XML 118 R15.htm IDEA: XBRL DOCUMENT v3.20.1
Loans Receivable and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2019
Loans Receivable and Allowance for Loan Losses  
Loans Receivable and Allowance for Loan Losses

(7)Loans Receivable and Allowance for Loan Losses

 

The components of loans receivable are as follows:

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

(Dollars in thousands)

 

2019

    

2018

 

Real estate loans:

 

 

 

 

 

 

 

First mortgages:

 

 

 

 

 

 

 

One- to four-family residential

 

$

1,536,781

 

$

1,531,149

 

Multi-family residential

 

 

9,965

 

 

12,151

 

Construction, commercial and other

 

 

23,382

 

 

20,780

 

Home equity loans and lines of credit

 

 

10,084

 

 

11,090

 

Total real estate loans

 

 

1,580,212

 

 

1,575,170

 

Other loans:

 

 

 

 

 

 

 

Loans on deposit accounts

 

 

235

 

 

357

 

Consumer and other loans

 

 

9,484

 

 

4,939

 

Total other loans

 

 

9,719

 

 

5,296

 

Less:

 

 

 

 

 

 

 

Net unearned fees and discounts

 

 

(2,435)

 

 

(3,110)

 

Allowance for loan losses

 

 

(2,712)

 

 

(2,642)

 

Total unearned fees, discounts and allowance for loan losses

 

 

(5,147)

 

 

(5,752)

 

Loans receivable, net

 

$

1,584,784

 

$

1,574,714

 

 

The table below presents the activity in the allowance for loan losses by portfolio segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction,

 

Home

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Other

 

Loans and

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

Mortgage

 

Lines of

 

Consumer

 

 

 

 

 

 

 

(Dollars in thousands)

 

Mortgage

 

Loans

 

Credit

 

and Other

 

Unallocated

 

Totals

 

Year ended December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of year

 

$

1,797

 

$

443

 

$

 1

 

$

47

 

$

354

 

$

2,642

 

Provision (reversal of provision) for loan losses

 

 

(84)

 

 

68

 

 

 —

 

 

26

 

 

51

 

 

61

 

 

 

 

1,713

 

 

511

 

 

 1

 

 

73

 

 

405

 

 

2,703

 

Charge-offs

 

 

(8)

 

 

 —

 

 

 —

 

 

(40)

 

 

 —

 

 

(48)

 

Recoveries

 

 

36

 

 

 —

 

 

 —

 

 

21

 

 

 —

 

 

57

 

Net recoveries (charge-offs)

 

 

28

 

 

 —

 

 

 —

 

 

(19)

 

 

 —

 

 

 9

 

Balance, end of year

 

$

1,741

 

$

511

 

$

 1

 

$

54

 

$

405

 

$

2,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of year

 

$

1,721

 

$

539

 

$

 1

 

$

55

 

$

232

 

$

2,548

 

Provision (reversal of provision) for loan losses

 

 

78

 

 

(96)

 

 

 —

 

 

15

 

 

122

 

 

119

 

 

 

 

1,799

 

 

443

 

 

 1

 

 

70

 

 

354

 

 

2,667

 

Charge-offs

 

 

(12)

 

 

 —

 

 

 —

 

 

(29)

 

 

 —

 

 

(41)

 

Recoveries

 

 

10

 

 

 —

 

 

 —

 

 

 6

 

 

 —

 

 

16

 

Net charge-offs

 

 

(2)

 

 

 —

 

 

 —

 

 

(23)

 

 

 —

 

 

(25)

 

Balance, end of year

 

$

1,797

 

$

443

 

$

 1

 

$

47

 

$

354

 

$

2,642

 

 

The allowance for loan loss for each segment of the loan portfolio is generally determined by calculating the historical loss of each segment in a seven year look-back period and adding a qualitative adjustment for the following factors:

 

·

changes in lending policies and procedures, including changes in underwriting standards and collections, charge-off and recovery practices;

·

changes in international, national, and local economic trends;

·

changes in the types of loans in the loan portfolio;

·

changes in the experience and ability of personnel in the mortgage loan origination and loan servicing departments;

·

changes in the number and amount of delinquent loans and classified assets;

·

changes in the type and volume of loans being originated;

·

changes in the value of underlying collateral for collateral dependent loans;

·

changes in any concentration of credit; and

·

external factors such as competition, legal and regulatory requirements on the level of estimated credit losses in the existing loan portfolio.

 

The allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.  The unallocated allowance is established for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

 

Management considers the allowance for loan losses at December 31, 2019 to be at an appropriate level to provide for probable losses that can be reasonably estimated based on general and specific conditions at that date.  While the Company uses the best information it has available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations.  To the extent actual outcomes differ from the estimates, additional provisions for credit losses may be required that would reduce future earnings.  In addition, as an integral part of their examination process, the bank regulators periodically review the allowance for loan losses and may require the Company to increase the allowance based on their analysis of information available at the time of their examination.

