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LOANS HELD FOR INVESTMENT, NET
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Receivables [Abstract]    
LOANS HELD FOR INVESTMENT, NET

NOTE 3 – LOANS HELD FOR INVESTMENT, NET

 

The components of loans held for investment, net in the consolidated balance sheets were as follows:

 

    March 31, 2016     December 31, 2015  
    Amount     Percent     Amount     Percent  
                         
Loans held for investment, net:                                
Commercial real estate   $ 149,189,698       75.5 %   $ 146,643,998       75.3 %
One- to four-family residential real estate     29,930,302       15.1       31,412,437       16.1  
Commercial and industrial     10,798,417       5.5       10,235,492       5.3  
Consumer and other     7,703,009       3.9       6,428,765       3.3  
Total gross loans     197,621,426       100.0 %     194,720,692       100.0 %
Unamortized loan fees     (664,737 )             (689,102 )        
Loans held for investment     196,956,689               194,031,590          
Allowance for loan losses     (2,052,365 )             (1,894,196 )        
Loans held for investment, net   $ 194,904,324             $ 192,137,394          

 

At March 31, 2016 and December 31, 2015 commercial real estate loans include construction loans of $7.7 million and $7.8 million, respectively.

 

Allowance for Loan Losses and Recorded Investment in Loans – The following is a summary of the allowance for loan losses and recorded investment in loans as of March 31, 2016 and December 31, 2015:

 

    As of March 31, 2016  
    Commercial
Real Estate		     One- to Four-
Family 
Residential Real 
Estate		     Commercial and 
Industrial		     Consumer and 
Other		     Total  
Allowance for loan losses                                        
Ending balance:  individually evaluated for impairment   $ -     $ -     $ -     $ -     $ -  
Ending balance:  collectively evaluated for impairment     1,241,068       567,465       197,713       46,119       2,052,365  
                                         
Total     1,241,068       567,465       197,713       46,119       2,052,365  
                                         
Gross loans                                        
Ending balance:  individually evaluated for impairment   $ 3,122,828     $ 1,289,486     $ 630,195     $ 23,247     $ 5,065,756  
Ending balance:  collectively evaluated for impairment     146,066,870       28,640,816       10,168,222       7,679,762       192,555,670  
Ending balance:  loans acquired with deteriorated credit quality     -       -       -       -       -  
                                         
Total   $ 149,189,698     $ 29,930,302     $ 10,798,417     $ 7,703,009     $ 197,621,426  

 

    As of December 31, 2015  
    Commercial
Real Estate		     One- to Four-
Family
Residential Real 
Estate		     Commercial and
Industrial		     Consumer and
Other		     Total  
Allowance for loan losses                                        
Ending balance:  individually evaluated for 
impairment		   $ -     $ -     $ -     $ -     $ -  
Ending balance:  collectively evaluated for 
impairment		     1,136,458       656,089       63,527       38,122       1,894,196  
Total   $ 1,136,458     $ 656,089     $ 63,527     $ 38,122     $ 1,894,196  
                                         
Gross loans                                        
Ending balance:  individually evaluated for 
impairment		   $ 2,221,619     $ 1,830,826     $ 354,208     $ -     $ 4,406,653  
Ending balance:  collectively evaluated for 
impairment		     144,422,379       29,581,611       9,881,284       6,428,765       190,314,039  
Ending balance:  loans acquired with deteriorated 
credit quality		     -       -       -       -       -  
Total   $ 146,643,998     $ 31,412,437     $ 10,235,492     $ 6,428,765     $ 194,720,692  

 

The following is a summary of activities for the allowance for loan losses for the three months ended March 31, 2016 and 2015:

 

    Three Months Ended March 31,  
    2016     2015  
             
Beginning balance   $ 1,894,196     $ 1,707,282  
                 
Provision for loan losses     52,000       100,000  
                 
Charge-offs:                
Commercial real estate     -       -  
One- to four-family residential real estate     (10,756 )     -  
Commercial and industrial     -       -  
Consumer and other     -       (160 )
Total charge-offs     (10,756 )     (160 )
                 
