LOANS

Portfolio loans consist of the following:

	December 31,			December 31,
	2017			2016
	(Dollars in thousands)
Commercial loans
Multifamily	$	120,480		$	93,597
Nonresidential		381,611			231,401
Land		15,162			8,373
Construction		116,863			68,158
Secured		177,994			95,343
Unsecured		10,506			7,386
Total commercial loans		822,616			504,258
Residential mortgage loans
One-to four-family		870,939			762,926
Construction		49,092			35,695
Total residential mortgage loans		920,031			798,621
Consumer loans
Home equity		195,852			165,054
Auto		64,364			39,609
Marine		1,526			1,796
Recreational vehicle		5,696			7,602
Other		6,056			2,537
Total consumer loans		273,494			216,598
Total loans		2,016,141			1,519,477
Less:
Allowance for loan losses		21,202			19,087
Deferred loan fees, net		(4,938	)		(3,187	)
Total		16,264			15,900
Loans, net	$	1,999,877		$	1,503,577

Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. 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.

	December 31,
	2017				2016
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
	(Dollars in thousands)
Commitments to make loans	$	80,741	$	39,978	$	74,927	$	40,908
Undisbursed loans in process		6,779		163,903		5,450		130,566
Unused lines of credit		9,503		247,891		8,538		156,032

Terms of the commitments in both years extend up to six months, but are generally less than two months. The fixed rate loan commitments have interest rates ranging from 2.75% to 18.00%; and maturities ranging from three months to thirty years. Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated as hedge relationships.

At December 31, 2017 and 2016, there were $239,000 and $1.0 million of outstanding standby letters of credit, respectively. These are issued to guarantee the performance of a customer to a third party. Standby letters of credit are generally contingent upon the failure of the customer to perform according to the terms of an underlying contract with the third party.

At December 31, 2017 and 2016, there were $54.4 million and $50.5 million in outstanding commitments to fund the OverdraftPrivilege™ Program at Home Savings. With OverdraftPrivilege™, Home Savings pays non-sufficient funds checks and fees on checking accounts up to a preapproved limit.

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 December 31, 2017 and December 31, 2016 and activity for the years ended December 31, 2017, 2016 and 2015.

	Commercial Loans			Residential Loans			Consumer Loans			Total
	(Dollars in thousands)
2017
Beginning balance	$	10,824		$	5,538		$	2,725		$	19,087
Provision		2,590			1,305			358			4,253
Charge-offs		(1,565	)		(1,218	)		(815	)		(3,598	)
Recoveries		693			235			532			1,460
Ending balance	$	12,542		$	5,860		$	2,800		$	21,202
Period-end amount allocated to:
Loans individually evaluated for impairment	$	516		$	1,145		$	398		$	2,059
Loans collectively evaluated for impairment		11,971			4,715			2,402			19,088
Loans aquired with deteriorated credit quality		55			—			—			55
Ending balance	$	12,542		$	5,860		$	2,800		$	21,202
Period-end balances:
Loans individually evaluated for impairment		3,356			16,140			6,754			26,250
Loans collectively evaluated for impairment		818,066			903,891			266,740			1,988,697
Loans aquired with deteriorated credit quality		1,194			—			—			1,194
Ending balance	$	822,616		$	920,031		$	273,494		$	2,016,141

	Commercial Loans			Residential Loans			Consumer Loans			Total
	(Dollars in thousands)
2016
Beginning balance	$	8,077		$	6,630		$	3,005		$	17,712
Provision		5,611			(464	)		240			5,387
Charge-offs		(3,722	)		(761	)		(1,151	)		(5,634	)
Recoveries		858			133			631			1,622
Ending balance	$	10,824		$	5,538		$	2,725		$	19,087
Period-end amount allocated to:
Loans individually evaluated for impairment	$	1,271		$	1,245		$	500		$	3,016
Loans collectively evaluated for impairment		9,553			4,293			2,225			16,071
Ending balance	$	10,824		$	5,538		$	2,725		$	19,087
Period-end balances:
Loans individually evaluated for impairment	$	6,018		$	17,485		$	8,045		$	31,548
Loans collectively evaluated for impairment		498,240			781,136			208,553			1,487,929
Ending balance	$	504,258		$	798,621		$	216,598		$	1,519,477