 

The table below presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction,

 

Home

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Other

 

Loans and

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

Mortgage

 

Lines of

 

Consumer

 

 

 

 

 

 

 

(Dollars in thousands)

 

Mortgage

 

Loans

 

Credit

 

and Other

 

Unallocated

 

Totals

 

December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

Collectively evaluated for impairment

 

 

1,741

 

 

511

 

 

 1

 

 

54

 

 

405

 

 

2,712

 

Total ending allowance balance

 

$

1,741

 

$

511

 

$

 1

 

$

54

 

$

405

 

$

2,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending loan balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

1,224

 

$

 —

 

$

89

 

$

 —

 

$

 —

 

$

1,313

 

Collectively evaluated for impairment

 

 

1,543,125

 

 

23,326

 

 

9,997

 

 

9,735

 

 

 —

 

 

1,586,183

 

Total ending loan balance

 

$

1,544,349

 

$

23,326

 

$

10,086

 

$

9,735

 

$

 —

 

$

1,587,496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

Collectively evaluated for impairment

 

 

1,797

 

 

443

 

 

 1

 

 

47

 

 

354

 

 

2,642

 

Total ending allowance balance

 

$

1,797

 

$

443

 

$

 1

 

$

47

 

$

354

 

$

2,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending loan balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

2,962

 

$

 —

 

$

148

 

$

 —

 

$

 —

 

$

3,110

 

Collectively evaluated for impairment

 

 

1,537,292

 

 

20,698

 

 

10,945

 

 

5,311

 

 

 —

 

 

1,574,246

 

Total ending loan balance

 

$

1,540,254

 

$

20,698

 

$

11,093

 

$

5,311

 

$

 —

 

$

1,577,356

 

 

The table below presents the balance of impaired loans individually evaluated for impairment by class of loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid

 

 

 

Recorded

 

Principal

 

(Dollars in thousands)

 

Investment

 

Balance

 

December 31, 2019:

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

1,224

 

$

1,615

 

Home equity loans and lines of credit

 

 

89

 

 

178

 

Total

 

$

1,313

 

$

1,793

 

 

 

 

 

 

 

 

 

December 31, 2018:

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

2,962

 

$

3,486

 

Home equity loans and lines of credit

 

 

148

 

 

224

 

Total

 

$

3,110

 

$

3,710

 

 

 

The table below presents the average recorded investment and interest income recognized on impaired loans by class of loans:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Recorded

 

Interest Income

 

(Dollars in thousands)

 

Investment

 

Recognized

 

2019:

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

1,272

 

$

34

 

Home equity loans and lines of credit

 

 

98

 

 

 —

 

Total

 

$

1,370

 

$

34

 

 

 

 

 

 

 

 

 

2018:

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

3,039

 

$

53

 

Home equity loans and lines of credit

 

 

156

 

 

 —

 

Total

 

$

3,195

 

$

53

 

 

There were no loans individually evaluated for impairment with a related allowance for loan loss as of December 31, 2019 or 2018. Loans individually evaluated for impairment do not have an allocated allowance for loan loss because they are written down to fair value at the time of impairment.

 

The table below presents the aging of loans and accrual status by class of loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

or More

 

 

 

30 - 59

 

60 - 89

 

90 Days or

 

 

 

 

 

 

 

 

 

 

 

 

 

Past Due

 

 

 

Days Past

 

Days Past

 

More

 

Total Past

 

Loans Not

 

Total

 

Nonaccrual

 

and Still

 

(Dollars in thousands)

 

Due

 

Due

 

Past Due

 

Due

 

Past Due

 

Loans

 

Loans

 

Accruing

 

December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

 —

 

$

959

 

$

 —

 

$

959

 

$

1,533,446

 

$

1,534,405

 

$

647

 

$

 —

 

Multi-family residential mortgages

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

9,944

 

 

9,944

 

 

 —

 

 

 —

 

Construction, commercial and other mortgages

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

23,326

 

 

23,326

 

 

 —

 

 

 —

 

Home equity loans and lines of credit

 

 

 —

 

 

26

 

 

 —

 

 

26

 

 

10,060

 

 

10,086

 

 

89

 

 

 —

 

Loans on deposit accounts

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

235

 

 

235

 

 

 —

 

 

 —

 

Consumer and other

 

 

33

 

 

 1

 

 

 1

 

 

35

 

 

9,465

 

 

9,500

 

 

 —

 

 

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

33

 

$

986

 

$

 1

 

$

1,020

 

$

1,586,476

 

$

1,587,496

 

$

736

 

$

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

$

40

 

$

292

 

$

838

 

$

1,170

 

$

1,526,949

 

$

1,528,119

 

$

2,065

 

$

 —

 

Multi-family residential mortgages

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,135

 

 

12,135

 

 

 —

 

 

 —

 

Construction, commercial and other mortgages

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

20,698

 

 

20,698

 

 

 —

 

 

 —

 

Home equity loans and lines of credit

 

 

 —

 

 

29

 

 

41

 

 

70

 

 

11,023

 

 

11,093

 

 

148

 

 

 —

 

Loans on deposit accounts

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

357

 

 

357

 

 

 —

 

 

 —

 

Consumer and other

 

 

 3

 

 

 4

 

 