Recoveries:                
Commercial real estate     116,125       183,546  
One- to four-family residential real estate     800       -  
Commercial and industrial     -       -  
Consumer and other     -       -  
Total recoveries     116,925       183,546  
Net recoveries     106,169       183,386  
                 
Ending balance   $ 2,052,365     $ 1,990,668  

 

Nonperforming Assets – The following tables present an aging analysis of the recorded investment of past due loans as of March 31, 2016 and December 31, 2015. Payment activity is reviewed by management on a monthly basis to determine the performance of each loan. Per Company policy, loans past due 90 days or more no longer accrue interest.

 

    Past Due           Total  
                90 Days                 Financing  
    30 - 59 Days     60 - 89 Days     or More     Total     Current     Receivables  
                                     
March 31, 2016                                                
Commercial real estate   $ -     $ -     $ -     $ -     $ 149,189,698     $ 149,189,698  
One- to four-family residential real estate     434,237       -       634,087       1,068,324       28,861,978       29,930,302  
Commercial and industrial     304,144       -       -       304,144       10,494,273       10,798,417  
Consumer and other     -       -       -       -       7,703,009       7,703,009  
                                                 
Totals   $ 738,381     $ -     $ 634,087     $ 1,372,468     $ 196,248,958     $ 197,621,426  

 

    Past Due           Total  
                90 Days                 Financing  
    30 - 59 Days     60 - 89 Days     or More     Total     Current     Receivables  
                                     
December 31, 2015                                                
Commercial real estate   $ -     $ -     $ -     $ -     $ 146,643,998     $ 146,643,998  
One- to four-family residential real estate     314,541       173,467       788,159       1,276,167       30,136,270       31,412,437  
Commercial and industrial     -       -       -       -       10,235,492       10,235,492  
Consumer and other     -       -       -       -       6,428,765       6,428,765  
                                                 
Totals   $ 314,541     $ 173,467     $ 788,159     $ 1,276,167     $ 193,444,525     $ 194,720,692  

 

The following table sets forth nonaccrual loans and other real estate at March 31, 2016 and December 31, 2015:

 

    March 31,     December 31,  
    2016     2015  
             
Nonaccrual loans                
Commercial real estate   $ -     $ -  
One- to four-family residential real estate     1,048,451       1,489,851  
Commercial and industrial     304,144       354,208  
Consumer and other     -       -  
Total nonaccrual loans     1,352,595       1,844,059  
Other real estate (ORE)     501,558       306,000  
                 
Total nonperforming assets   $ 1,854,153     $ 2,150,059  
                 
Nonperforming assets to gross loans held for investment and ORE     0.94 %     1.10 %
Nonperforming assets to total assets     0.67 %     0.79 %

 

Other real estate consisted of one commercial property and one 1-4 family residence at March 31, 2016 and one commercial property at December 31, 2015.

 

Credit Quality Indicators – The following table represents the credit exposure by internally assigned grades at March 31, 2016 and December 31, 2015. This grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements in accordance with the loan terms. The Bank’s internal credit risk grading system is based on management’s experiences with similarly graded loans. Credit risk grades are reassessed each quarter based on any recent developments potentially impacting the creditworthiness of the borrower, as well as other external statistics and factors, which may affect the risk characteristics of the respective loan.

