LOANS

Portfolio loans consist of the following:

	September 30,		December 31,
	2014		2013
	(Dollars in thousands)
Real Estate:
One-to four-family residential	$	669,270	$	585,025
Multi-family residential		56,445		54,485
Nonresidential		123,260		131,251
Land		9,487		9,683
Construction:
One-to four-family residential and land development		52,735		53,349
Multi-family and nonresidential		4,667		—
Total real estate		915,864		833,793
Consumer:
Home equity		154,936		159,795
Auto		5,300		5,669
Marine		4,003		4,308
Recreational vehicles		15,249		17,347
Other		1,986		2,112
Total consumer		181,474		189,231
Commercial:
Secured		39,685		25,714
Unsecured		168		427
Total commercial		39,853		26,141
Total loans		1,137,191		1,049,165
Less:
Allowance for loan losses		18,132		21,116
Deferred loan costs, net		(896)		(1,143	)
Total		17,236		19,973
Loans, net	$	1,119,955	$	1,029,192

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, but can be extended up to 36 months. 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 are based on impairment method as of September 30, 2014 and December 31, 2013 and activity for the three and nine months ended September 30, 2014 and 2013.

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, 2014
Beginning balance (06/30/14)	$	12,353		$	1,164		$	3,790		$	957		$	18,264
Provision (recovery)		409			(143	)		(41	)		(109	)		116
Chargeoffs		(338	)		(100	)		(229	)		—			(667	)
Recoveries		51			10			200			158			419
Ending balance (09/30/14)	$	12,475		$	931		$	3,720		$	1,006		$	18,132
For the nine months ended September 30, 2014
Beginning balance (12/31/13)	$	13,794		$	2,281		$	4,302		$	739		$	21,116
Provision (recovery)		(352)			(851)			(16)			(246)			(1,465)
Chargeoffs		(1,365)			(530)			(1,083)			(45)			(3,023)
Recoveries		398			31			517			558			1,504
Ending balance (09/30/14)	$	12,475		$	931		$	3,720		$	1,006		$	18,132
September 30, 2014
Period-end amount allocated to:
Loans individually evaluated for impairment	$	2,368		$	203		$	1,058		$	3		$	3,632
Loans collectively evaluated for impairment		10,107			728			2,662			1,003			14,500
Ending balance	$	12,475		$	931		$	3,720		$	1,006		$	18,132
Period-end balances:
Loans individually evaluated for impairment	$	27,871		$	2,453		$	12,926		$	4,029		$	47,279
Loans collectively evaluated for impairment		830,591			54,949			168,548			35,824			1,089,912
Ending balance	$	858,462		$	57,402		$	181,474		$	39,853		$	1,137,191

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 (06/31/13)	$	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
December 31, 2013
Period-end amount allocated to:
Loans individually evaluated for impairment	$	1,786		$	680		$	859		$	—		$	3,325
Loans collectively evaluated for impairment		12,008			1,601			3,443			739			17,791
Ending balance	$	13,794		$	2,281		$	4,302		$	739		$	21,116
Period-end balances:
Loans individually evaluated for impairment	$	27,224		$	3,092		$	13,821		$	4,044		$	48,181
Loans collectively evaluated for impairment		753,220			50,257			175,410			22,097			1,000,984
Ending balance	$	780,444		$	53,349		$	189,231		$	26,141		$	1,049,165

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, 2014:

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	$	7,592	$	6,177	$	—	$	6,985	$	43	$	147
Multifamily residential		185		86		—		207		—		—
Nonresidential		5,408		3,804		—		4,180		—		23
Land		3,958		532		—		510		—		—
Total		17,143		10,599		—		11,882		43		170
Construction loans
One-to four-family residential		1,741		639		—		711		—		—
Multifamily and nonresidential		—		—		—		—		—		—
Total		1,741		639		—		711		—		—
Consumer loans
Home Equity		2,622		2,015		—		2,893		8		53
Auto		105		96		—		73		1		5
Marine		154		154		—		157		—		5
Recreational vehicle		365		252		—		257		4		8
Other		5		5		—		4		—		—
Total		3,251		2,522		—		3,384		13		71
Commercial loans
Secured		3,929		3,704		—		3,792		—		2
Unsecured		3,651		—		—		—		—		57
Total		7,580		3,704		—		3,792		—		59
Total	$	29,715	$	17,464	$	—	$	19,769	$	56	$	300

