LOANS

12 Months Ended

Dec. 31, 2015

Loans and Leases Receivable Disclosure [Abstract]

LOANS

NOTE 3 - LOANS

The components of loans are as follows:

	At December 31,
	2015			2014
Real estate loans:
One-to-four family	$	110,792,710		$	117,591,822
Multi-family		41,182,067			41,391,862
Commercial		153,634,426			129,415,314
Construction and land		13,588,626			28,590,745
		319,197,829			316,989,743
Commercial business		89,743,511			73,984,867
Consumer:
Home equity		13,656,008			13,523,985
Automobile and other		3,523,696			1,772,431
		17,179,704			15,296,416
Total gross loans		426,121,044			406,271,026
Deferred loan origination costs, net		228,764			194,820
Allowance for loan losses		(5,886,225	)		(5,561,442	)
Loans, net	$	420,463,583		$	400,904,404

On occasion, the Company originates loans secured by single-family dwellings with loan to value ratios exceeding 90%. As of December 31, 2015 and December 31, 2014, these loans represented 2.07% and 2.17%, respectively, of our combined one-to-four family and home equity portfolios. The Company does not consider the level of such loans to be a significant concentration of credit as of December 31, 2015 or December 31, 2014.

The recorded investment in loans does not include accrued interest and loan origination fees due to immateriality. The allowance for loan losses does not include a component for undisbursed loan commitments; rather, this amount is included in other liabilities.

The following tables present our past-due loans, segregated by class:

December 31, 2015
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	331,479	$	259,240	$	33,839	$	624,558	$	110,168,152	$	110,792,710	$	-
Multi-family		-		-		-		-		41,182,067		41,182,067		-
Commercial		-		-		111,706		111,706		153,522,720		153,634,426		-
Construction and land		-		-		-		-		13,588,626		13,588,626		-
		331,479		259,240		145,545		736,264		318,461,565		319,197,829		-
Commercial business		-		-		87,254		87,254		89,656,257		89,743,511		-
Consumer:
Home equity		57,625		-		89,407		147,032		13,508,976		13,656,008		-
Automobile and other		500		-		-		500		3,523,196		3,523,696		-
		58,125		-		89,407		147,532		17,032,172		17,179,704		-
Total	$	389,604	$	259,240	$	322,206	$	971,050	$	425,149,994	$	426,121,044	$	-

December 31, 2014
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	843,185	$	166,965	$	408,228	$	1,418,378	$	116,173,444	$	117,591,822	$	-
Multi-family		-		-		-		-		41,391,862		41,391,862		-
Commercial		100,220		-		29,810		130,030		129,285,284		129,415,314		-
Construction and land		-		-		-		-		28,590,745		28,590,745		-
		943,405		166,965		438,038		1,548,408		315,441,335		316,989,743		-
Commercial business		-		25,095		-		25,095		73,959,772		73,984,867		-
Consumer:
Home equity		41,930		-		48,088		90,018		13,433,967		13,523,985		-
Automobile and other		-		-		-		-		1,772,431		1,772,431		-
		41,930		-		48,088		90,018		15,206,398		15,296,416		-
Total	$	985,335	$	192,060	$	486,126	$	1,663,521	$	404,607,505	$	406,271,026	$	-

All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or collection of additional interest is deemed insufficient to warrant further accrual. Generally, we place all loans 90 days or more past due on non-accrual status. However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed. In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off. When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

Year-end non-accrual loans, segregated by class, are as follows:

	At December 31,
	2015		2014
Real estate loans:
One-to-four family	$	601,833	$	589,170
Multi-family		995,659		1,340,779
Commercial		1,245,023		1,242,009
Construction and land		-		1,431,619
		2,842,515		4,603,577
Commercial business		263,233		25,095
Consumer:
Home equity		124,627		48,088
Automobile and other		8,558		-
		133,185		48,088
Total non-accrual loans	$	3,238,933	$	4,676,760

The following tables present the activity in the allowance for loan losses for the years ended December 31, 2015 and 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,119,762	$	(25,258	)	$	21,576	$	23,650		$	1,139,730
Multi-family		436,833		-			11,753		25,782			474,368
Commercial		1,650,290		(79,248	)		11,923		401,123			1,984,088
Construction and land		1,194,917		-			811,350		(1,508,275	)		497,992
		4,401,802		(104,506	)		856,602		(1,057,720	)		4,096,178
Commercial business		951,215		-			73,761		409,711			1,434,687
Consumer
Home equity		198,150		-			-		81,520			279,670
Automobile and other		10,275		(1,900	)		826		66,489			75,690
		208,425		(1,900	)		826		148,009			355,360
Total	$	5,561,442	$	(106,406	)	$	931,189	$	(500,000	)	$	5,886,225

Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,424,663	$	(263,258	)	$	466,287	$	(507,930	)	$	1,119,762
Multi-family		661,358		-			-		(224,525	)		436,833
Commercial		1,454,455		(1,876	)		-		197,711			1,650,290
Construction and land		668,085		-			230,000		296,832			1,194,917
		4,208,561		(265,134	)		696,287		(237,912	)		4,401,802
Commercial business		1,219,080		(190,255	)		13,048		(90,658	)		951,215
Consumer
Home equity		116,478		(43,519	)		9,402		115,789			198,150
Automobile and other		46,549		-			945		(37,219	)		10,275
		163,027		(43,519	)		10,347		78,570			208,425
Total	$	5,590,668	$	(498,908	)	$	719,682	$	(250,000	)	$	5,561,442

The following tables separate the allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively as of December 31, 2015 and 2014:

December 31, 2015
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	116,724	$	1,023,006	$	1,139,730	$	905,974	$	109,886,736	$	110,792,710
Multi-family		-		474,368		474,368		995,659		40,186,408		41,182,067
Commercial		183,966		1,800,122		1,984,088		2,735,652		150,898,774		153,634,426
Construction and land		-		497,992		497,992		186,888		13,401,738		13,588,626
		300,690		3,795,488		4,096,178		4,824,173		314,373,656		319,197,829
Commercial business		259,787		1,174,900		1,434,687		586,103		89,157,408		89,743,511
Consumer:
Home equity		49,782		229,888		279,670		141,649		13,514,359		13,656,008
Automobile and other		-		75,690		75,690		8,558		3,515,138		3,523,696
		49,782		305,578		355,360		150,207		17,029,497		17,179,704
Total	$	610,259	$	5,275,966	$	5,886,225	$	5,560,483	$	420,560,561	$	426,121,044

December 31, 2014
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	91,688	$	1,028,074	$	1,119,762	$	1,266,717	$	116,325,105	$	117,591,822
Multi-family		-		436,833		436,833		1,340,779		40,051,083		41,391,862
Commercial		155,863		1,494,427		1,650,290		2,267,362		127,147,952		129,415,314
Construction and land		-		1,194,917		1,194,917		1,639,030		26,951,715		28,590,745
		247,551		4,154,251		4,401,802		6,513,888		310,475,855		316,989,743
Commercial business		115,446		835,769		951,215		140,541		73,844,326		73,984,867
Consumer:
Home equity		9,902		188,248		198,150		65,452		13,458,533		13,523,985
Automobile and other		-		10,275		10,275		-		1,772,431		1,772,431
		9,902		198,523		208,425		65,452		15,230,964		15,296,416
Total	$	372,899	$	5,188,543	$	5,561,442	$	6,719,881	$	399,551,145	$	406,271,026

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. The risk category of homogeneous loans such as consumer loans and smaller balance loans is evaluated when the loan becomes delinquent. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates.

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

Pass - A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring.

Special Mention - A special mention asset has potential weaknesses that deserve management’s close attention. The asset may also be subject to a weak or speculative market or to economic conditions, which may, in the future adversely affect the obligor. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard - A substandard asset is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the institution will sustain some loss of principal and/or interest if the deficiencies are not corrected. It is not necessary for a loan to have an identifiable loss potential in order to receive this rating.

Doubtful - An asset that has all the weaknesses inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely likely, but it is not identified at this point due to pending factors.

Loss - An asset, or portion thereof, classified as loss is considered uncollectible and of such little value that its continuance on the Company’s books as an asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; rather, there is much doubt about whether, how much, or when the recovery would occur. As such, it is not practical or desirable to defer the write-off. Therefore, there is no balance to report at December 31, 2015 or 2014.

The following tables present our credit quality indicators, segregated by class, as of December 31, 2015 and 2014:

December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	109,161,526	$	772,127	$	859,057	$	-	$	110,792,710
Multi-family		37,571,827		2,614,581		995,659		-		41,182,067
Commercial		143,837,755		5,295,878		4,500,793		-		153,634,426
Construction and land		13,143,977		-		444,649		-		13,588,626
		303,715,085		8,682,586		6,800,158		-		319,197,829
Commercial business		85,604,981		3,323,003		815,527		-		89,743,511
Consumer:
Home equity		13,504,552		-		68,241		83,215		13,656,008
Automobile and other		3,510,289		-		4,849		8,558		3,523,696
		17,014,841		-		73,090		91,773		17,179,704
Total	$	406,334,907	$	12,005,589	$	7,688,775	$	91,773	$	426,121,044

December 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	116,218,120	$	280,067	$	936,372	$	157,263	$	117,591,822
Multi-family		37,340,022		2,711,061		1,340,779		-		41,391,862
Commercial		113,447,231		12,016,499		3,951,584		-		129,415,314
Construction and land		26,892,171		-		1,698,574		-		28,590,745
		293,897,544		15,007,627		7,927,309		157,263		316,989,743
Commercial business		73,372,401		471,925		140,541		-		73,984,867
Consumer:
Home equity		13,444,685		-		79,300		-		13,523,985
Automobile and other		1,772,431		-		-		-		1,772,431
		15,217,116		-		79,300		-		15,296,416
Total	$	382,487,061	$	15,479,552	$	8,147,150	$	157,263	$	406,271,026

The following tables provide details of impaired loans, segregated by class, as of and for the periods indicated. The unpaid contractual balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.