 

    As of March 31, 2016  
    Commercial
Real Estate		     One- to Four-
Family
Residential Real
Estate		     Commercial and
Industrial		     Consumer and
Other		     Total  
                               
Grade                                        
Pass   $ 144,577,449     $ 28,427,054     $ 10,078,247     $ 7,679,762     $ 190,762,512  
Special mention     1,489,421       213,762       89,975       -       1,793,158  
Substandard     3,122,828       1,289,486       326,051       23,247       4,761,612  
Doubtful     -       -       304,144       -       304,144  
Loss     -       -       -       -       -  
                                         
Totals   $ 149,189,698     $ 29,930,302     $ 10,798,417     $ 7,703,009     $ 197,621,426  

 

    As of December 31, 2015  
    Commercial
Real Estate		     One- to Four-
Family
Residential Real
Estate		     Commercial and
Industrial		     Consumer and
Other		     Total  
                               
Grade                                        
Pass   $ 142,560,320     $ 29,434,236     $ 9,785,619     $ 6,428,765     $ 188,208,940  
Special mention     1,862,059       147,375       95,665       -       2,105,099  
Substandard     2,221,619       1,830,826       -       -       4,052,445  
Doubtful     -       -       354,208       -       354,208  
Loss     -       -       -       -       -  
                                         
Totals   $ 146,643,998     $ 31,412,437     $ 10,235,492     $ 6,428,765     $ 194,720,692  

 

The Bank’s internally assigned grades are as follows:

 

Pass – Strong credit with no existing or known potential weaknesses deserving of management’s close attention.

 

Special Mention – Potential weaknesses that deserve management’s close attention. Borrower and guarantor’s capacity to meet all financial obligations is marginally adequate or deteriorating.

 

Substandard – Inadequately protected by the paying capacity of the Borrower and/or collateral pledged. The borrower or guarantor is unwilling or unable to meet loan terms or loan covenants for the foreseeable future.

 

Doubtful – All the weakness inherent in one classified as substandard with the added characteristic that those weaknesses in place make the collection or liquidation in full, on the basis of current conditions, highly questionable and improbable.

 

Loss – Considered uncollectible or no longer a bankable asset. This classification does not mean that the asset has absolutely no recoverable value. In fact, a certain salvage value is inherent in these loans. Nevertheless, it is not practical or desirable to defer writing off a portion or whole of a perceived asset even though partial recovery may be collected in the future.

 

Impaired Loans – The following table includes the recorded investment and unpaid principal balances, net of charge-offs for impaired loans with the associated allowance amount, if applicable. Management determined the allocated allowance based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the allocated allowance recorded.

 

    As of March 31, 2016  
          Principal           Average  
    Recorded     Net of     Related     Recorded  
    Investment     Charge-offs     Allowance     Investment  
                         
With no related allowance recorded:                                
Commercial real estate   $ -     $ -     $ -     $ -  
One- to four-family residential real estate     1,048,451       1,048,451       -       1,395,991  
Commercial and industrial     304,144       304,144       -       380,998  
Consumer and other     -       -       -       -  
                                 
With an allowance recorded:   $ -     $ -     $ -     $ -  
                                 
Total:                                
Commercial real estate   $ -     $ -     $ -     $ -  
One- to four-family residential real estate     1,048,451       1,048,451       -       1,395,991  
Commercial and industrial     304,144       304,144       -       380,998  
Consumer and other     -       -       -       -  

 

    As of December 31, 2015  
          Principal           Average  
    Recorded     Net of     Related     Recorded  
    Investment     Charge-offs     Allowance     Investment  
                         
With no related allowance recorded:                                
Commercial real estate   $ -     $ -     $ -     $ -  
One- to four-family residential real estate     1,489,851       1,489,851       -       1,949,279  
Commercial and industrial     354,208       354,208       -       733,940  
Consumer and other     -       -       -       -  
                                 
With an allowance recorded:   $ -     $ -     $ -     $ -  
                                 
Total:                                
Commercial real estate   $ -     $ -     $ -     $ -  
One- to four-family residential real estate     1,489,851       1,489,851       -       1,949,279  
Commercial and industrial     354,208       354,208       -       733,940  
Consumer and other     -       -       -       -  

 

During the three months ended March 31, 2016 and 2015, no interest income was recognized on these loans as interest collected was credited to loan principal.

