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ALLOWANCE FOR LOAN LOSSES
 3 Months Ended
Mar. 31, 2018
ALLOWANCE FOR LOAN LOSSES [Abstract]  
ALLOWANCE FOR LOAN LOSSES
9.   ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses may consist of specific and general components. At March 31, 2018, the Bank’s periodic evaluation of its allowance for loan losses (specific or general) was comprised of two primary components: (1) impaired loans and (2) pass graded loans. Within these components, the Company has identified the following portfolio segments for purposes of assessing its allowance for loan losses: (1) real estate loans; (2) C&I loans; and (3) consumer loans.  Within these segments, the Bank analyzes the allowance for loan losses based upon the underlying collateral type (classes). Smaller balance homogeneous real estate loans, such as condominium or cooperative apartment and one-to-four family residential real estate loans with balances equal to or less than the FNMA Limits, and consumer loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Impaired Loan Component

All loans that are deemed to meet the definition of impaired are individually evaluated for impairment. Impairment is typically measured using the difference between the outstanding loan principal balance and either: (1) the likely realizable value of a note sale; (2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected to come from liquidation of the collateral; or (3) the present value of estimated future cash flows (using the loan's pre-modification rate in the case of certain performing TDRs).  For impaired loans on non-accrual status, either of the initial two measurements is utilized.

All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any.  If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, the likely realizable net proceeds from either a note sale or the liquidation of the collateral are generally considered when measuring impairment.  While measured impairment is generally charged off immediately, impairment attributed to a reduction in the present value of expected cash flows of a performing TDR is generally reflected as an allocated reserve within the allowance for loan losses. At March 31, 2018 and December 31, 2017, there were no allocated reserves related to TDRs within the allowance for loan losses.

Non-Impaired Loan Component

The Bank initially looks to the underlying collateral type when determining the allowance for loan losses associated with non-impaired real estate loans.  The following underlying collateral types are analyzed separately: 1) one-to-four family residential and condominium or cooperative apartment; 2) multifamily residential and residential mixed use; 3) commercial mixed use real estate, 4) commercial real estate; 5) ADC; and 6) C&I.  Within the analysis of each underlying collateral type, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for non-impaired real estate loans:

(i)
Charge-off experience (including peer charge-off experience)
(ii)
Economic conditions
(iii)
Underwriting standards or experience
(iv)
Loan concentrations
(v)
Regulatory climate
(vi)
Nature and volume of the portfolio
(vii)
Changes in the quality and scope of the loan review function

The following is a brief synopsis of the manner in which each element is considered:

(i) Charge-off experience - Loans within the non-impaired loan portfolio are segmented by significant common characteristics, against which historical loss rates are applied to reflect probable incurred loss percentages.  The Bank also reviews and considers the charge-off experience of peer banks in its lending marketplace in order to determine whether probable incurred losses that could take a longer period to flow through its allowance for loan losses possibly exist.

(ii) Economic conditions - The Bank assigned a loss allocation to its entire non-impaired real estate loan portfolio based, in part, upon a review of economic conditions affecting the local real estate market. Specifically, the Bank considered both the level of, and recent trends in: 1) the local and national unemployment rate, 2) residential and commercial vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank’s loan portfolio.
 
(iii) Underwriting standards or experience - Underwriting standards are reviewed to ensure that changes in the Bank's lending policies and practices are adequately evaluated for risk and reflected in its analysis of potential credit losses.  Loss expectations associated with changes in the Bank’s lending policies and practices, if any, are then incorporated into the methodology.

(iv) Loan concentrations - The Bank regularly reviews its loan concentrations (borrower, collateral type, location, etc.) in order to ensure that heightened risk has not evolved that has not been captured through other factors.  The risk component of loan concentrations is regularly evaluated for reserve adequacy.

(v) Regulatory climate – Consideration is given to public statements made by the banking regulatory agencies that have a potential impact on the Bank’s loan portfolio and allowance for loan losses.

(vi) Nature and volume of the portfolio – The Bank considers any significant changes in the overall nature and volume of its loan portfolio.

(vii) Changes in the quality and scope of the loan review function – The Bank considers the potential impact upon its allowance for loan losses of any adverse change in the quality and scope of the loan review function.

