Note 6—Loans Receivable



	September 30,
	2014		2013
	(In thousands)
Real estate:
One-to-four-family	$	90,567	$	90,177
Multi-family		28,659		25,771
Non-residential		56,076		50,655
Construction		174		935
Home equity and second mortgages		8,653		8,169
		184,129		175,707
Commercial & Industrial		40,346		33,089
Consumer		55		103
Total Loans		224,530		208,899
Allowance for loan losses		(740)		(923)
Net deferred loan origination fees and costs		(4)		20
	$	223,786	$	207,996

The following table summarizes the primary segments of the loan portfolio, including net deferred loan origination fees and costs, as of September 30, 2014 and 2013:



	Individually		Collectively
	Evaluated for		Evaluated for
September 30, 2014	Impairment		Impairment		Total
	(In thousands)
Real estate:
One-to-four-family	$	5,740	$	84,825	$	90,565
Multi-family		—		28,658		28,658
Non-residential		1,738		54,337		56,075
Construction		—		174		174
Home equity and second mortgages		374		8,279		8,653
		7,852		176,273		184,125
Commercial & Industrial		3,297		37,049		40,346
Consumer		4		51		55
Total	$	11,153	$	213,373	$	224,526



	Individually		Collectively
	Evaluated for		Evaluated for
September 30, 2013	Impairment		Impairment		Total
	(In thousands)
Real estate:
One-to-four-family	$	6,693	$	83,493	$	90,186
Multi-family		—		25,773		25,773
Non-residential		—		50,660		50,660
Construction		—		935		935
Home equity and second mortgages		471		7,699		8,170
		7,164		168,560		175,724
Commercial & Industrial		873		32,219		33,092
Consumer		—		103		103
Total	$	8,037	$	200,882	$	208,919

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of September 30, 2014 and 2013:



					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
September 30, 2014	Investment		Allowance		Investment		Investment		Balance
	(In thousands)
Real estate:
One-to-four-family	$	—	$	—	$	5,740	$	5,740	$	5,874
Multi-family		—		—		—		—		—
Non-residential		—		—		1,738		1,738		2,071
Construction		—		—		—		—		—
Home equity and second mortgages		—		—		374		374		374
		—		—		7,852		7,852		8,319
Commercial & Industrial		—		—		3,297		3,297		3,297
Consumer		4		4		—		4		4
Total	$	4	$	4	$	11,149	$	11,153	$	11,620



					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
September 30, 2013	Investment		Allowance		Investment		Investment		Balance
	(In thousands)
Real estate:
One-to-four-family	$	—	$	—	$	6,693	$	6,693	$	6,658
Multi-family		—		—		—		—		—
Non-residential		—		—		—		—		—
Construction		—		—		—		—		—
Home equity and second mortgages		—		—		471		471		462
		—		—		7,164		7,164		7,120
Commercial & Industrial		—		—		873		873		873
Consumer		—		—		—		—		—
Total	$	—	$	—	$	8,037	$	8,037	$	7,993

The following table presents the average recorded investment in impaired loans and related interest income recognized for the years ended September 30, 2014 and 2013:


	One-to-		Home Equity
	four-		and Second		Non-		Commercial
September 30, 2014	family		Mortgages		residential		& Industrial		Consumer		Total
	(In thousands)
Average investment in impaired loans	$	5,977	$	381	$	1,653	$	1,144	$	1	$	9,156
Interest income recognized on an accrual basis on impaired loans		95		10		18		97		—		220
Interest income recognized on a cash basis on impaired loans		45		2		—		7		—		54



	One-to-		Home Equity
	four-		and Second		Non-
September 30, 2013	family		Mortgages		residential		Commercial		Consumer		Total
	(In thousands)
Average investment in impaired loans	$	9,165	$	558	$	—	$	175	$	10	$	9,908
Interest income recognized on an accrual basis on impaired loans		118		11		—		26		—		155
Interest income recognized on a cash basis on impaired loans		19		2		—		1		—		22

The following table presents the classes of the loan portfolio summarized by the aggregate Pass (including loans graded Watch) and the classified ratings of Special Mention, Substandard and Doubtful within the internal risk rating system as of September 30, 2014 and 2013:



			Special
September 30, 2014	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
Real estate:
One-to-four-family	$	87,808	$	—	$	2,757	$	—	$	90,565
Multi-family		28,658		—		—		—		28,658
Non-residential		54,337		—		1,738		—		56,075
Construction		174		—		—		—		174
Home equity and second mortgages		8,417		139		97		—		8,653
		179,394		139		4,592		—		184,125
Commercial & Industrial		35,839		1,210		3,297		—		40,346
Consumer		51		—		—		4		55
Total	$	215,284	$	1,349	$	7,889	$	4	$	224,526



			Special
September 30, 2013	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
Real estate:
One-to-four-family	$	86,077	$	—	$	4,109	$	—	$	90,186
Multi-family		25,018		755		—		—		25,773
Non-residential		50,660		—		—		—		50,660
Construction		935		—		—		—		935
Home equity and second mortgages		7,999		—		171		—		8,170
		170,689		755		4,280		—		175,724
Commercial & Industrial		28,498		3,721		873		—		33,092
Consumer		103		—		—		—		103
Total	$	199,290	$	4,476	$	5,153	$	—	$	208,919

Management further monitors the performance and credit quality of the loan portfolio by analyzing the delinquency aging of the portfolio as determined by the length of time a recorded payment is past due.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2014 and 2013:



			30-59		60-89		90 Days or
			Days		Days		More Past				Total
			Past		Past		Due and		Non-		Past
September 30, 2014	Current		Due		Due		Accruing		Accrual		Due		Total
	(In thousands)
Real estate:
One-to-four-family	$	88,304	$	240	$	—	$	—	$	2,021	$	2,261	$	90,565
Multi-family		28,658		—		—		—		—		—		28,658
Non-residential		56,075		—		—		—		—		—		56,075
Construction		174		—		—		—		—		—		174
Home equity and second mortgages		8,416		—		50		—		187		237		8,653
		181,627		240		50		—		2,208		2,498		184,125
Commercial & Industrial		39,678		511		—		—		157		668		40,346
Consumer		51		—		—		4		—		4		55
Total	$	221,356	$	751	$	50	$	4	$	2,365	$	3,170	$	224,526



			30-59		60-89		90 Days or
			Days		Days		More Past				Total
			Past		Past		Due and		Non-		Past
September 30, 2013	Current		Due		Due		Accruing		Accrual		Due		Total
	(In thousands)
Real estate:
One-to-four-family	$	86,125	$	—	$	237	$	—	$	3,824	$	4,061	$	90,186
Multi-family		25,773		—		—		—		—		—		25,773
Non-residential		50,660		—		—		—		—		—		50,660
Construction		935		—		—		—		—		—		935
Home equity and second mortgages		8,098		—		—		—		72		72		8,170
		171,591		—		237		—		3,896		4,133		175,724
Commercial & Industrial		32,206		—		13		—		873		886		33,092
Consumer		103		—		—		—		—		—		103
Total	$	203,900	$	—	$	250	$	—	$	4,769	$	5,019	$	208,919

The Company is not committed to lend additional funds on nonaccrual loans at September 30, 2014.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL. Management utilizes an internally developed spreadsheet to track and apply the various components of the allowance.

The following table summarizes the primary segments of the ALLL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of September 30, 2014 and 2013:



			Collectively		Individually
	ALLL		Evaluated for		Evaluated for
September 30, 2014	Balance		Impairment		Impairment
	(In thousands)
Real estate:
One-to-four-family	$	257	$	257	$	—
Multi-family		83		83		—
Non-residential		266		266		—
Construction		—		—		—
Home equity and second mortgages		26		26		—
		632		632		—
Commercial & Industrial		100		100		—
Consumer		8		4		4
Total	$	740	$	736	$	4



			Collectively		Individually
	ALLL		Evaluated for		Evaluated for
September 30, 2013	Balance		Impairment		Impairment
	(In thousands)
Real estate:
One-to-four-family	$	225	$	225	$	—
Multi-family		48		48		—
Non-residential		374		374		—
Construction		7		7		—
Home equity and second mortgages		82		82		—
		736		736		—
Commercial & Industrial		187		187		—
Consumer		—		—		—
Total	$	923	$	923	$	—

The following table summarizes activity in the primary segments of the ALLL for the years ended September 30, 2014 and 2013:



	Balance		Charge-						Balance
September 30, 2014	September 30, 2013		offs		Recoveries		Provision		September 30, 2014
	(In thousands)
Real estate:
One-to-four-family	$	225	$	(142)	$	—	$	174	$	257
Multi-family		48		-		—		35		83
Non-residential		374		(333)		—		225		266
Construction		7		-		—		(7)		-
Home equity and second mortgages		82		-		—		(56)		26
		736		(475)		—		370		632
Commercial & Industrial		187		(9)		1		(79)		100
Consumer		-		-		—		8		8
Total	$	923	$	(484)	$	1	$	300	$	740



	Balance		Charge-						Balance
September 30, 2013	September 30, 2012		offs		Recoveries		Provision		September 30, 2013
	(In thousands)
Real estate:
One-to-four-family	$	625	$	(562)	$	82	$	80	$	225
Multi-family		35		—		—		13		48
Non-residential		67		—		—		307		374
Construction		3		—		—		4		7
Home equity and second mortgages		71		—		—		14		82
		801		(562)		82		415		736
Commercial & Industrial		164		—		—		23		187
Consumer		2		(7)		—		5		—
Total	$	967	$	(569)	$	82	$	443	$	923

A troubled debt restructuring (“TDR”) is a loan that has been modified whereby the Bank has agreed to make certain concessions that would otherwise not be granted to a borrower experiencing or expected to experience financial difficulties in order to maximize the ultimate recovery of a loan. The types of concessions granted generally include, but are not limited to interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal. In evaluating whether a restructuring constitutes a TDR, a creditor must separately conclude that the restructuring constitutes a concession and the borrower is experiencing financial difficulties. The concessions granted on these loans consisted of interest rate reductions and/- or extensions of the loan term. The following table summarizes the TDR identified during the years ended September 30, 2014 and 2013:



		Recorded Investment		Recorded Investment
September 30, 2014	Number of Loans	Before Modification		After Modification
	(Dollars in thousands)
One-to-four-family	4	$	1,471	$	1,590
Non-residential	1		532		549
Commercial & Industrial	1		170		167

		Recorded Investment		Recorded Investment
	Number of Loans	Before Modification		After Modification
September 30, 2013	(Dollars in thousands)
One-to-four-family	4	$	1,089	$	1,170

A default on a troubled debt restructured loan for purposes of disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred. During the years ended September 30, 2014 and 2013, one and no defaults occurred on troubled debt restructured loans that were modified as a TDR within 12 months of the initial modification, respectively. The TDR that defaulted during the year ended September 30, 2014 was a one-to-four-family loan and totaled approximately $506,000 at September 30, 2014.