 

Certain loans within the Company’s loan and ORE portfolios are guaranteed by the Veterans Administration (VA). In the event of default by the borrower, the VA can elect to pay the guaranteed amount or take possession of the property. If the VA takes possession of the property, the Company is entitled to be reimbursed for the outstanding principal balance, accrued interest and certain other expenses. There were no commitments from the VA to take title to foreclosed VA properties at March 31, 2016 and December 31, 2015.

 

Troubled Debt Restructurings – Restructured loans are considered “troubled debt restructurings” if due to the borrower’s financial difficulties, the Bank has granted a concession that they would not otherwise consider. This may include a transfer of real estate or other assets from the borrower, a modification of loan terms, rates, or a combination of the two. All troubled debt restructurings placed on nonaccrual status must show no less than six consecutive months of repayment performance by the borrower in accordance with contractual terms to return to accrual status. Once a loan has been identified as a troubled debt restructuring, it will continue to be reported as such until the loan is paid in full.

 

There were no troubled debt restructurings as of March 31, 2016 or December 31, 2015.

 

In the normal course of business, the Company may modify a loan for a credit worthy borrower where the modified loan is not considered a troubled debt restructuring. In these cases, the modified terms are consistent with loan terms available to credit worthy borrowers and within normal loan pricing. The modifications to such loans are done according to existing underwriting standards which include review of historical financial statements, including current interim information if available, an analysis of the causes of the borrower’s decline in performance, and projections intended to assess repayment ability going forward.

NOTE 5 – LOANS HELD FOR INVESTMENT, NET

 

The components of loans held for investment, net in the consolidated balance sheets were as follows:

 

  December 31, 2015  December 31, 2014 
  Amount  Percent  Amount  Percent 
             
Loans held for investment, net:                
Commercial real estate $146,643,998   75.3% $129,948,473   73.7%
One- to four-family residential real estate  31,412,437   16.1   32,959,380   18.7 
Commercial and industrial  10,235,492   5.3   8,594,344   4.9 
Consumer and other  6,428,765   3.3   4,816,230   2.7 
Total gross loans  194,720,692   100.0%  176,318,427   100.0%
Unamortized loan fees  (689,102)      (621,345)    
Loans held for investment  194,031,590       175,697,082     
Allowance for loan losses  (1,894,196)      (1,707,282)    
Loans held for investment, net $192,137,394      $173,989,800     

 

At December 31, 2015 and 2014 commercial real estate loans include construction loans of $7.8 million and $13.0 million, respectively.

 

Allowance for Loan Losses and Recorded Investment in Loans – The following is a summary of the allowance for loan losses and recorded investment in loans as of December 31, 2015 and 2014:

 

  As of December 31, 2015 
  Commercial
Real Estate		  One- to
Four-Family
Residential
Real Estate		  Commercial
and Industrial		  Consumer and
Other		  Total 
Allowance for loan losses                    
Ending balance:  individually evaluated for impairment $-  $-  $-  $-  $- 
Ending balance:  collectively evaluated for impairment  1,136,458   656,089   63,527   38,122   1,894,196 
                     
Total $1,136,458  $656,089  $63,527  $38,122  $1,894,196 
                     
Gross loans                    
Ending balance:  individually evaluated for impairment $2,221,619  $1,830,826  $354,208  $-  $4,406,653 
Ending balance:  collectively evaluated for impairment $144,422,379  $29,581,611  $9,881,284  $6,428,765   190,314,039 
Ending balance:  loans acquired with deteriorated credit quality  -   -   -   -   - 
Total $146,643,998  $31,412,437  $10,235,492  $6,428,765  $194,720,692 


 

 

  As of December 31, 2014 
  Commercial
Real Estate		  One- to
Four-Family
Residential
Real Estate		  Commercial
and Industrial		  Consumer and
Other		  Total 
                
