Loans

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Loans

6. LOANS

Portfolio loans consist of the following:

	September 30,			December 31,
	2013			2012
	(Dollars in thousands)
Real Estate:
One-to four-family residential	$	575,791		$	577,249
Multi-family residential		55,696			80,923
Nonresidential		127,699			138,188
Land		9,546			15,808
Construction:
One-to four-family residential and land development		38,932			28,318
Multi-family and nonresidential		—			4,534
Total real estate		807,664			845,020
Consumer
Home equity		163,866			177,230
Auto		5,943			7,648
Marine		4,432			4,942
Recreational vehicles		17,939			22,250
Other		2,203			2,523
Total consumer		194,383			214,593
Commercial
Secured		26,113			24,243
Unsecured		775			2,300
Total commercial		26,888			26,543
Total loans		1,028,935			1,086,156
Less:
Allowance for loan losses		21,032			21,130
Deferred loan costs, net		(1,126	)		(1,214	)
Total		19,906			19,916
Loans, net	$	1,009,029		$	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 September 30, 2013 and December 31, 2012 and activity for the three and nine months ended September 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 September 30, 2013
Beginning balance (06/30/13)	$	12,129		$	1,803		$	4,202		$	903		$	19,037
Provision		2,286			(1,800	)		394			(223	)		657
Chargeoffs		(651	)		(37	)		(400	)		(16	)		(1,104	)
Recoveries		92			1,913			257			180			2,442
Ending balance (09/30/13)	$	13,856		$	1,879		$	4,453		$	844		$	21,032
For the nine months ended September 30, 2013
Beginning balance (12/31/12)	$	13,819		$	1,404		$	4,459		$	1,448		$	21,130
Provision		5,064			(1,354	)		967			(843	)		3,834
Chargeoffs		(5,794	)		(402	)		(1,514	)		(144	)		(7,854	)
Recoveries		767			2,231			541			383			3,922
Ending balance (09/30/13)	$	13,856		$	1,879		$	4,453		$	844		$	21,032
September 30, 2013
Period-end amount allocated to:
Loans individually evaluated for impairment	$	1,222		$	677		$	524		$	—		$	2,423
Loans collectively evaluated for impairment		12,634			1,202			3,929			844			18,609
Ending balance	$	13,856		$	1,879		$	4,453		$	844		$	21,032
Period-end balances:
Loans individually evaluated for impairment	$	26,259		$	3,333		$	12,407		$	4,328		$	46,327
Loans collectively evaluated for impairment		742,473			35,599			181,976			22,560			982,608
Ending balance	$	768,732		$	38,932		$	194,383		$	26,888		$	1,028,935

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 historic loan loss experience.

Allowance For Loan Losses
(Dollars in thousands)
	Permanent Real Estate Loans			Construction Loans			Consumer Loans			Commercial Loans			Total
For the three months ended September 30, 2012
Beginning balance (06/30/12)	$	22,121		$	2,490		$	4,805		$	1,517		$	30,933
Provision		27,905			1,678			1,288			(592	)		30,279
Chargeoffs		(2,267	)		(543	)		(839	)		(233	)		(3,882	)
Recoveries		468			139			125			144			876
Net (chargeoffs) recovery from asset sale		(35,744	)		(2,134	)		(822	)		542			(38,158	)
Ending balance (09/30/12)	$	12,483		$	1,630		$	4,557		$	1,378		$	20,048
For the nine months ended September 30, 2012
Beginning balance (12/31/11)	$	31,323		$	4,493		$	4,576		$	1,879		$	42,271
Provision		32,539			2,293			2,422			(31	)		37,223
Chargeoffs		(16,328	)		(3,213	)		(2,198	)		(1,207	)		(22,946	)
Recoveries		693			191			579			195			1,658
Net (chargeoffs) recovery from asset sale		(35,744	)		(2,134	)		(822	)		542			(38,158	)
Ending balance (09/30/12)	$	12,483		$	1,630		$	4,557		$	1,378		$	20,048
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 nine months ended September 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	$	14,687	$	12,469	$	—	$	16,088	$	333	$	385
Multifamily residential		737		643		—		766		2		9
Nonresidential		6,380		5,227		—		7,209		12		44
Land		3,913		487		—		2,120		—		—
Total		25,717		18,826		—		26,183		347		438
Construction loans
One-to four-family residential		1,501		1,092		—		2,070		—		2
Multifamily and nonresidential		—		—		—		—		—		—
Total		1,501		1,092		—		2,070		—		2
Consumer loans
Home Equity		9,073		8,511		—		8,942		300		328
Auto		50		33		—		40		1		3
Marine		162		162		—		182		—		7
Recreational vehicle		270		245		—		737		9		12
Other		—		—		—		2		—		—
Total		9,555		8,951		—		9,903		310		350
Commercial loans
Secured		4,701		4,328		—		2,798		—		41
Unsecured		4,197		—		—		188		1		56
Total		8,898		4,328		—		2,986		1		97
Total	$	45,671	$	33,197	$	—	$	41,142	$	658	$	887
With a specific allowance recorded
Permanent real estate
One-to four-family residential	$	6,670	$	6,665	$	1,092	$	2,036	$	192	$	193
Multifamily residential		185		85		25		554		—		—
Nonresidential		950		683		105		4,869		—		8
Land		—		—		—		1,064		—		—
Total		7,805		7,433		1,222		8,523		192		201
Construction loans
One-to four-family residential		3,829		2,241		677		2,984		—		—
Multifamily and nonresidential		—		—		—		—		—		—
Total		3,829		2,241		677		2,984		—		—
Consumer loans
Home Equity		2,728		2,728		365		683		69		72
Auto		—		—		—		—		—		—
Marine		—		—		—		—		—		—
Recreational vehicle		756		728		159		182		14		14
Other		—		—		—		—		—		—
Total		3,484		3,456		524		865		83		86
Commercial loans
Secured		—		—		—		208		—		—
Unsecured		—		—		—		—		—		—
Total		—		—		—		208		—		—
Total	$	15,118	$	13,130	$	2,423	$	12,580	$	275	$	287
Total	$	60,789	$	46,327	$	2,423	$	53,722	$	933	$	1,174

