XML 21 R11.htm IDEA: XBRL DOCUMENT

Loans Receivable, Net

6 Months Ended

Jun. 30, 2019

4. LOANS RECEIVABLE, NET

	June 30, 2019			December 31, 2018
Mortgage loans:
Residential 1-4 family	$	18,441,772		$	18,239,205
Commercial and multi-family		16,521,767			15,640,233
Home equity lines of credit		10,403			27,725

		34,973,942			33,907,163
Other loans:
Student		6,938,995			8,024,588
Commercial		1,253,849			1,316,545

		8,192,844			9,341,133

Total loans		43,166,786			43,248,296

Less:
Deferred loan fees (costs and premiums), net		(219,275	)		(261,061	)
Allowance for loan losses		434,063			407,832

		214,788			146,771

	$	42,951,998		$	43,101,525

In the ordinary course of business, the Company makes loans to its directors, executive officers, and their associates (related parties) on the same terms as those prevailing at the time of origination for comparable loans with other borrowers. The unpaid principal balances of related party loans were approximately $137,000 and $142,000 at June 30, 2019 and December 31, 2018, respectively.

Activity in the allowance for loan losses is summarized as follows:

	Three Months Ended
	June 30,
	2019		2018

Balance at beginning of period	$	407,832	$	507,235
Provision for loan losses		26,231		-

Balance at end of period	$	434,063	$	507,235

	Six Months Ended
	June 30,
	2019		2018

Balance at beginning of period	$	407,832	$	507,235
Provision for loan losses		26,231		-

Balance at end of period	$	434,063	$	507,235

The allowance for loan losses consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. There are no specific allowances as of June 30, 2019 and December 31, 2018. The general component covers pools of loans by loan class not considered impaired, as well as smaller balance homogeneous loans, such as one-to-four family real estate, home equity lines of credit and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:

1.	Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.

2.	National, regional, and local economic and business conditions including the value of underlying collateral for collateral dependent loans.

3.	Nature and volume of the portfolio and terms of loans.

4.	Experience, ability, and depth of lending management and staff and the quality of the Company’s loan review system.

5.	Volume and severity of past due, classified and nonaccrual loans.

6.	Existence and effect of any concentrations of credit and changes in the level of such concentrations.

7.	Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of pass, special mention, substandard, doubtful and loss.

Loan classifications are defined as follows:

●	Pass — These loans are well protected by the current net 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.

●	Special Mention — These loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects.

●	Substandard — These loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

●	Doubtful — These loans have all the weaknesses inherent in a loan classified substandard with the added characteristic that the weaknesses make the full recovery of our principal balance highly questionable and improbable on the basis of currently known facts, conditions, and values. The likelihood of a loss on an asset or portion of an asset classified as doubtful is high. Its classification as Loss is not appropriate, however, because pending events are expected to materially affect the amount of loss.

●	Loss — These loans are considered uncollectible and of such little value that a charge-off is warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery will occur.

One of the primary methods the Company uses as an indicator of the credit quality of their portfolio is the regulatory classification system. The following table reflects the credit quality indicators by portfolio segment and class, at the dates indicated:

	June 30, 2019
	Mortgage Loans
			Commercial						Commercial
	Residential		Real Estate and						and
	1-4 Family		Multi-Family		Home Equity		Student		Other		Total
	(In thousands)

Pass	$	18,201	$	15,442	$	10	$	6,892	$	1,254	$	41,799
Special Mention		-		-		-		22		-		22
Substandard		241		1,080		-		25		-		1,346

Total	$	18,442	$	16,522	$	10	$	6,939	$	1,254	$	43,167

	December 31, 2018
	Mortgage Loans
			Commercial						Commercial
	Residential		Real Estate and						and
	1-4 Family		Multi-Family		Home Equity		Student		Other		Total
	(In thousands)

Pass	$	17,941	$	15,640	$	28	$	8,000	$	1,316	$	42,925
Special Mention		49		-		-		-		-		49
Substandard		249		-		-		25		-		274

Total	$	18,239	$	15,640	$	28	$	8,025	$	1,316	$	43,248

The following table provides information about loan delinquencies at the dates indicated:

	June 30, 2019
													90 Days
													or More
	30-59		60-89		90 Days								Past Due
	Days		Days		or More		Total		Current		Total		and
	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Accruing
	(In thousands)

Residential 1-4 family	$	-	$	252	$	-	$	252	$	18,190	$	18,442	$	-
Commercial real estate and multi-family		-		234		-		234		16,288		16,522		-
Home equity lines of credit		-		-		9		9		1		10		9
Student loans		98		9		55		162		6,777		6,939		55
Other loans		-		-		-		-		1,254		1,254		-

	$	98	$	495	$	64	$	657	$	42,510	$	43,167	$	64

	December 31, 2018
													90 Days
													or More
	30-59		60-89		90 Days								Past Due
	Days		Days		or More		Total		Current		Total		and
	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Accruing
	(In thousands)