Allowance for loan losses                    
Ending balance:  individually evaluated for impairment $-  $-  $-  $-  $- 
Ending balance:  collectively evaluated for impairment  1,125,491   387,801   177,820   16,170   1,707,282 
                     
Total $1,125,491  $387,801  $177,820  $16,170  $1,707,282 
                     
Gross loans                    
Ending balance:  individually evaluated for impairment $2,512,377  $491,780  $16,796  $-  $3,020,953 
Ending balance:  collectively evaluated for impairment  127,436,096   32,467,600   8,577,548   4,816,230   173,297,474 
Total $129,948,473  $32,959,380  $8,594,344  $4,816,230  $176,318,427 

 

The following is a summary of activities for the allowance for loan losses for the year ended December 31, 2015, twelve-month period ended December 31, 2014 and the six months ended December 31, 2014 and the years ended June 30, 2014 and 2013:

 

     Twelve-month  Six-month       
  Year ended  period ended  period ended       
  December 31,  December 31,  December 31,  Years Ended June 30, 
  2015  2014  2014  2014  2013 
     (Unaudited)          
                
Beginning balance $1,707,282  $1,733,097  $1,644,550  $1,824,388  $2,436,785 
                     
Provision for (credit to) loan losses  694,000   50,000   50,000   -   (121,000)
                     
Charge-offs:                    
Commercial real estate  -   -   -   (76,000)  (382,592)
One- to four-family residential real estate  (339,352)  (100,962)  (14,252)  (86,710)  (111,237)
Commercial and industrial  (354,000)  -   -   -   - 
Consumer and other  (160)  (32,562)  (872)  (47,981)  (187,397)
Total charge-offs  (693,512)  (133,524)  (15,124)  (210,691)  (681,226)
                     
Recoveries:                    
Commercial real estate  183,546   29,700   -   29,700   66,265 
One- to four-family residential real estate  2,800   26,153   26,153   -   45,820 
Commercial and industrial  -   -   -   -   - 
Consumer and other  80   1,856   1,703   1,153   77,744 
Total recoveries  186,426   57,709   27,856   30,853   189,829 
Net (charge-offs) recoveries  (507,086)  (75,815)  12,732   (179,838)  (491,397)
                     
Ending balance $1,894,196  $1,707,282  $1,707,282  $1,644,550  $1,824,388 

 

 

Nonperforming Assets – The following tables present an aging analysis of the recorded investment of past due loans as of December 31, 2015 and 2014. Payment activity is reviewed by management on a monthly basis to determine the performance of each loan. Per Company policy, loans past due 90 days or more no longer accrue interest.

 

  Past Due     Total 
  30 - 59  60 - 89  90 Days        Financing 
  Days  Days  or More  Total  Current  Receivables 
                   
December 31, 2015                        
Commercial real estate $-  $-  $-  $-  $146,643,998  $146,643,998 
One- to four-family residential real estate  314,541   173,467   788,159   1,276,167   30,136,270   31,412,437 
Commercial and industrial  -   -   -   -   10,235,492   10,235,492 
Consumer and other  -   -   -   -   6,428,765   6,428,765 
                         
Totals $314,541  $173,467  $788,159  $1,276,167  $193,444,525  $194,720,692 

 

  Past Due       
  30 - 59 Days  60 - 89 Days  90 Days
or More		  Total  Current  Financing
Receivables		 
December 31, 2014                  
Commercial real estate $-  $894,137  $-  $894,137  $129,054,336  $129,948,473 
One- to four-family residential real estate  945,427   149,832   113,239   1,208,497   31,750,882   32,959,380 
Commercial and industrial  -   -   -   -   8,594,344   8,594,344 
Consumer and other  -   -   -   -   4,816,230   4,816,230 
                         
Totals $945,427  $1,043,969  $113,239  $2,102,634  $174,215,792  $176,318,427 

  