	Commercial Loans			Residential Loans			Consumer Loans			Total
	(Dollars in thousands)
2015
Beginning balance	$	5,690		$	8,517		$	3,480		$	17,687
Provision		2,922			(974	)		187			2,135
Charge-offs		(1,268	)		(1,301	)		(1,257	)		(3,826	)
Recoveries		733			388			595			1,716
Ending balance	$	8,077		$	6,630		$	3,005		$	17,712

The unpaid principal balance is the total amount of the loan that is due to the Company. 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 allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required based on an analysis using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, general economic conditions in the market area and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

Other loans not reviewed specifically by management are evaluated as a homogenous group of loans (generally single-family residential mortgage loans and all consumer credits except marine loans) using a loss factor applied to the outstanding loan balance to determine the level of reserve required. This loss factor consists of two components, a quantitative and a qualitative component. The quantitative component is based on a historical analysis of all charged-off loans, net of recoveries, looking back 22 quarters as of December 31, 2017. In determining the qualitative component, consideration is given to such attributes as lending policies, economic conditions, nature and volume of the portfolio, management, loan quality trend, loan review, collateral value, concentrations, economic cycles and other external factors. The quantitative and qualitative components are combined to arrive at the loss factor, which is applied to the average outstanding balance of homogenous loans. At December 31, 2016, the Company evaluated 18 quarters of net charge-off history.

The following table presents loans individually evaluated for impairment by class of loans for the year ended December 31, 2017:

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
Commercial loans
Multifamily	$	41	$	—	$	—	$	309	$	—	$	—
Nonresidential		651		144		—		482		7		7
Land		716		9		—		9		—		—
Construction		2,467		—		—		—		—		—
Secured		1,042		894		—		371		43		43
Unsecured		187		—		—		—		—
Total commercial loans		5,104		1,047		—		1,171		50		50
Residential mortgage loans
One-to four-family		6,432		5,441		—		5,695		128		119
Construction		—		—		—		—		—		—
Total residential mortgage loans		6,432		5,441		—		5,695		128		119
Consumer loans
Home equity		1,399		1,059		—		1,346		21		21
Auto		29		14		—		12		1		1
Marine		553		181		—		179		1		1
Recreational vehicle		578		151		—		228		15		15
Other		3		3		—		1		—		—
Total consumer loans		2,562		1,408		—		1,766		38		38
Total	$	14,098	$	7,896	$	—	$	8,632	$	216	$	207
With a specific allowance recorded
Commercial loans
Multifamily	$	422	$	275	$	28	$	69	$	4	$	4
Nonresidential		1,455		1,423		16		1,332		110		102
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured		893		611		472		153		81		81
Unsecured		—		—		—		—		—		—
Total commercial loans		2,770		2,309		516		1,554		195		187
Residential mortgage loans
One-to four-family		10,874		10,699		1,145		10,792		493		448
Construction		—		—		—		—		—		—
Total residential mortgage loans		10,874		10,699		1,145		10,792		493		448
Consumer loans
Home equity		4,921		4,840		377		5,049		269		255
Auto		—		—		—		—		—		—
Marine		100		100		1		103		5		5
Recreational vehicle		418		406		20		560		22		21
Other		—		—		—		—		—		—
Total consumer loans		5,439		5,346		398		5,712		296		281
Total		19,083		18,354		2,059		18,058		984		916
Total impaired loans	$	33,181	$	26,250	$	2,059	$	26,690	$	1,200	$	1,123

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016:

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
Commercial loans
Multifamily	$	55	$	—	$	—	$	—	$	—	$	—
Nonresidential		2,278		1,489		—		544		102		101
Land		3,922		34		—		234		—		—
Construction		3,594		—		—		—		—		—
Secured		242		190		—		2,823		—		—
Unsecured		713		—		—		—		7		7
Total commercial loans		10,804		1,713		—		3,601		109		108
Residential mortgage loans
One-to four-family		8,736		6,758		—		6,272		195		177
Construction		—		—		—		—		—		—
Total residential mortgage loans		8,736		6,758		—		6,272		195		177
Consumer loans
Home equity		2,159		1,583		—		1,382		66		64
Auto		11		3		—		7		—		—
Marine		585		267		—		293		1		1
Recreational vehicle		433		120		—		251		13		13
Other		—		—		—		2		1		1
Total consumer loans		3,188		1,973		—		1,935		81		79
Total	$	22,728	$	10,444	$	—	$	11,808	$	385	$	364
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		6,930		4,133		1,193		7,698		143		142
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured		237		172		78		654		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		7,167		4,305		1,271		8,352		143		142
Residential mortgage loans
One-to four-family		10,810		10,727		1,245		11,898		497		457
Construction		—		—		—		—		—		—
Total residential mortgage loans		10,810		10,727		1,245		11,898		497		457
Consumer loans
Home equity		5,390		5,335		426		6,117		310		293
Auto		—		—		—		—		—		—
Marine		108		108		1		144		6		6
Recreational vehicle		639		629		73		691		26		26
Other		—		—		—		—		—		—
Total consumer loans		6,137		6,072		500		6,952		342		325
Total		24,114		21,104		3,016		27,202		982		924
Total impaired loans	$	46,842	$	31,548	$	3,016	$	39,010	$	1,367	$	1,288

