		—		—			—

Total		13,325		5			12
Consumer loans
Home Equity		—		—			—
Auto		—		—			—
Marine		—		—			—
Recreational vehicle		36		—			—
Other		—		—			—

Total		36		—			—
Commercial loans
Secured		551		(1	)		1
Unsecured		—		—			—

Total		551		(1	)		1

Total	$	51,701	$	(18	)	$	359

Total	$	134,824	$	248		$	858

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2012:


Impaired Loans
(Dollars in thousands)
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no specific allowance recorded
Permanent real estate
One-to four-family residential	$	18,672	$	16,947	$	—
Multifamily residential		1,173		1,078		—
Nonresidential		13,240		12,638		—
Land		4,577		3,804		—

Total		37,662		34,467		—
Construction loans
One-to four-family residential		17,912		3,580		—
Multifamily and nonresidential		571		—		—

Total		18,483		3,580		—
Consumer loans
Home Equity		8,867		7,958		—
Auto		68		44		—
Marine		190		190		—
Recreational vehicle		887		592		—
Other		—		—		—

Total		10,012		8,784		—
Commercial loans
Secured		2,122		1,212		—
Unsecured		2,861		38		—

Total		4,983		1,250		—

Total	$	71,140	$	48,081	$	—


(Continued) Impaired Loans
(Dollars in thousands)
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With a specific allowance recorded
Permanent real estate
One-to four-family residential	$	735	$	735	$	260
Multifamily residential		996		981		57
Nonresidential		5,218		4,703		1,336
Land		3,913		2,127		727

Total		10,862		8,546		2,380
Construction loans
One-to four-family residential		6,455		3,967		478
Multifamily and nonresidential		—		—		—

Total		6,455		3,967		478
Consumer loans
Home Equity		—		—		—
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—

Total		—		—		—
Commercial loans
Secured		798		423		166
Unsecured		—		—		—

Total		798		423		166

Total		18,115		12,936		3,024

Total	$	89,255	$	61,017	$	3,024

The following tables present the recorded investment in nonaccrual and loans past due over 90 days and still on accrual by class of loans as of June 30, 2013:


Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing
(Dollars in thousands)
	Nonaccrual		Loans past due over 90 days and still accruing
Real Estate Loans
Permanent
One-to four-family residential	$	4,993	$	—
Multifamily residential		727		—
Nonresidential		6,928		3,501
Land		656		—

Total		13,304		3,501

Construction Loans
One-to four-family residential		4,385		—
Multifamily and nonresidential		—		—

Total		4,385		—

Consumer Loans
Home Equity		2,809		—
Auto		89		—
Marine		167		—
Recreational vehicle		389		—
Other		5		—

Total		3,459		—

Commercial Loans
Secured		4,251		—
Unsecured		202		—

Total		4,453		—

Total	$	25,601	$	3,501


Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing
As of December 31, 2012
(Dollars in thousands)
	Nonaccrual		Loans past due over 90 days and still accruing
Real Estate Loans
Permanent
One-to four-family residential	$	5,437	$	—
Multifamily residential		2,027		—
Nonresidential		17,065		3,678
Land		6,047		—

Total		30,576		3,678

Construction Loans
One-to four-family residential		7,466		—
Multifamily and nonresidential		—		—

Total		7,466		—

Consumer Loans
Home Equity		3,298		—
Auto		105		—
Marine		176		—
Recreational vehicle		1,259		—
Other		4		—

Total		4,842		—

Commercial Loans
Secured		1,194		—
Unsecured		31		—

Total		1,225		—

Total	$	44,109	$	3,678

The following tables present an age analysis of past-due loans, segregated by class of loans as of June 30, 2013:


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
Real Estate Loans
Permanent
One-to four-family residential	$	1,586	$	1,549	$	3,642	$	6,777	$	565,798	$	572,575
Multifamily residential		—		2,663		727		3,390		59,169		62,559
Nonresidential		—		11		9,432		9,443		111,143		120,586
Land		27		19		656		702		9,119		9,821

Total		1,613		4,242		14,457		20,312		745,229		765,541

Construction Loans
One-to four-family residential		—		—		4,385		4,385		28,127		32,512
Multifamily and nonresidential		—		—		—		—		4,584		4,584

Total		—		—		4,385		4,385		32,711		37,096

Consumer Loans
Home Equity		890		581		2,279		3,750		163,664		167,414
Auto		20		1		48		69		6,321		6,390
Marine		—		—		22		22		4,522		4,544
Recreational vehicle		353		168		368		889		18,302		19,191
Other		18		1		3		22		2,073		2,095