The following table sets forth nonaccrual loans and other real estate at December 31, 2015 and 2014:

 

  December 31,  December 31, 
  2015  2014 
       
Nonaccrual loans        
Commercial real estate $-  $616,605 
One- to four-family residential real estate  1,489,851   181,284 
Commercial and industrial  354,208   16,795 
Consumer and other  -   - 
Total nonaccrual loans  1,844,059   814,684 
Other real estate (ORE)  306,000   820,000 
         
Total nonperforming assets $2,150,059  $1,634,684 
         
Nonperforming assets to gross loans held for investment and ORE  1.10%  0.92%
Nonperforming assets to total assets  0.79%  0.66%

 

 

Credit Quality Indicators – The following table represents the credit exposure by internally assigned grades at December 31, 2015 and 2014. This grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements in accordance with the loan terms. The Bank’s internal credit risk grading system is based on management’s experiences with similarly graded loans. Credit risk grades are reassessed each quarter based on any recent developments potentially impacting the creditworthiness of the borrower, as well as other external statistics and factors, which may affect the risk characteristics of the respective loan.

   

  As of December 31, 2015 
  Commercial
Real Estate		  One- to
Four-Family
Residential
Real Estate		  Commercial
and Industrial		  Consumer and
Other		  Total 
                
Grade                    
Pass $142,560,320  $29,434,236  $9,785,619  $6,428,765  $188,208,940 
Special mention  1,862,059   147,375   95,665   -   2,105,099 
Substandard  2,221,619   1,830,826   -   -   4,052,445 
Doubtful  -   -   354,208   -   354,208 
Loss  -   -   -   -   - 
                     
Totals $146,643,998  $31,412,437  $10,235,492  $6,428,765  $194,720,692 

 

  As of December 31, 2014 
  Commercial
Real Estate		  One- to
Four-Family
Residential
Real Estate		  Commercial
and Industrial		  Consumer and
Other		  Total 
                
Grade                    
Pass $126,864,801  $32,382,072  $8,577,548  $4,816,230  $172,640,651 
Special mention  571,294   85,528   -   -   656,823 
Substandard  2,512,377   491,780   16,795   -   3,020,953 
Doubtful  -   -   -   -   - 
Loss  -   -   -   -   - 
                     
Totals $129,948,473  $32,959,380  $8,594,344  $4,816,230  $176,318,427 

 

The Bank’s internally assigned grades are as follows:

 

Pass – Strong credit with no existing or known potential weaknesses deserving of management’s close attention.

 

Special Mention – Potential weaknesses that deserve management’s close attention. Borrower and guarantor’s capacity to meet all financial obligations is marginally adequate or deteriorating.

 

Substandard – Inadequately protected by the paying capacity of the Borrower and/or collateral pledged. The borrower or guarantor is unwilling or unable to meet loan terms or loan covenants for the foreseeable future.

 

Doubtful – All the weakness inherent in one classified as substandard with the added characteristic that those weaknesses in place make the collection or liquidation in full, on the basis of current conditions, highly questionable and improbable.

 

Loss – Considered uncollectible or no longer a bankable asset. This classification does not mean that the asset has absolutely no recoverable value. In fact, a certain salvage value is inherent in these loans. Nevertheless, it is not practical or desirable to defer writing off a portion or whole of a perceived asset even though partial recovery may be collected in the future.

 

Impaired Loans – The following table includes the recorded investment and unpaid principal balances, net of charge-offs for impaired loans with the associated allowance amount, if applicable. Management determined the allocated allowance based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the allocated allowance recorded.