 —

 

 

 7

 

 

4,947

 

 

4,954

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

43

 

$

325

 

$

879

 

$

1,247

 

$

1,576,109

 

$

1,577,356

 

$

2,213

 

$

 —

 

 

The Company primarily uses the aging of loans and accrual status to monitor the credit quality of its loan portfolio.  When a mortgage loan becomes seriously delinquent (90 days or more contractually past due), it displays weaknesses that may result in a loss. As a loan becomes more delinquent, the likelihood of the borrower repaying the loan decreases and the loan becomes more collateral-dependent. A mortgage loan becomes collateral-dependent when the proceeds for repayment can be expected to come only from the sale or operation of the collateral and not from borrower repayments.  Generally, appraisals are obtained after a loan becomes collateral-dependent or is four months delinquent.  The carrying value of collateral-dependent loans is adjusted to the fair value of the collateral less selling costs.  Any commercial real estate, commercial, construction or equity loan that has a loan balance in excess of a specified amount is also periodically reviewed to determine whether the loan exhibits any weaknesses and is performing in accordance with its contractual terms.

 

The Company had six nonaccrual loans with a book value of $736,000 at December 31, 2019 and 11 nonaccrual loans with a book value of $2.2 million as of December 31, 2018.  The Company collected interest on nonaccrual loans of $58,000 and $93,000 during 2019 and 2018, respectively, but due to regulatory requirements, the Company recorded the interest as a reduction of principal.  The Company would have recognized additional interest income of $60,000 and $133,000 during 2019 and 2018, respectively, had the loans been accruing interest.  At December 31, 2019, the Company had one loan for $1,000 that was 90 days or more past due and still accruing interest.  The Company did not have any loans 90 days or more past due and still accruing interest as of December 31, 2018.

 

There were no loans modified in a troubled debt restructuring during the year ended December 31, 2019 or 2018. There were no new troubled debt restructurings within the 12 months ended December 31, 2019 that subsequently defaulted.

 

The table below summarizes troubled debt restucturings by class of loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Accrual

 

Number of

 

Nonaccrual

 

 

(Dollars in thousands)

Loans

 

Status

 

Loans

 

Status

 

Total

December 31, 2019:

 

 

    

 

 

    

 

 

    

 

 

 

 

 

One- to four-family residential mortgages

 

 3

 

$

577

 

 

 2

 

$

525

 

$

1,102

Home equity loans and lines of credit

 

 —

 

 

 —

 

 

 1

 

 

64

 

 

64

Total

 

 3

 

$

577

 

 

 3

 

$

589

 

$

1,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One- to four-family residential mortgages

 

 4

 

$

897

 

 

 3

 

$

691

 

$

1,588

Home equity loans and lines of credit

 

 —

 

 

 —

 

 

 1

 

 

78

 

 

78

Total

 

 4

 

$

897

 

 

 4

 

$

769

 

$

1,666

 

There were no delinquent restructured loans at December 31, 2019 or December 31, 2018.  Restructurings include deferrals of interest and/or principal payments and temporary or permanent reductions in interest rates due to the financial difficulties of the borrowers.  At December 31, 2019, we have no commitments to lend any additional funds to these borrowers.

 

The Company had no real estate owned as of December 31, 2019 or 2018. There were no loans in the process of foreclosure at December 31, 2019.  There were two one- to four-family residential mortgage loans totaling $838,000 and one home equity loan for $41,000 in the process of foreclosure as of December 31, 2018.

 

Nearly all of our real estate loans are collateralized by real estate located in the State of Hawaii. Loan-to-value ratios on these real estate loans generally do not exceed 80% at the time of origination.

 

During the years ended December 31, 2019 and 2018, the Company sold mortgage loans held for sale with principal balances of $10.1 million and $10.0 million, respectively, and recognized gains of $89,000 and $72,000, respectively.  The Company had one loan held for sale for $470,000 at December 31, 2019 and one loan held for sale for $309,000 at December 31, 2018.

 

During 2019, the Company securitized fixed-rate first mortgage loans with a book value of $36.8 milion and received mortgage-backed securities with a fair market value of $37.9 million.  The Company retained the servicing of these loans and recorded mortgage servicing assets with a fair market value of $344,000.  A net gain of $1.5 million was recognized on the securitization transactions as the fair value of the mortgage-backed securities exceeded the amortized cost of the mortgage loans.

 

The Company serviced loans for others with principal balances of $65.1 million and $30.3 million at December 31, 2019 and 2018, respectively.  Of these amounts, $37.8 million and $1.5 million of loan balances relate to securitizations for which the Company continues to hold the related mortgage-backed securities at December 31, 2019 and 2018, respectively.  The amount of contractually specified servicing fees earned was $114,000 and $88,000 for 2019 and 2018, respectively.  The fees are reported in service fees on loan and deposit accounts in the Consolidated Statements of Income.

 

In the normal course of business, the Company has made loans to certain directors and executive officers under terms which management believes are consistent with the Company’s general lending policies.  Loans to directors and executive officers amounted to $661,000 at December 31, 2019 and $850,000 at December 31, 2018.