Consumer Loans

Due to their small individual balances, the Bank does not evaluate individual consumer loans for impairment.  Loss percentages are applied to aggregate consumer loans based upon both their delinquency status and loan type.  These loss percentages are derived from a combination of the Company’s historical loss experience and/or nationally published loss data on such loans.  Consumer loans in excess of 120 days delinquent are typically fully charged off against the allowance for loan losses.

 Reserve for Loan Commitments

At both March 31, 2018 and December 30, 2017, respectively, the Bank maintained a reserve of $25 associated with unfunded loan commitments accepted by the borrower.  This reserve is determined based upon the outstanding volume of loan commitments at each period end.  Any increases or reductions in this reserve are recognized in periodic non-interest expense.
 
The following tables present data regarding the allowance for loan losses activity for the periods indicated:

  
At or for the Three Months Ended March 31, 2018
 
     
Real Estate Loans
     
Consumer
Loans
 
  
One-to-Four Family
Residential,
Including
Condominium and
Cooperative
Apartment
  
Multifamily
 Residential and
Residential
Mixed-Use
  
Commercial
Mixed-Use
Real Estate
  
Commercial
Real Estate
  
ADC
  
Total
Real Estate
   
C&I
 
Beginning balance
 
$
116
  
$
15,219
  
$
1,388
  
$
2,147
  
$
123
  
$
18,993
  
$
2,021
  
$
19
 
Provision (credit) for loan losses
  
-
   
(223
)
  
6
   
(19
)
  
3
   
(233
)
  
424
   
2
 
Charge-offs
  
(15
)
  
-
   
(4
)
  
-
   
-
   
(19
)
  
-
   
(4
)
Recoveries
  
1
   
-
   
-
   
-
   
-
   
1
   
-
   
-
 
Ending balance
 
$
102
  
$
14,996
  
$
1,390
  
$
2,128
  
$
126
  
$
18,742
  
$
2,445
  
$
17
 

  
At or for the Three Months Ended March 31, 2017
 
  
Real Estate Loans
     
Consumer
Loans
 
  
One- to Four Family
Residential,
Including
Condominium and
Cooperative
Apartment
  
Multifamily
Residential and
Residential
Mixed- Use
  
Commercial
Mixed-Use
Real Estate
  
Commercial
Real Estate
  
Total
Real Estate
   
C&I
 
Beginning balance
 
$
145
  
$
16,555
  
$
1,698
  
$
2,118
  
$
20,516
  
$
-
  
$
20
 
Provision (credit) for loan losses
  
(4
)
  
134
   
(109
)
  
(23
)
  
(2
)
  
453
   
(1
)
Charge-offs
  
(13
)
  
(69
)
  
-
   
-
   
(82
)
  
-
   
-
 
Recoveries
  
1
   
45
   
-
   
4
   
50
   
-
   
-
 
Ending balance
 
$
129
  
$
16,665
  
$
1,589
  
$
2,099
  
$
20,482
  
$
453
  
$
19
 
 
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 evaluation method as of the dates indicated:

  
At March 31, 2018
 
     
Real Estate Loans
   
C&I
 
 
Consumer
Loans
 
  
One-to-Four Family
Residential,
Including
Condominium and
Cooperative
Apartment
  
Multifamily
Residential and
Residential
Mixed-Use
  
Commercial
Mixed-Use
Real Estate
  
Commercial
Real Estate
  
ADC
  
Total
Real Estate
 
Allowance for loan losses:
                         
Individually evaluated for impairment
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
294
  
$
-
 
Collectively evaluated for impairment
  
102
   
14,996
   
1,390
   
2,128
   
126
   
18,742
   
2,151
   
17
 
Total ending allowance balance
 
$
102
  
$
14,996
  
$
1,390
  
$
2,128
  
$
126
  
$
18,742
  
$
2,445
  
$
17
 
                                 
Loans:
                                