(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	$	13,980	$	13,980	$	2,113	$	13,590	$	284	$	285
Multifamily residential		54		29		6		312		—		—
Nonresidential		3,729		3,264		249		1,660		51		56
Land		—		—		—		—		—		—
Total		17,763		17,273		2,368		15,562		335		341
Construction loans
One-to four-family residential		3,436		1,814		203		2,033		—		—
Multifamily and nonresidential		—		—		—		—		—		—
Total		3,436		1,814		203		2,033		—		—
Consumer loans
Home Equity		9,654		9,654		917		9,300		241		243
Auto		7		7		—		6		—		—
Marine		—		—		—		—		—		—
Recreational vehicle		743		743		141		747		11		11
Other		—		—		—		—		—		—
Total		10,404		10,404		1,058		10,053		252		254
Commercial loans
Secured		324		324		3		243		—		—
Unsecured		—		—		—		—		—		—
Total		324		324		3		243		—		—
Total	$	31,927	$	29,815	$	3,632	$	27,891	$	587	$	595
Total	$	61,642	$	47,279	$	3,632	$	47,660	$	643	$	895

The following tables present 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	$	14,867	$	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

(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	$	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 table present loans individually evaluated for impairment by class of loans as of December 31, 2013:

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	$	13,321	$	11,309	$	—
Multifamily residential		662		567		—
Nonresidential		6,451		5,311		—
Land		3,913		487		—
Total		24,347		17,674		—
Construction loans
One-to four-family residential		1,433		825		—
Multifamily and nonresidential		—		—		—
Total		1,433		825		—
Consumer loans
Home Equity		6,458		5,808		—
Auto		83		66		—
Marine		160		160		—
Recreational vehicle		429		386		—
Other		2		2		—
Total		7,132		6,422		—
Commercial loans
Secured		4,414		4,044		—
Unsecured		4,067		—		—
Total		8,481		4,044		—
Total	$	41,393	$	28,965	$	—

(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	$	8,897	$	8,897	$	1,675
Multifamily residential		185		85		25
Nonresidential		908		568		86
Land		—		—		—
Total		9,990		9,550		1,786
Construction loans
One-to four-family residential		3,895		2,267		680
Multifamily and nonresidential		—		—		—
Total		3,895		2,267		680
Consumer loans
Home Equity		6,743		6,743		719
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		656		656		140
Other		—		—		—
Total		7,399		7,399		859
Commercial loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total	$	21,284	$	19,216	$	3,325
Total	$	62,677	$	48,181	$	3,325

The following tables present loans individually evaluated for impairment by class of loans as of and for the three months ended September 30, 2014:

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	$	5,226	$	19	$	50
Multifamily residential		88		—		—
Nonresidential		3,802		4		11
Land		510		—		—
Total		9,626		23		61
Construction loans
One-to four-family residential		690		—		—
Multifamily and nonresidential		—		—		—
Total		690		—		—
Consumer loans
Home Equity		1,875		19		22
Auto		65		—		1
Marine		157		—		2
Recreational vehicle		195		1		4
Other		4		—		—
Total		2,296		20		29
Commercial loans
Secured		3,710		—		1
Unsecured		—		—		22
Total		3,710		—		23
Total	$	16,322	$	43	$	113

(Continued)

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	$	15,742	$	137	$	137
Multifamily residential		567		—		—
Nonresidential		1,404		—		3
Land		—		—		—
Total		17,713		137		140
Construction loans
One-to four-family residential		2,026		—		—
Multifamily and nonresidential		—		—		—
Total		2,026		—		—
Consumer loans
Home Equity		10,399		123		121
Auto		9		—		—
Marine		—		—		—
Recreational vehicle		794		6		6
Other		—		—		—
Total		11,202		129		127
Commercial loans
Secured		324		—		—
Unsecured		—		—		—
Total		324		—		—
Total	$	31,265	$	266	$	267
Total	$	47,587	$	309	$	380

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

(Continued)

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 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, 2014:

Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing

As of September 30, 2014

(Dollars in thousands)

	Nonaccrual		Loans past due over 90 days and still accruing
Real Estate Loans
Permanent
One-to four-family residential	$	4,700	$	—
Multifamily residential		114		—
Nonresidential		6,804		—
Land		531		—
Total		12,149		—
Construction Loans
One-to four-family residential		2,453		—
Multifamily and nonresidential		—		—
Total		2,453		—
Consumer Loans
Home Equity		1,574		—
Auto		84		—
Marine		123		—
Recreational vehicle		175		—
Other		4		—
Total		1,960		—
Commercial Loans
Secured		4,019		—
Unsecured		125		—
Total		4,144		—
Total	$	20,706	$	—

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, 2013:

Nonaccrual Loans and Loans Past Due Over 90 Days and Still Accruing

As of December 31, 2013

(Dollars in thousands)