The following table presents loans individually evaluated for impairment by class of loans for the year ended December 31, 2015:

Impaired Loans

(Dollars in thousands)

	Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Commercial loans
Multifamily	$	21	$	4	$	4
Nonresidential		1,389		6		6
Land		474		—		—
Construction		69		—		—
Secured		3,700		—		—
Unsecured		—		—		—
Total commercial loans		5,653		10		10
Residential mortgage loans
One-to four-family		4,710		156		149
Construction		—		—		—
Total residential mortgage loans		4,710		156		149
Consumer loans
Home equity		1,491		31		29
Auto		22		—		—
Marine		280		2		2
Recreational vehicle		70		4		4
Other		1		—		—
Total consumer loans		1,864		37		35
Total	$	12,227	$	203	$	194
With a specific allowance recorded
Commercial loans
Multifamily	$	21	$	—	$	—
Nonresidential		5,659		119		117
Land		—		—		—
Construction		379		—		—
Secured		324		—		—
Unsecured		—		—		—
Total commercial loans		6,383		119		117
Residential mortgage loans
One-to four-family		14,324		592		539
Construction		—		—		—
Total residential mortgage loans		14,324		592		539
Consumer loans
Home equity		8,346		402		381
Auto		2		—		—
Marine		41		7		7
Recreational vehicle		783		33		33
Other		2		1		1
Total consumer loans		9,174		443		422
Total		29,881		1,154		1,078
Total impaired loans	$	42,108	$	1,357	$	1,272

Within secured and nonresidential impaired loans, there are two related credits with a total principal balance outstanding of $7.0 million as of December 31, 2015. The source of repayment for the loan resides in funds held in escrow by a court that has administered foreclosure and receivership proceedings surrounding the loan. The loan has been subject to protracted litigation and a reserve of $546,000 was placed on one of the loans in 2015. In 2016, this relationship was reclassified as a nonperforming asset within other assets and is no longer included in loan balances. Home Savings believes that the asset that remains no longer represents a loan. Other than the funds held in the Receiver Estate, there are no additional assets to which Home Savings can assert a claim against as the corporate borrowers have been liquidated and dissolved, and the individual guarantors have no remaining assets. In December 2017, an appellate court ruled that a portion of the proceeds should be awarded to another claimant. Subsequently the asset was written down $2.3 million, through other expenses, to $4.1 million to reflect the court ruling. It is the Company’s intent to continue to pursue a full recovery. As a result, it is most appropriate to categorize these proceeds as a nonperforming “other asset” identified as a current receivable from the court.

The Company reclassifies a collateralized mortgage loan and consumer loans secured by real estate to real estate owned and other repossessed assets once it has either obtained legal title to the real estate collateral or the borrower voluntarily conveys all interest in the real property to the Bank to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The table below presents loans that are in the process of foreclosure at December 31, 2017 and December 31, 2016, but legal title, deed in lieu of foreclosure or similar legal agreement to the property has not yet been obtained:

	December 31, 2017				December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Recorded Investment
Mortgage loans in the process of foreclosure	$	2,588	$	2,428	$	3,025	$	2,576
Consumer loans in the process of foreclosure		613		608		1,069		795

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 December 31, 2017:

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

As of December 31, 2017

	Nonaccrual		Loans past due over 90 days and still accruing
	(Dollars in thousands)
Commercial loans
Multifamily	$	275	$	—
Nonresidential		1,218		—
Land		9		—
Construction		—		—
Secured		1,505		—
Unsecured		—		—
Total commercial loans		3,007		—
Residential mortgage loans
One-to four-family		6,076		—
Construction		—		—
Total residential mortgage loans		6,076		—
Consumer Loans
Home equity		2,074		—
Auto		155		—
Marine		181		—
Recreational vehicle		208		—
Other		2		—
Total consumer loans		2,620		—
Total nonaccrual loans and loans past due over 90 days and still accruing	$	11,703	$	—