	As of December 31, 2015						As of December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Real estate loans:
One-to-four family	$	648,750	$	648,750	$	-	$	551,510	$	467,191	$	-
Multi-family		1,478,137		995,659		-		1,823,257		1,340,779		-
Commercial		2,246,797		2,193,291		-		768,533		768,533		-
Construction and land		186,888		186,888		-		3,412,264		1,639,030		-
		4,560,572		4,024,588		-		6,555,564		4,215,533		-
Commercial business		87,254		87,254		-		215,350		25,095		-
Consumer:
Home equity		52,242		52,242		-		55,550		55,550		-
Automobile and other		8,558		8,558		-		-		-		-
		60,800		60,800		-		55,550		55,550		-
Subtotal	$	4,708,626	$	4,172,642	$	-	$	6,826,464	$	4,296,178	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	257,224	$	257,224	$	116,724	$	851,010	$	799,526	$	91,688
Commercial		685,759		542,361		183,966		1,691,064		1,498,829		155,863
		942,983		799,585		300,690		2,542,074		2,298,355		247,551
Commercial business		498,849		498,849		259,787		115,446		115,446		115,446
Consumer:
Home equity		89,407		89,407		49,782		9,902		9,902		9,902
Subtotal		1,531,239		1,387,841		610,259		2,667,422		2,423,703		372,899
Total	$	6,239,865	$	5,560,483	$	610,259	$	9,493,886	$	6,719,881	$	372,899

	For the year ended December 31, 2015						For the year ended December 31, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	710,678	$	2,200	$	-	$	633,963	$	2,306	$	-
Multi-family		1,123,043		30		-		1,309,419		30		-
Commercial		1,417,242		26,003		-		853,898		7,709		-
Construction and land		745,332		2,144		-		1,183,097		2,376		-
		3,996,295		30,377		-		3,980,377		12,421		-
Commercial business		22,470		389		-		345,137		-		-
Consumer:
Home equity		53,926		1,096		-		106,734		1,101		-
Automobile and other		1,712		-		-		-		-		-
		55,638		1,096		-		106,734		1,101		-
Subtotal	$	4,074,403	$	31,862	$	-	$	4,432,248	$	13,522	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	481,678	$	8,968	$	-	$	667,999	$	11,874	$	-
Multi-family		-		-		-		414,443		-		-
Commercial		933,199		8,823		-		1,367,490		18,584		-
Construction and land		-		2,430		-		53,062		2,430		-
		1,414,877		20,221		-		2,502,994		32,888		-
Commercial business		305,930		11,498		-		121,785		8,577		-
Consumer:
Home equity		58,779		68		-		2,475		-		-
Automobile and other		394		-		-		-		-		-
		59,173		68		-		2,475		-		-
Subtotal		1,779,980		31,787		-		2,627,254		41,465		-
Total	$	5,854,383	$	63,649	$	-	$	7,059,502	$	54,987	$	-

Troubled Debt Restructurings:

During the years ending December 31, 2015 and 2014, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: (1) payment and maturity changes not available in the market; and (2) a reduction of the stated interest rate of the loan.

The Company had allocations of $380,593 of specific reserves on $3,925,262 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2015. The Company had allocations of $328,442 of specific reserves on $5,661,342 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2014. The Company had no commitments to lend additional amounts as of December 31, 2015 to customers with outstanding loans that are classified as troubled debt restructurings. The amount the Company had committed to lend to loan customers that are classified as troubled debt restructurings was not material as of December 31, 2014.

The following tables present loans, by class, modified as troubled debt restructurings that occurred during the years ended December 31, 2015 and 2014:

Year ended December 31, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
Commercial		2	$	1,000,116	$	1,000,116
Commercial business		1		162,167	$	162,167
Consumer:
Home equity		1		35,221		35,221
Total		4	$	1,197,504	$	1,197,504

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $27,897 but resulted in no charge offs during the year ended December 31, 2015.

Year ended December 31, 2014
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
One-to-four family		2	$	504,465	$	504,465
Construction and land		1		985,787		985,787
Total		3	$	1,490,252	$	1,490,252

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $46,420 but resulted in no charge offs during the year ended December 31, 2014.

There were no payment defaults within twelve months following the modifications during the years ended December 31, 2015 and 2014.

A loan is considered to be in payment default once it is 60 days contractually past due under the modified terms.

Loans to Affiliates:

The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, executive officers, their immediate families, and companies in which these individuals have a 10% or more beneficial ownership. Changes in these loans for the years ended December 31, 2015 and 2014 are summarized as follows:

	Year Ended
	December 31,
	2015			2014
Balance, beginning of year	$	11,845,673		$	7,932,877
Additions		1,219,504			7,066,199
Repayments		(1,231,984	)		(3,050,455	)
Change in status of borrower		-			(102,948	)
Balance, end of year	$	11,833,193		$	11,845,673

The change in status of borrower represents the loans that are no longer required to be reported due to an executive officer or director no longer being associated with the Company.