Residential 1-4 family	$	-	$	-	$	49	$	49	$	18,190	$	18,239	$	49
Commercial real estate and multi-family		-		-		-		-		15,640		15,640		-
Home equity lines of credit		-		-		-		-		28		28		-
Student		5		33		-		38		7,987		8,025		-
Other loans		-		-		-		-		1,316		1,316		-

	$	5	$	33	$	49	$	87	$	43,161	$	43,248	$	49

The following is a summary of loans, by loan type, on which the accrual of income has been discontinued and loans that are contractually past due 90 days or more but have not been classified as non-accrual at the dates indicated:

	June 30, 2019		December 31, 2018
		(In thousands)
Non-accrual loans:
Residential 1-4 family	$	241	$	249
Commercial real estate and multi-family		-		-
Home equity lines of credit		-		-
Student		-		-
Other loans		-		-

Total		241		249

Accruing loans delinquent 90 days or more:
Residential 1-4 family		-		49
Home equity lines of credit		9		-
Student		55		-

Total		64		49

Total non-performing loans	$	305	$	249

The total amount of interest income on non-accrual loans that would have been recognized if interest on all such loans had been recorded based upon original contract terms amounted to approximately $2,700 and $7,000 for the three months ended June 30, 2019 and 2018, respectively. The total amount of interest income recognized on non-accrual loans amounted to approximately $0 and $4,000 during the three months ended June 30, 2019 and 2018, respectively.

For the six months ended June 30, 2019 and 2018, such interest income that would have been recognized on non-accrual loans totaled approximately $5,500 and $14,000, respectively. The total amount of interest income recognized on non-accrual loans amounted to approximately $0 and $7,000 during the six months ended June 30, 2019 and 2018, respectively.

A loan is defined as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. The Company considers one-to four-family mortgage loans and consumer installment loans to be homogeneous and, therefore, does not generally evaluate them for impairment, unless they are considered troubled debt restructurings. All other loans are evaluated on an individual basis.

The following table provides information about the Company’s impaired loans at June 30, 2019 and December 31, 2018 (in thousands):

June 30, 2019	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance

Residential 1-4 family	$	241	$	241	$	-

December 31, 2018	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance

Residential 1-4 family	$	249	$	249	$	-

The following tables provide information about the Company’s impaired loans for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Three Months Ended				Three Months Ended
	June 30, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Residential 1-4 family	$	243	$	-	$	-	$	-

	Six Months Ended				Six Months Ended
	June 30, 2019				June 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Residential 1-4 family	$	245	$	-	$	-	$	-

The recorded investment in a loan modified in a troubled debt restructuring totaled $241,199 ($248,956 at December 31, 2018), which was current at the reporting dates and complied with the terms of its restructure agreement. Loans that were modified in a troubled debt restructuring represent concessions made to borrowers experiencing financial difficulties. The Company works with these borrowers to modify existing loan terms usually by extending maturities or reducing interest rates. The Company records an impairment loss, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate or the value of the underlying collateral property. Subsequently, these loans are individually evaluated for impairment.

During the three and six months ended June 30, 2019 and 2018, there were no new TDR’s that occurred.

The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:

	Three Months Ended
	June 30, 2019
	Mortgage Loans
			Commercial
	Residential 1-4 Family		and Multi-Family		Home Equity			Student			Other		Unallocated		Total
								(In thousands)

Beginning balance	$	148	$	129	$	1		$	118		$	12	$		$	408
Provision for loan losses		4		27		(1	)		(4	)		-		-	$	26

Ending Balance	$	152	$	156	$	-		$	114		$	12	$	-	$	434

	Three Months Ended
	June 30, 2018
	Mortgage Loans
				Commercial
	Residential 1-4 Family			and Multi-Family			Home Equity			Student		Other		Unallocated			Total
										(In thousands)

Beginning balance	$	327		$	110		$	4		$	49	$	10	$	7		$	507
Provision for loan losses		(19	)		(2	)		(1	)		23		3		(4	)	$	-

Ending Balance	$	308		$	108		$	3		$	72	$	13	$	3		$	507

	Six Months Ended
	June 30, 2019
	Mortgage Loans
			Commercial
	Residential 1-4 Family		and Multi-Family		Home Equity			Student			Other		Unallocated		Total
								(In thousands)

Beginning balance	$	145	$	128	$	1		$	122		$	12	$	-	$	408
Provision for loan losses		7		28		(1	)		(8	)		-		-	$	26

Ending Balance	$	152	$	156	$	-		$	114		$	12	$	-	$	434

	Six Months Ended
	June 30, 2018
	Mortgage Loans
				Commercial
	Residential 1-4 Family			and Multi-Family			Home Equity			Student		Other		Unallocated		Total
										(In thousands)

Beginning balance	$	318		$	121		$	4		$	54	$	10	$	-	$	507
Provision for loan losses		(10	)		(13	)		(1	)		18		3		3	$	-

Ending Balance	$	308		$	108		$	3		$	72	$	13	$	3	$	507

See Note 8 “Contingencies” for an additional discussion on the Company’s student loan portfolio.