	Nonaccrual		Loans past due over 90 days and still accruing
Real Estate Loans
Permanent
One-to four-family residential	$	6,356	$	—
Multifamily residential		641		—
Nonresidential		5,560		—
Land		496		—
Total		13,053		—
Construction Loans
One-to four-family residential		3,084		—
Multifamily and nonresidential		—		—
Total		3,084		—
Consumer Loans
Home Equity		2,726		45
Auto		110		—
Marine		136		—
Recreational vehicle		263		—
Other		13		—
Total		3,248		45
Commercial Loans
Secured		4,028		—
Unsecured		130		—
Total		4,158		—
Total	$	23,543	$	45

The following table presents an age analysis of past-due loans, segregated by class of loans as of September 30, 2014:

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	$	2,021	$	873	$	2,873	$	5,767	$	663,503	$	669,270
Multifamily residential		233		—		114		347		56,098		56,445
Nonresidential		—		—		6,773		6,773		116,487		123,260
Land		—		—		530		530		8,957		9,487
Total		2,254		873		10,290		13,417		845,045		858,462
Construction Loans
One-to four-family residential		—		—		2,453		2,453		50,282		52,735
Multifamily and nonresidential		—		—		—		—		4,667		4,667
Total		—		—		2,453		2,453		54,949		57,402
Consumer Loans
Home Equity		463		544		1,181		2,188		152,748		154,936
Auto		7		6		27		40		5,260		5,300
Marine		—		381		—		381		3,622		4,003
Recreational vehicle		606		221		19		846		14,403		15,249
Other		3		6		—		9		1,977		1,986
Total		1,079		1,158		1,227		3,464		178,010		181,474
Commercial Loans
Secured		—		—		4,019		4,019		35,666		39,685
Unsecured		—		—		125		125		43		168
Total		—		—		4,144		4,144		35,709		39,853
Total	$	3,333	$	2,031	$	18,114	$	23,478	$	1,113,713	$	1,137,191

The following table presents an age analysis of past-due loans, segregated by class of loans as of December 31, 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	$	1,482	$	379	$	4,687	$	6,548	$	578,477	$	585,025
Multifamily residential		359		—		190		549		53,936		54,485
Nonresidential		13		—		5,456		5,469		125,782		131,251
Land		—		36		496		532		9,151		9,683
Total		1,854		415		10,829		13,098		767,346		780,444
Construction Loans
One-to four-family residential		—		—		3,084		3,084		50,265		53,349
Multifamily and nonresidential		—		—		—		—		—		—
Total		—		—		3,084		3,084		50,265		53,349
Consumer Loans
Home Equity		541		452		2,111		3,104		156,691		159,795
Auto		5		—		49		54		5,615		5,669
Marine		—		—		—		—		4,308		4,308
Recreational vehicle		117		199		3		319		17,028		17,347
Other		1		7		10		18		2,094		2,112
Total		664		658		2,173		3,495		185,736		189,231
Commercial Loans
Secured		—		11		4,017		4,028		21,686		25,714
Unsecured		—		—		130		130		297		427
Total		—		11		4,147		4,158		21,983		26,141
Total	$	2,518	$	1,084	$	20,233	$	23,835	$	1,025,330	$	1,049,165

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended September 30, 2014:

	Number of loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		6	$	643	$	645
Multifamily residential		—		—		—
Nonresidential		—		—		—
Land		—		—		—
Total		6		643		45
Construction Loans
One-to four-family residential		—		—		—
Multifamily and nonresidential		—		—		—
Total		—		—		—
Consumer Loans
Home Equity		7		394		405
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total		7		394		405
Commercial Loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total Restructured Loans		13	$	1,037	$	1,050

The troubled debt restructurings described above increased the allowance for loan losses by $59,000 and resulted in charge-offs of $70,000 during the three months ended September 30, 2014.

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2014:

	Number of loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		26	$	2,134	$	2,190
Multifamily residential		—		—		—
Nonresidential		1		120		120
Land		—		—		—
Total		27		2,254		2,310
Construction Loans
One-to four-family residential		—		—		—
Multifamily and nonresidential		—		—		—
Total		—		—		—
Consumer Loans
Home Equity		26		1,411		1,414
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total		26		1,411		1,414
Commercial Loans
Secured		—		—		—
Unsecured		—		—		—
Total		—		—		—
Total Restructured Loans		53	$	3,665	$	3,724

The troubled debt restructurings described above increased the allowance for loan losses by $175,000 and resulted in charge-offs of $73,000 during the nine months ended September 30, 2014.