The following tables present loans individually evaluated for impairment by class of loans as of and for the nine months ended September 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	$	17,027	$	15,594	$	—	$	25,431	$	424	$	461
Multifamily residential		610		515		—		3,363		—		9
Nonresidential		11,308		11,145		—		23,348		22		62
Land		4,584		3,811		—		5,789		—		3
Total		33,529		31,065		—		57,931		446		535
Construction loans
One-to four-family residential		6,465		2,553		—		8,289		9		21
Multifamily and nonresidential		587		—		—		—		—		—
Total		7,052		2,553		—		8,289		9		21
Consumer loans
Home Equity		5,921		4,956		—		4,365		133		163
Auto		72		52		—		56		—		4
Marine		170		170		—		220		—		9
Recreational vehicle		912		637		—		514		—		37
Other		7		7		—		7		—		1
Total		7,082		5,822		—		5,162		133		214
Commercial loans
Secured		2,298		1,378		—		1,948		18		97
Unsecured		3,066		43		—		344		1		12
Total		5,364		1,421		—		2,292		19		109
Total	$	53,027	$	40,861	$	—	$	73,674	$	607	$	879

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	$	—	$	—	$	—	$	1,489	$	—	$	—
Multifamily residential		1,026		1,011		57		2,742		—		17
Nonresidential		8,168		7,115		956		25,788		55		74
Land		4,588		2,371		268		3,226		—		12
Total		13,782		10,497		1,281		33,245		55		103
Construction loans
One-to four-family residential		21,648		7,427		664		13,032		15		27
Multifamily and nonresidential		—		—		—		—		—		—
Total		21,648		7,427		664		13,032		15		27
Consumer loans
Home Equity		—		—		—		—		—		—
Auto		—		—		—		—		—		—
Marine		—		—		—		121		—		—
Recreational vehicle		88		36		18		36		—		—
Other		—		—		—		—		—		—
Total		88		36		18		157		—		—
Commercial loans
Secured		798		423		166		488		—		3
Unsecured		—		—		—		19		—		—
Total		798		423		166		507		—		3
Total	$	36,316	$	18,383	$	2,129	$	46,941	$	70	$	133
Total	$	89,343	$	59,244	$	2,129	$	120,615	$	677	$	1,012

The following tables present loans individually evaluated for impairment by class of loans as of and for the three months ended September 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	$	14,977	$	128	$	165
Multifamily residential		652		—		4
Nonresidential		5,270		2		20
Land		487		—		—
Total		21,386		130		189
Construction loans
One-to four-family residential		1,587		—		—
Multifamily and nonresidential		—		—		—
Total		1,587		—		—
Consumer loans
Home Equity		9,467		109		116
Auto		39		—		1
Marine		174		—		2
Recreational vehicle		677		4		6
Other		—		—		—
Total		10,357		113		125
Commercial loans
Secured		4,420		—		8
Unsecured		1		—		28
Total		4,421		—		36
Total	$	37,751	$	243	$	350