Total		1,281		751		2,720		4,752		194,882		199,634

Commercial Loans
Secured		221		—		4,224		4,445		18,791		23,236
Unsecured		—		—		202		202		1,088		1,290

Total		221		—		4,426		4,647		19,879		24,526

Total	$	3,115	$	4,993	$	25,988	$	34,096	$	992,701	$	1,026,797

The following table presents an age analysis of past-due loans, segregated by class of loans as of December 31, 2012:


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
Real Estate Loans
Permanent
One-to four-family residential	$	1,995	$	784	$	4,495	$	7,274	$	569,975	$	577,249
Multifamily residential		158		—		1,630		1,788		79,135		80,923
Nonresidential		—		176		19,942		20,118		118,070		138,188
Land		83		—		6,044		6,127		9,681		15,808

Total		2,236		960		32,111		35,307		776,861		812,168

Construction Loans
One-to four-family residential		54		—		7,398		7,452		20,866		28,318
Multifamily and nonresidential		—		—		—		—		4,534		4,534

Total		54		—		7,398		7,452		25,400		32,852

Consumer Loans
Home Equity		1,135		475		2,071		3,681		173,549		177,230
Auto		35		7		83		125		7,523		7,648
Marine		—		—		8		8		4,934		4,942
Recreational vehicle		447		32		353		832		21,418		22,250
Other		—		1		3		4		2,519		2,523

Total		1,617		515		2,518		4,650		209,943		214,593

Commercial Loans
Secured		16		—		23		39		24,204		24,243
Unsecured		—		728		6		734		1,566		2,300

Total		16		728		29		773		25,770		26,543

Total	$	3,923	$	2,203	$	42,056	$	48,182	$	1,037,974	$	1,086,156

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended June 30, 2013:


	Number of loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		9	$	1,099	$	844
Multifamily residential		1		469		469
Nonresidential		1		41		41
Land		2		3,913		487

Total		13		5,522		1,841

Construction Loans
One-to four-family residential		1		1,161		823
Multifamily and nonresidential		—		—		—

Total		1		1,161		823

Consumer Loans
Home Equity		37		1,655		1,660
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—

Total		37		1,655		1,660

Commercial Loans
Secured		—		—		—
Unsecured		—		—		—

Total		—		—		—

Total Restructured Loans		51	$	8,338	$	4,324

The troubled debt restructurings described above increased the allowance for loan losses by $199,000, and increased chargeoffs by $1.8 million during the three months ended June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2013:


	Number of loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		22	$	1,842	$	1,606
Multifamily residential		1		469		469
Nonresidential		1		41		41
Land		2		3,913		487

Total		26		6,265		2,603

Construction Loans
One-to four-family residential		1		1,161		823
Multifamily and nonresidential		—		—		—

Total		1		1,161		823

Consumer Loans
Home Equity		63		2,526		2,537
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		4		791		804
Other		—		—		—

Total		67		3,317		3,341

Commercial Loans
Secured		—		—		—
Unsecured		—		—		—

Total		—		—		—

Total Restructured Loans		94	$	10,743	$	6,767

The troubled debt restructurings described above increased the allowance for loan losses by $572,000, and increased chargeoffs by $1.8 million during the six months ended June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended June 30, 2012:


	Number of loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
Real Estate Loans
Permanent
One-to four-family		7	$	350	$	345
Multifamily residential		—		—		—
Nonresidential		—		—		—
Land		—		—		—

Total		7		350		345

Construction Loans
One-to four-family residential		—		—		—
Multifamily and nonresidential		—		—		—

Total		—		—		—

Consumer Loans
Home Equity		20		950		918
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—

Total		20		950		918

Commercial Loans
Secured		—		—		—
Unsecured		—		—		—

Total		—		—		—

Total Restructured Loans		27	$	1,300	$	1,263

The troubled debt restructurings described above had no effect on the allowance for loan losses and resulted in no chargeoffs during the three months ended June 30, 2012.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2012:


	Number of loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
Real Estate Loans
Permanent
One-to four-family		21	$	2,306	$	2,264
Multifamily residential		6		1,439		1,438
Nonresidential		1		424		424
Land		—		—		—

Total		28		4,169		4,126

Construction Loans
One-to four-family residential		3		853		830
Multifamily and nonresidential		—		—		—

Total		3		853		830

Consumer Loans
Home Equity		42		1,783		1,752
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—

Total		42		1,783		1,752

Commercial Loans
Secured		—		—		—
Unsecured		1		446		446

Total		1		446		446

Total Restructured Loans		74	$	7,251	$	7,154

The troubled debt restructurings described above increased the allowance for loan losses by $78,000 and resulted in no chargeoffs during the six months ended June 30, 2012.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ended June 30, 2013:


	Number of loans		Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		7	$	851
Multifamily residential		—		—
Nonresidential		—		—
Land		2		487

Total		9		1,338

Construction Loans
One-to four-family residential		1		823
Multifamily and nonresidential		—		—

Total		1		823

Consumer Loans
Home Equity		7		354
Auto		—		—
Marine		—		—
Recreational vehicle		1		93
Other		—		—

Total		8		447

Commercial Loans
Secured		—		—
Unsecured		—		—

Total		—		—

Total Restructured Loans		18	$	2,608


	Number of loans		Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		9	$	851
Multifamily residential		—		—
Nonresidential		—		—
Land		—		—

Total		9		851

Construction Loans
One-to four-family residential		—		—
Multifamily and nonresidential		—		—

Total		—		—

Consumer Loans
Home Equity		2		77
Auto		—		—
Marine		—		—
Recreational vehicle		—		—
Other		—		—

Total		2		77

Commercial Loans
Secured		—		—
Unsecured		—		—

Total		—		—

Total Restructured Loans		11	$	928

A troubled debt restructuring is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above resulted in no chargeoffs during the twelve months ended December 31, 2012, and had no effect on the provision for loan losses.

The terms of certain other loans were modified during the period ended June 30, 2013, but they did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment as of June 30, 2013 of $38.2 million. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be significant.

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 among other factors. 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, 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. Loans may be housed in this category for no longer than 12 months during which time information is obtained to determine if the credit should be downgraded to the substandard category.

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, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:


	Loans
	June 30, 2013
	(Dollars in thousands)
	Unclassified				Classified
			Special								Total
	Unclassified		Mention		Substandard		Doubtful		Loss		Classified		Total Loans
Real Estate Loans
Permanent
One-to four-family residential	$	564,034	$	423	$	8,118	$	—	$	—	$	8,118	$	572,575
Multifamily residential		52,757		7,081		2,721		—		—		2,721		62,559
Nonresidential		95,998		5,464		19,124		—		—		19,124		120,586
Land		9,068		266		487		—		—		487		9,821

Total		721,857		13,234		30,450		—		—		30,450		765,541

Construction Loans
One-to four-family residential		27,977		138		4,397		—		—		4,397		32,512
Multifamily and nonresidential		4,584		—		—		—		—		—		4,584

Total		32,561		138		4,397		—		—		4,397		37,096

Consumer Loans
Home Equity		164,483		—		2,931		—		—		2,931		167,414
Auto		6,235		47		108		—		—		108		6,390
Marine		4,353		5		186		—		—		186		4,544
Recreational vehicle		18,789		—		402		—		—		402		19,191
Other		2,089		—		6		—		—		6		2,095

Total		195,949		52		3,633		—		—		3,633		199,634

Commercial Loans
Secured		15,930		1,641		5,665		—		—		5,665		23,236
Unsecured		440		51		799		—		—		799		1,290

Total		16,370		1,692		6,464		—		—		6,464		24,526

Total	$	966,737	$	15,116	$	44,944	$	—	$	—	$	44,944	$	1,026,797



	Loans
	December 31, 2012
	(Dollars in thousands)
	Unclassified				Classified
			Special								Total
	Unclassified		Mention		Substandard		Doubtful		Loss		Classified		Total Loans
Real Estate Loans
Permanent
One-to four-family residential	$	569,204	$	459	$	7,586	$	—	$	—	$	7,586	$	577,249
Multifamily Residential		69,060		8,409		3,454		—		—		3,454		80,923
Nonresidential		99,275		12,234		26,679		—		—		26,679		138,188
Land		9,596		280		5,932		—		—		5,932		15,808

Total		747,135		21,382		43,651		—		—		43,651		812,168

Construction Loans
One-to four-family Residential		20,577		196		7,545		—		—		7,545		28,318
Multifamily and Nonresidential		4,534		—		—		—		—		—		4,534

Total		25,111		196		7,545		—		—		7,545		32,852

Consumer Loans
Home Equity		173,696		—		3,534		—		—		3,534		177,230
Auto		7,453		82		113		—		—		113		7,648
Marine		4,745		7		190		—		—		190		4,942
Recreational vehicle		20,859		—		1,391		—		—		1,391		22,250
Other		2,507		—		16		—		—		16		2,523

Total		209,260		89		5,244		—		—		5,244		214,593

Commercial Loans
Secured		20,843		769		2,631		—		—		2,631		24,243
Unsecured		1,481		11		808		—		—		808		2,300

Total		22,324		780		3,439		—		—		3,439		26,543

Total	$	1,003,830	$	22,447	$	59,879	$	—	$	—	$	59,879	$	1,086,156