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 for which there was a payment default within a twelve month cycle following the modification as September 30, 2014:

	Number of loans		Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		1	$	145
Multifamily residential		—		—
Nonresidential		—		—
Land		—		—
Total		1		145
Construction Loans
One-to four-family residential		—		—
Multifamily and nonresidential		—		—
Total		—		—
Consumer Loans
Home Equity		2		127
Auto		—		—
Marine		—		—
Recreational vehicle		—		—
Other		—		—
Total		2		127
Commercial Loans
Secured		—		—
Unsecured		—		—
Total		—		—
Total Restructured Loans		3	$	272

The troubled debt restructurings that subsequently defaulted described above resulted in no charge-offs during the three or nine months ended September 30, 2014, and had no effect on the provision for loan losses.

	Number of loans		Recorded Investment
	(Dollars in thousands)
Real Estate Loans
Permanent
One-to four-family		4	$	576
Multifamily residential		1		463
Nonresidential		—		—
Land		2		487
Total		7		1,526
Construction Loans
One-to four-family residential		1		623
Multifamily and nonresidential		—		—
Total		1		623
Consumer Loans
Home Equity		6		207
Auto		—		—
Marine		—		—
Recreational vehicle		2		184
Other		—		—
Total		8		391
Commercial Loans
Secured		—		—
Unsecured		—		—
Total		—		—
Total Restructured Loans		16	$	2,540

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 described above that subsequently defaulted resulted in no charge-offs during the twelve months ended December 31, 2013, and had no effect on the provision for loan losses.

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, certain loans that display potential weakness are risk rated as special mention. In addition, there are three classified risk ratings: substandard, doubtful and loss. These specific credit risk categories are defined as follows:

Special Mention. Loans classified as special mention have potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loss. Loans classified as loss are considered uncollectible and of such little value, that continuance as assets is not warranted. Although there may be a chance of recovery on these assets, it is not practical or desirable to defer writing off the asset.

The Company monitors loans on a monthly basis to determine if they should be included in one of the categories listed above. All impaired non-homogeneous credits classified as Substandard, Doubtful or Loss are analyzed on an individual basis for a specific reserve requirement. This analysis is performed on each individual credit at least annually or more frequently if warranted.

As of September 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loans

September 30, 2014

(Dollars in thousands)

	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Real Estate Loans
Permanent
One-to four-family residential	$	661,994	$	1,492	$	5,784	$	—	$	—	$	5,784	$	669,270
Multifamily residential		49,294		4,167		2,984		—		—		2,984		56,445
Nonresidential		94,968		9,479		18,813		—		—		18,813		123,260
Land		8,955		—		532		—		—		532		9,487
Total		815,211		15,138		28,113		—		—		28,113		858,462
Construction Loans
One-to four-family residential		50,285		—		2,450		—		—		2,450		52,735
Multifamily and nonresidential		4,667		—		—		—		—		—		4,667
Total		54,952		—		2,450		—		—		2,450		57,402
Consumer Loans
Home Equity		153,068		—		1,868		—		—		1,868		154,936
Auto		5,217		—		83		—		—		83		5,300
Marine		3,839		11		153		—		—		153		4,003
Recreational vehicle		15,051		—		198		—		—		198		15,249
Other		1,981		—		5		—		—		5		1,986
Total		179,156		11		2,307		—		—		2,307		181,474
Commercial Loans
Secured		32,671		920		6,094		—		—		6,094		39,685
Unsecured		54		—		114		—		—		114		168
Total		32,725		920		6,208		—		—		6,208		39,853
Total	$	1,082,044	$	16,069	$	39,078	$	—	$	—	$	39,078	$	1,137,191

Loans

December 31, 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	$	575,903	$	404	$	8,718	$	—	$	—	$	8,718	$	585,025
Multifamily Residential		48,918		2,962		2,605		—		—		2,605		54,485
Nonresidential		90,115		12,222		28,914		—		—		28,914		131,251
Land		9,069		127		487		—		—		487		9,683
Total		724,005		15,715		40,724		—		—		40,724		780,444
Construction Loans
One-to four-family Residential		50,257		—		3,092		—		—		3,092		53,349
Multifamily and Nonresidential		—		—		—		—		—		—		—
Total		50,257		—		3,092		—		—		3,092		53,349
Consumer Loans
Home Equity		156,795		46		2,954		—		—		2,954		159,795
Auto		5,548		5		116		—		—		116		5,669
Marine		4,148		—		160		—		—		160		4,308
Recreational vehicle		17,066		—		281		—		—		281		17,347
Other		2,099		—		13		—		—		13		2,112
Total		185,656		51		3,524		—		—		3,524		189,231
Commercial Loans
Secured		19,714		190		5,810		—		—		5,810		25,714
Unsecured		68		—		359		—		—		359		427
Total		19,782		190		6,169		—		—		6,169		26,141
Total	$	979,700	$	15,956	$	53,509	$	—	$	—	$	53,509	$	1,049,165