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	$	3,338	$	98	$	98
Multifamily residential		85		—		—
Nonresidential		1,339		—		1
Land		—		—		—
Total		4,762		98		99
Construction loans
One-to four-family residential		2,279		—		—
Multifamily and nonresidential		—		—		—
Total		2,279		—		—
Consumer loans
Home Equity		1,364		38		38
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		364		5		5
Other		—		—		—
Total		1,728		43		43
Commercial loans
Secured		102		—		—
Unsecured		—		—		—
Total		102		—		—
Total	$	8,871	$	141	$	142
Total	$	46,622	$	384	$	492

The following tables present loans individually evaluated for impairment by class of loans as of and for the three months ended September 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	$	22,316	$	194	$	205
Multifamily residential		2,688		—		1
Nonresidential		17,943		9		22
Land		4,804		—		—
Total		47,751		203		228
Construction loans
One-to four-family residential		5,157		3		7
Multifamily and nonresidential		—		—		—
Total		5,157		3		7
Consumer loans
Home Equity		4,953		50		64
Auto		55		—		1
Marine		262		—		4
Recreational vehicle		648		—		16
Other		7		—		—
Total		5,925		50		85
Commercial loans
Secured		1,438		6		28
Unsecured		125		—		3
Total		1,563		6		31
Total	$	60,396	$	262	$	351

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	$	1,802	$	—	$	—
Multifamily residential		3,102		—		—
Nonresidential		15,467		18		22
Land		2,755		—		—
Total		23,126		18		22
Construction loans
One-to four-family residential		9,913		5		8
Multifamily and nonresidential		—		—		—
Total		9,913		5		8
Consumer loans
Home Equity		—		—		—
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		36		—		—
Other		—		—		—
Total		36		—		—
Commercial loans
Secured		504		—		—
Unsecured		—		—		—
Total		504		—		—
Total	$	33,579	$	23	$	30
Total	$	93,975	$	285	$	381

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

Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing
As of September 30, 2013
(Dollars in thousands)
	Nonaccrual		Loans past due over 90 days and still accruing
Real Estate Loans
Permanent
One-to four-family residential	$	6,127	$	—
Multifamily residential		705		—
Nonresidential		5,839		3,125
Land		628		—
Total		13,299		3,125
Construction Loans
One-to four-family residential		3,320		—
Multifamily and nonresidential		—		—
Total		3,320		—
Consumer Loans
Home Equity		3,134		—
Auto		100		—
Marine		140		—
Recreational vehicle		184		—
Other		5		—
Total		3,563		—
Commercial Loans
Secured		4,036		—
Unsecured		141		—
Total		4,177		—
Total	$	24,359	$	3,125

The following table presents the recorded investment in nonaccrual and loans past due over 90 days and still on accrual by class of loans as of December 31, 2012:

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 table presents an age analysis of past-due loans, segregated by class of loans as of September 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	$	1,292	$	405	$	4,471	$	6,168	$	569,623	$	575,791
Multifamily residential		112		—		240		352		55,344		55,696
Nonresidential		133		18		8,826		8,977		118,722		127,699
Land		—		44		627		671		8,875		9,546
Total		1,537		467		14,164		16,168		752,564		768,732
Construction Loans
One-to four-family residential		—		49		3,320		3,369		30,411		33,780
Multifamily and nonresidential		—		—		—		—		5,152		5,152
Total		—		49		3,320		3,369		35,563		38,932
Consumer Loans
Home Equity		517		427		2,587		3,531		160,335		163,866
Auto		16		—		53		69		5,874		5,943
Marine		—		41		—		41		4,391		4,432
Recreational vehicle		342		129		76		547		17,392		17,939
Other		22		1		2		25		2,178		2,203
Total		897		598		2,718		4,213		190,170		194,383
Commercial Loans
Secured		—		—		4,016		4,016		22,097		26,113
Unsecured		—		—		141		141		634		775
Total		—		—		4,157		4,157		22,731		26,888
Total	$	2,434	$	1,114	$	24,359	$	27,907	$	1,001,028	$	1,028,935

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 September 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		14	$	1,316	$	1,363
Multifamily residential		—		—		—
Nonresidential		—		—		—
Land		—		—		—
Total		14		1,316		1,363
Construction Loans
One-to four-family residential		—		—		—
Multifamily and nonresidential		—		—		—
Total		—		—		—
Consumer Loans
Home Equity		31		1,437		1,349
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total		31		1,437		1,349
Commercial Loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total Restructured Loans		45	$	2,753	$	2,712