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 December 31, 2016:

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

As of December 31, 2016

	Nonaccrual		Loans past due over 90 days and still accruing
	(Dollars in thousands)
Commercial loans
Multifamily	$	—	$	—
Nonresidential		3,546		—
Land		34		—
Construction		—		—
Secured		361		—
Unsecured		—		—
Total commercial loans		3,941		—
Residential mortgage loans
One-to four-family		6,084		—
Construction		—		—
Total residential mortgage loans		6,084		—
Consumer Loans
Home equity		1,936		—
Auto		31		—
Marine		267		—
Recreational vehicle		178		—
Other		2		—
Total consumer loans		2,414		—
Total nonaccrual loans and loans past due over 90 days and still accruing	$	12,439	$	—

The following tables present an age analysis of past-due loans, segregated by class of loans as of December 31, 2017:

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
Commercial loans
Multifamily	$	—	$	—	$	275	$	275	$	120,205	$	120,480
Nonresidential		20		—		1,199		1,219		380,392		381,611
Land		—		—		9		9		15,153		15,162
Construction		—		—		—		—		116,863		116,863
Secured		114		4		110		228		177,766		177,994
Unsecured		—		—		—		—		10,506		10,506
Total commercial loans		134		4		1,593		1,731		820,885		822,616
Residential mortgage loans
One-to four-family		4,704		1,523		4,804		11,031		859,908		870,939
Construction		—		—		—		—		49,092		49,092
Total residential mortgage loans		4,704		1,523		4,804		11,031		909,000		920,031
Consumer Loans:
Home equity		1,184		120		1,793		3,097		192,755		195,852
Automobile		187		100		82		369		63,995		64,364
Marine		—		—		181		181		1,345		1,526
Recreational vehicle		47		—		165		212		5,484		5,696
Other		31		3		2		36		6,020		6,056
Total consumer loans		1,449		223		2,223		3,895		269,599		273,494
Total loans	$	6,287	$	1,750	$	8,620	$	16,657	$	1,999,484	$	2,016,141

The following tables present an age analysis of past-due loans, segregated by class of loans as of December 31, 2016:

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
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	93,597	$	93,597
Nonresidential		3,511		—		61		3,572		227,829		231,401
Land		—		—		34		34		8,339		8,373
Construction		—		—		—		—		68,158		68,158
Secured		—		—		361		361		94,982		95,343
Unsecured		—		—		—		—		7,386		7,386
Total commercial loans		3,511		—		456		3,967		500,291		504,258
Residential mortgage loans
One-to four-family		3,774		1,717		5,461		10,952		751,974		762,926
Construction		—		—		—		—		35,695		35,695
Total residential mortgage loans		3,774		1,717		5,461		10,952		787,669		798,621
Consumer Loans:
Home equity		941		458		1,669		3,068		161,986		165,054
Automobile		130		—		3		133		39,476		39,609
Marine		—		—		267		267		1,529		1,796
Recreational vehicle		131		347		—		478		7,124		7,602
Other		1		3		2		6		2,531		2,537
Total consumer loans		1,203		808		1,941		3,952		212,646		216,598
Total loans	$	8,488	$	2,525	$	7,858	$	18,871	$	1,500,606	$	1,519,477

The following table presents loans by class modified as TDRs that occurred during the year ended December 31, 2017:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(In thousands)
Commercial loans
Multifamily		—	$	—	$	—
Nonresidential		2		1,379		1,379
Land		—		—		—
Construction		—		—		—
Secured		—		—		—
Unsecured		—		—		—
Total commercial loans		2		1,379		1,379
Residential mortgage loans
One-to four-family		3		309		350
Construction		—		—		—
Total residential mortgage loans		3		309		350
Consumer loans
Home equity		—		—		—
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		1		115		115
Other		—		—		—
Total consumer loans		1		115		115
Total restructured loans		6	$	1,803	$	1,844

The TDRs described above increased the allowance for loan losses by $7,000, and resulted in no charge-offs during the twelve months ended December 31, 2017.