 

  As of December 31, 2015 
     Principal     Average 
  Recorded  Net of  Related  Recorded 
  Investment  Charge-offs  Allowance  Investment 
             
With no related allowance recorded:                
Commercial real estate $-  $-  $-  $- 
One- to four-family residential real estate  1,489,851   1,489,851   -   1,949,279 
Commercial and industrial  354,208   354,208   -   733,940 
Consumer and other  -   -   -   - 
                 
With an allowance recorded: $-  $-  $-  $- 
                 
Total:                
Commercial real estate $-  $-  $-  $- 
One- to four-family residential real estate  1,489,851   1,489,851   -   1,949,279 
Commercial and industrial  354,208   354,208   -   733,940 
Consumer and other  -   -   -   - 
                 
  As of December 31, 2014 
     Principal     Average 
  Recorded  Net of  Related  Recorded 
  Investment  Charge-offs  Allowance  Investment 
             
With no related allowance recorded:                
Commercial real estate $1,099,680  $1,099,680  $-  $1,103,367 
One- to four-family residential real estate  181,284   181,284   -   186,279 
Commercial and industrial  16,795   16,795   -   16,795 
Consumer and other  -   -   -   - 
                 
With an allowance recorded: $-  $-  $-  $- 
                 
Total:                
Commercial real estate $1,099,680  $1,099,680  $-  $1,103,367 
One- to four-family residential real estate  181,284   181,284   -   186,279 
Commercial and industrial  16,795   16,795   -   16,795 
Consumer and other  -   -   -   - 

 

 

During the years ended December 31, 2015 and 2014, no interest income was recognized on these loans as interest collected was credited to loan principal.

 

Certain loans within the Company’s loan and ORE portfolios are guaranteed by the Veterans Administration (VA). In the event of default by the borrower, the VA can elect to pay the guaranteed amount or take possession of the property. If the VA takes possession of the property, the Company is entitled to be reimbursed for the outstanding principal balance, accrued interest and certain other expenses. There were no commitments from the VA to take title to foreclosed VA properties at December 31, 2015 and 2014.

 

Troubled Debt Restructurings – Restructured loans are considered “troubled debt restructurings” if due to the borrower’s financial difficulties, the Bank has granted a concession that they would not otherwise consider. This may include a transfer of real estate or other assets from the borrower, a modification of loan terms, rates, or a combination of the two. All troubled debt restructurings placed on nonaccrual status must show no less than six months of repayment performance by the borrower in accordance with contractual terms to return to accrual status. Once a loan has been identified as a troubled debt restructuring, it will continue to be reported as such until the loan is paid in full.

  

There were no troubled debt restructurings as of December 31, 2015. The following is a summary of total troubled debt restructurings by class as of December 31, 2014:

 

  Number of 
Modifications		 Recorded 
Investment 
Pre-Modification		  Recorded
Investment 
Post-Modification		  Principal Net of 
Charge-offs		 
            
December 31, 2014              
Commercial real estate 3 $1,016,728  $1,137,660  $963,844 
One- to four-family residential real estate -  -   -   - 
Commercial and industrial 1  99,040   113,053   16,795 
Consumer and other -  -   -   - 
               
Totals 4 $1,115,768  $1,250,712  $980,639 

 

Troubled debt restructurings (post-modification) were the result of adding real estate taxes to the loan, along with legal costs related to bankruptcies. There were no allocated specific allowances related to these credits and there were no commitments to lend additional amounts to these customers as of December 31, 2014.

 

During the 12 months ended December 31, 2014, there was one commercial real estate loan of $231,000, which was modified as a troubled debt restructuring. This restructuring was not in default during the 12 months ended December 31, 2014.

 

Nonaccrual troubled debt restructurings as of December 31, 2015 and 2014 amounted to $0 and $498,000, respectively.

 

In the normal course of business, the Company may modify a loan for a credit worthy borrower where the modified loan is not considered a troubled debt restructuring. In these cases, the modified terms are consistent with loan terms available to credit worthy borrowers and within normal loan pricing. The modifications to such loans are done according to existing underwriting standards which include review of historical financial statements, including current interim information if available, an analysis of the causes of the borrower’s decline in performance, and projections intended to assess repayment ability going forward.