The troubled debt restructurings described above increased the allowance for loan losses by $206,000, but did not result in any chargeoffs during the three months ended September 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 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		36	$	3,158	$	2,969
Multifamily residential		1		469		469
Nonresidential		1		41		41
Land		2		2,127		487
Total		40		5,795		3,966
Construction Loans
One-to four-family residential		1		942		823
Multifamily and nonresidential		—		—		—
Total		1		942		823
Consumer Loans
Home Equity		94		3,963		3,886
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		4		791		804
Other		—		—		—
Total		98		4,754		4,690
Commercial Loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total Restructured Loans		139	$	11,491	$	9,479

The troubled debt restructurings described above increased the allowance for loan losses by $778,000, and increased chargeoffs by $1.8 million during the nine months ended September 30, 2013.

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

	Number of loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
Real Estate Loans
Permanent
One-to four-family		17	$	537	$	537
Multifamily residential		—		—		—
Nonresidential		—		—		—
Land		—		—		—
Total		17		537		537
Construction Loans
One-to four-family residential		—		—		—
Multifamily and nonresidential		—		—		—
Total		—		—		—
Consumer Loans
Home Equity		19		2,711		2,792
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total		19		2,711		2,792
Commercial Loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total Restructured Loans		36	$	3,248	$	3,329

The troubled debt restructurings described above increased the allowance for loan losses by $367,000, but did not result in any chargeoffs during the three months ended September 30, 2012.

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

	Number of loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
Real Estate Loans
Permanent
One-to four-family		38	$	2,843	$	2,801
Multifamily residential		6		1,439		1,438
Nonresidential		1		424		424
Land		—		—		—
Total		45		4,706		4,663
Construction Loans
One-to four-family residential		3		853		830
Multifamily and nonresidential		—		—		—
Total		3		853		830
Consumer Loans
Home Equity		61		4,494		4,544
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total		61		4,494		4,544
Commercial Loans
Secured		—		—		—
Unsecured		1		446		446
Total		1		446		446
Total Restructured Loans		110	$	10,499	$	10,483

The troubled debt restructurings described above increased the allowance for loan losses by $367,000, but did not result in any chargeoffs during the nine months ended September 30, 2012.

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

	Number of loans		Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		8	$	861
Multifamily residential		1		467
Nonresidential		—		—
Land		2		487
Total		11		1,815
Construction Loans
One-to four-family residential		1		823
Multifamily and nonresidential		—		—
Total		1		823
Consumer Loans
Home Equity		8		250
Auto		—		—
Marine		—		—
Recreational vehicle		2		187
Other		—		—
Total		10		437
Commercial Loans
Secured		—		—
Unsecured		—		—
Total		—		—
Total Restructured Loans		22	$	3,075

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within a twelve months cycle following the modification as of December 31, 2012:

	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.

Troubled debt restructurings increased during the nine month period ended September 30, 2013 due primarily to extensive efforts taken by the Company to refinance home equity lines of credit.

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 September 30, 2013, but they did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment as of September 30, 2013 of $15.9 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 not 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 September 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 September 30, 2013 (Dollars in thousands)
	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Real Estate Loans
Permanent
One-to four-family residential	$	566,765	$	1,166	$	7,860	$	—	$	—	$	7,860	$	575,791
Multifamily residential		49,860		2,989		2,847		—		—		2,847		55,696
Nonresidential		86,074		11,302		30,323		—		—		30,323		127,699
Land		8,905		154		487		—		—		487		9,546
Total		711,604		15,611		41,517		—		—		41,517		768,732
Construction Loans
One-to four-family residential		30,310		137		3,333		—		—		3,333		33,780
Multifamily and nonresidential		5,152		—		—		—		—		—		5,152
Total		35,462		137		3,333		—		—		3,333		38,932
Consumer Loans
Home Equity		160,501		—		3,365		—		—		3,365		163,866
Auto		5,792		46		105		—		—		105		5,943
Marine		4,265		5		162		—		—		162		4,432
Recreational vehicle		17,741		—		198		—		—		198		17,939
Other		2,198		—		5		—		—		5		2,203
Total		190,497		51		3,835		—		—		3,835		194,383
Commercial Loans
Secured		19,682		194		6,237		—		—		6,237		26,113
Unsecured		294		41		440		—		—		440		775
Total		19,976		235		6,677		—		—		6,677		26,888
Total	$	957,539	$	16,034	$	55,362	$	—	$	—	$	55,362	$	1,028,935

	Loans December 31, 2012 (Dollars in thousands)
	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total 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