The following table presents loans by class modified as TDRs that occurred during the year ended December 31, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(Dollars in thousands)
Commercial loans
Multifamily		—	$	—	$	—
Nonresidential		4		6,134		6,140
Land		—		—		—
Construction		—		—		—
Secured		—		—		—
Unsecured		—		—		—
Total commercial loans		4		6,134		6,140
Residential mortgage loans
One-to four-family		8		812		853
Construction		—		—		—
Total residential mortgage loans		8		812		853
Consumer loans
Home equity		4		178		182
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		—		—		—
Total consumer loans		4		178		182
Total restructured loans		16	$	7,124	$	7,175

The TDRs described above increased the allowance for loan losses by $39,000, and resulted in no charge-offs during the twelve months ended December 31, 2016.

The following table presents loans by class modified as TDRs that occurred during the year ended December 31, 2015:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(Dollars in thousands)
Commercial loans
Multifamily		—	$	—	$	—
Nonresidential		—		—		—
Land		—		—		—
Construction		—		—		—
Secured		—		—		—
Unsecured		—		—		—
Total commercial loans		—		—		—
Residential mortgage loans
One-to four-family		14		1,283		1,337
Construction		—		—		—
Total residential mortgage loans		14		1,283		1,337
Consumer loans
Home equity		14		844		845
Auto		—		—		—
Marine		—		—		—
Recreational vehicle		—		—		—
Other		1		28		8
Total consumer loans		15		872		853
Total restructured loans		29	$	2,155	$	2,190

The TDRs described above increased the allowance for loan losses by $135,000, and resulted in no of charge-offs during the twelve months ended December 31, 2015.

During the periods ended December 31, 2017, 2016 and 2015, the terms of certain loans were modified as TDRs. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. Modifications involving a reduction of the stated interest rate of a loan were for periods ranging from six months to 2 years. Modifications involving an extension of the maturity date were for periods ranging from six months to ten years.

As of December 31, 2017 and December 31, 2016, the Company has a recorded investment in troubled debt restructurings of $19.8 million and $26.6 million, respectively. The Company has allocated $1.6 million of specific reserves to customers whose loan terms were modified in TDRs as of December 31, 2017. The Company had allocated $3.0 million of specific reserves to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2016. The Company committed to lend additional amounts totaling up to $37,000 and $31,000 at December 31, 2017 and December 31, 2016, respectively.

TDR loans that were on nonaccrual status aggregated $2.4 million and $6.6 million at December 31, 2017 and December 31, 2016, respectively. Such loans are considered nonperforming loans. TDR loans that were accruing according to their terms aggregated $17.9 million and $20.0 million at December 31, 2017 and December 31, 2016, respectively.

There were no loans modified as TDRs for which there was a payment default within twelve months following the modification during the period ended December 31, 2017.

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

The terms of certain other loans were modified during the period ended December 31, 2017, but they did not meet the definition of a TDR. 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 insignificant.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the period ended December 31, 2016:

	Number of loans		Recorded Investment
			(Dollars in thousands)
Commercial loans
Multifamily		—	$	—
Nonresidential		1		3,603
Land		—		—
Construction		—		—
Secured		—		—
Unsecured		—		—
Total commercial loans		1		3,603
Residential mortgage loans
One-to four-family		1		3
Construction		—		—
Total residential mortgage loans		1		3
Consumer loans
Home equity		—		—
Auto		—		—
Marine		—		—
Recreational vehicle		—		—
Other		—		—
Total consumer loans		—		—
Total restructured loans		2	$	3,606

The TDRs that subsequently defaulted described above resulted in $350,000 charge-offs during the twelve months ended December 31, 2016, and an $820,000 increase in the provision for loan losses. The TDR’s described above were resolved in January 2017, and are no longer in the Company’s loan portfolio.

The terms of certain other loans were modified during the period ended December 31, 2016, but they did not meet the definition of a TDR. 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 insignificant.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the period ended December 31, 2015:

	Number of loans		Recorded Investment
			(Dollars in thousands)
Commercial loans
Multifamily		—	$	—
Nonresidential		—		—
Land		—		—
Construction		—		—
Secured		—		—
Unsecured		—		—
Total commercial loans		—		—
Residential mortgage loans
One-to four-family		2		29
Construction		—		—
Total residential mortgage loans		2		29
Consumer loans
Home equity		1		40
Auto		—		—
Marine		—		—
Recreational vehicle		—		—
Other		1		8
Total consumer loans		2		48
Total restructured loans		4	$	77

The TDRs that subsequently defaulted described above resulted in no charge-offs during the twelve months ended December 31, 2015, and had no effect on the provision for loan losses.

The terms of certain other loans were modified during the period ended December 31, 2015, but they did not meet the definition of a TDR. 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 insignificant.