Individually evaluated for impairment
 
$
20
  
$
604
  
$
4,242
  
$
3,279
  
$
-
  
$
8,145
  
$
1,179
  
$
-
 
Collectively evaluated for impairment
  
62,576
   
4,280,347
   
397,927
   
602,147
   
9,413
   
5,352,410
   
144,639
   
1,053
 
Total ending loans balance
 
$
62,596
  
$
4,280,951
  
$
402,169
  
$
605,426
  
$
9,413
  
$
5,360,555
  
$
145,818
  
$
1,053
 

  
At December 31, 2017
 
     
Real Estate Loans
     
Consumer
Loans
 
  
One-to-Four Family
Residential,
Including
Condominium and
Cooperative
Apartment
  
Multifamily
Residential and
Residential
Mixed-Use
  
Commercial
Mixed-Use
Real Estate
  
Commercial
Real Estate
  
ADC
  
Total Real Estate
   
C&I
 
Allowance for loan losses:
                         
Individually evaluated for impairment
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
 
Collectively evaluated for impairment
  
116
   
15,219
   
1,388
   
2,147
   
123
   
18,993
   
2,021
   
19
 
Total ending allowance balance
 
$
116
  
$
15,219
  
$
1,388
  
$
2,147
  
$
123
  
$
18,993
  
$
2,021
  
$
19
 
                                 
Loans:
                                
Individually evaluated for impairment
 
$
22
  
$
619
  
$
4,267
  
$
3,296
  
$
-
  
$
8,204
  
$
-
  
$
-
 
Collectively evaluated for impairment
  
63,073
   
4,380,561
   
397,288
   
605,752
   
9,189
   
5,455,863
   
136,671
   
1,379
 
Total ending loans balance
 
$
63,095
  
$
4,381,180
  
$
401,555
  
$
609,048
  
$
9,189
  
$
5,464,067
  
$
136,671
  
$
1,379
 
 
The following tables summarize impaired real estate loans with no related allowance recorded as of the dates indicated (by collateral type within the real estate loan segment):
 
  
At March 31, 2018
  
At December 31, 2017
 
  
Unpaid
Principal
Balance
  
Recorded
Investment(1)
  
Related
Allowance
  
Unpaid
Principal
Balance
  
Recorded
Investment(1)
  
Related
Allowance
 
                   
With no related allowance recorded:
                  
One-to-four family residential, including condominium and cooperative apartment
 
$
20
  
$
20
  
$
-
  
$
22
  
$
22
  
$
-
 
Multifamily residential and residential mixed-use
  
604
   
604
   
-
   
619
   
619
   
-
 
Commercial mixed-use real estate
  
4,242
   
4,242
   
-
   
4,267
   
4,267
   
-
 
Commercial real estate
  
3,279
   
3,279
   
-
   
3,296
   
3,296
   
-
 
Total with no related allowance recorded
  
8,145
   
8,145
   
-
   
8,204
   
8,204
   
-
 
                         
With an allowance recorded:
                        
C&I
  
1,179
   
1,179
   
294
   
-
   
-
   
-
 
Total with an allowance recorded
  
1,179
   
1,179
   
294
   
-
   
-
   
-
 
Total
 
$
9,324
  
$
9,324
  
$
294
  
$
8,204
  
$
8,204
  
$
-
 
 
(1)
The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.

The following table presents information for impaired loans for the periods indicated:

  
Three Months Ended
March 31, 2018
  
Three Months Ended
March 31, 2017
 
  
Average
Recorded
Investment(1)
  
Interest
Income
Recognized
  
Average
Recorded
 Investment(1)
  
Interest
Income
Recognized
 
             
With no related allowance recorded:
            
One-to-four family residential, including condominium and cooperative apartment
 
$
21
  
$
-
  
$
404
  
$
7
 
Multifamily residential and residential mixed-use
  
611
   
12
   
3,302
   
46
 
Commercial mixed-use real estate
  
4,255
   
43
   
4,773
   
45
 
Commercial real estate
  
3,287
   
33
   
3,355
   
34
 
Total with no related allowance recorded
  
8,174
   
88
   
11,834
   
132
 
                 
With an allowance recorded:
                
C&I
  
589
   
-
   
-
   
-
 
Total with no related allowance recorded
 
$
8,763
  
$
88
  
$
11,834
  
$
132
 
 
(1)
The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.