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 December 31, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

December 31, 2017

(Dollars in thousands)

	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Commercial Loans
Multifamily	$	118,716	$	1,334	$	430	$	—	$	—	$	430	$	120,480
Nonresidential		367,553		6,394		7,664		—		—		7,664		381,611
Land		15,153		—		9		—		—		9		15,162
Construction		116,460		403		—		—		—		—		116,863
Secured		149,912		6,092		21,990		—		—		21,990		177,994
Unsecured		10,412		—		94		—		—		94		10,506
Total commercial loans		778,206		14,223		30,187		—		—		30,187		822,616
Residential mortgage loans
One-to four-family		861,971		1,585		7,383		—		—		7,383		870,939
Construction		49,092		—		—		—		—		—		49,092
Total residential mortgage loans		911,063		1,585		7,383		—		—		7,383		920,031
Consumer Loans
Home equity		193,733		—		2,119		—		—		2,119		195,852
Auto		64,209		—		155		—		—		155		64,364
Marine		1,345		—		181		—		—		181		1,526
Recreational vehicle		5,488		—		208		—		—		208		5,696
Other		6,051		—		5		—		—		5		6,056
Total consumer loans		270,826		—		2,668		—		—		2,668		273,494
Total loans	$	1,960,095	$	15,808	$	40,238	$	—	$	—	$	40,238	$	2,016,141

December 31, 2016

(Dollars in thousands)

	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Commercial Loans
Multifamily	$	89,468	$	3,564	$	565	$	—	$	—	$	565	$	93,597
Nonresidential		217,204		6,037		8,160		—		—		8,160		231,401
Land		8,339		—		34		—		—		34		8,373
Construction		68,158		—		—		—		—		—		68,158
Secured		89,756		3,420		2,167		—		—		2,167		95,343
Unsecured		7,291		—		95		—		—		95		7,386
Total commercial loans		480,216		13,021		11,021		—		—		11,021		504,258
Residential mortgage loans
One-to four-family		754,996		104		7,826		—		—		7,826		762,926
Construction		35,695		—		—		—		—		—		35,695
Total residential mortgage loans		790,691		104		7,826		—		—		7,826		798,621
Consumer Loans
Home equity		163,101		—		1,953		—		—		1,953		165,054
Auto		39,577		1		31		—		—		31		39,609
Marine		1,530		—		266		—		—		266		1,796
Recreational vehicle		7,424		—		178		—		—		178		7,602
Other		2,535		—		2		—		—		2		2,537
Total consumer loans		214,167		1		2,430		—		—		2,430		216,598
Total loans	$	1,485,074	$	13,126	$	21,277	$	—	$	—	$	21,277	$	1,519,477

Directors and officers of the Company are loan customers in the ordinary course of business. The following describes loans to officers and/or directors of the Company:

	(Dollars in thousands)
Balance as of December 31, 2016	$	927
New loans to officers and/or directors		7,532
Loan payments during 2017		(89	)
Increase due to changes in officers and/or directors		189
Balance as of December 31, 2017	$	8,559

Purchased Credit Impaired Loans:

The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows:

	December 31, 2017
	(Dollars in thousands)
Commercial loans	$	1,194
Residential mortgage loans		—
Consumer loans		—
Outstanding balance	$	1,194

Carrying amount, net of allowance of $55	$	1,139

Accretable yield, or income expected to be collected, is as follows:

	Year Ended
	December 31, 2017
	(Dollars in thousands)
Beginning of period	$	—
New loans purchased		158
Accretion of income		64
Balance at December 31	$	94

For the purchased credit impaired loans disclosed above, there was an increase of $55,000 in the allowance for loan losses for the year ended December 31, 2017.

Purchased credit impaired loans purchased during the year ended December 31, 2017 for which it was probable at acquisition that all contractually required payments would not be collected are as follows:

	December 31, 2017
	(Dollars in thousands)
Contractually required payments receivable of loans purchased during the year:
Commercial loans	$	4,499
Residential mortgage loans		—
Consumer loans		—
	$	4,499

Cash flow expected to be collected at acquisition	$	1,955
Fair value of acquired loans at acquisition		1,797

Income is not recognized on purchased credit impaired loans if the Company cannot reasonable estimate cash flows expected to be collected. The carrying amounts of such loans are as follows:

	December 31, 2017
	(Dollars in thousands)
Loans at beginning of year	$	—
Loans purchased during the year		1,797
Loans at end of period		1,194