Loans Receivable and Allowance for Loan Losses

Loans receivable at December 31, 2017 and September 30, 2017 are summarized as follows:



	December 31,			September 30,
	2017			2017
	(In thousands)
Real estate loans:
One to four family	$	1,616,259		$	1,578,835
Multifamily and commercial	1,871,210			1,821,982
Construction	233,652			218,408
Commercial business loans	277,970			267,664
Consumer loans:
Home equity loans and advances	448,020			464,962
Other consumer loans	998			1,270
Total loans	4,448,109			4,353,121
Net deferred loan costs	10,539			9,135
Allowance for loan losses	(58,178		)	(54,633		)
Loans receivable, net	$	4,400,470		$	4,307,623

The Company had no loans held for sale at December 31, 2017 and September 30, 2017. The Company purchased commercial real estate and multifamily loans with a carrying value of $49.8 million and residential loans with a carrying value of $6.2 million from third parties during the three months ended December 31, 2017. The Company purchased $9.4 million of residential loans from third parties for the three months ended December 31, 2016.

At December 31, 2017 and September 30, 2017, the carrying value of real estate loans serviced by the Company for investors was $478.8 million and $493.2 million, respectively.

The following tables summarize the aging of loans receivable by portfolio segment at December 31, 2017 and September 30, 2017:



	December 31, 2017
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total
	(In Thousands)
Real estate loans:
One to four family	$	7,080	1,229	3,360	11,669	1,604,590	$	1,616,259
Multifamily and commercial	138		380	1,329	1,847	1,869,363	1,871,210
Construction	—		—	—	—	233,652	233,652
Commercial business loans	89		730	1,263	2,082	275,888	277,970
Consumer loans:
Home equity loans advances	1,421		26	573	2,020	446,000	448,020
Other consumer loans	—		—	—	—	998	998
Total loans	$	8,728	2,365	6,525	17,618	4,430,491	$	4,448,109



	September 30, 2017
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total
	(In thousands)
Real estate loans:
One to four family	$	3,924	932	3,496	8,352	1,570,483	$	1,578,835
Multifamily and commercial	—		123	1,510	1,633	1,820,349	1,821,982
Construction	—		—	—	—	218,408	218,408
Commercial business loans	—		388	1,038	1,426	266,238	267,664
Consumer loans:
Home equity loans advances	1,437		187	351	1,975	462,987	464,962
Other consumer loans	1		—	—	1	1,269	1,270
Total loans	$	5,362	1,630	6,395	13,387	4,339,734	$	4,353,121

The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. A loan is designated as a non-accrual loan when the payment of interest is more than three months in arrears of its contractual due date. The accrual of income on a non-accrual loan is reversed and discontinued until the outstanding payments in arrears have been collected. The Company identifies loans that may need to be charged-off as a loss by reviewing all delinquent loans, classified loans and other loans that management may have concerns about collectability.

At December 31, 2017 and September 30, 2017, there were no loans past due 90 days or more and still accruing interest.

The following table summarizes loans receivable and allowance for loan losses by portfolio segment and impairment method:



	December 31, 2017
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	423	28	—	80	15	—	—	$	546
Collectively evaluated for impairment	19,568		19,905	5,217	8,195	4,561	8	178	57,632
Total	$	19,991	19,933	5,217	8,275	4,576	8	178	$	58,178
Total loans:
Ending balance:
Individually evaluated for impairment	$	11,644	3,693	—	4,263	2,591	—	—	$	22,191
Collectively evaluated for impairment	1,604,615		1,867,517	233,652	273,707	445,429	998	—	4,425,918
Total	$	1,616,259	1,871,210	233,652	277,970	448,020	998	—	$	4,448,109



	September 30, 2017
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	407		35	—	84	14	—	—	540
Collectively evaluated for impairment	18,126		17,994	5,299	8,396	4,176	8	94	54,093
Total	18,533		18,029	5,299	8,480	4,190	8	94	54,633
Total loans:
Ending balance:
Individually evaluated for impairment	$	12,247	6,343	—	4,327	2,998	—	—	$	25,915
Collectively evaluated for impairment	1,566,588		1,815,639	218,408	263,337	461,964	1,270	—	4,327,206
Total	$	1,578,835	1,821,982	218,408	267,664	464,962	1,270	—	$	4,353,121

Loan modifications to borrowers experiencing financial difficulties that are considered Troubled Debt Restructurings ("TDRs") primarily involve the lowering of the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following tables present the number of loans modified as TDRs during the three months ended December 31, 2017 and December 31, 2016, along with their balances immediately prior to the modification date and post-modification as of December 31, 2017 and December 31, 2016.



	December 31, 2017					December 31, 2016
	No of loans	Pre-modification recorded investment		Post-modification recorded investment		No of loans	Pre-modification recorded investment		Post-modification recorded investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	—	$	—	$	—	2	$	257	$	257
Consumer loans:
Home equity loans and advances	—	—		—		1	108		108
Total loans	—	$	—	$	—	3	$	365	$	365

The activity in the allowance for loan losses by portfolio segment at December 31, 2017 and 2016 was as follows:



	One to four family			Multifamily and commercial			Construction		Commercial Business		Home equity loans and advances		Other consumer		Unallocated	Total
	(In Thousands)
2017
Balance at beginning of period	$	18,533		$	18,029		5,299		8,480		4,190		8		94	$	54,633
Provision charged (credited)	1,473			1,906			(82	)	(373	)	389		3		84	3,400
Recoveries	9			—			—		171		6		2		—	188
Charge-offs	(24		)	(2		)	—		(3	)	(9	)	(5	)	—	(43		)
Balance at end of period	$	19,991		19,933			5,217		8,275		4,576		8		178	$	58,178

2016
Balance at beginning of period	$	18,638		17,390			5,960		5,721		4,052		11		95	$	51,867
Provision charged (credited)	(27		)	226			(1,362	)	641		177		4		341	—
Recoveries	3			—			—		19		6		—		—	28
Charge-offs	(15		)	$	—		—		(23	)	(4	)	(4	)	—	(46		)
Balance at end of period	$	18,599		17,616			4,598		6,358		4,231		11		436	$	51,849

The following table presents loans individually evaluated for impairment by loan segment:



	December 31, 2017
	Recorded investment		Unpaid principal balance	Specific allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	8,870	9,704	$	—
Multifamily and commercial	2,058		2,933	—
Commercial business loans	1,522		2,015	—
Consumer loans:
Home equity loans and advances	2,161		2,601	—
	$	14,611	17,253	$	—
With a specific allowance recorded:
Real estate loans:
One to four family	$	2,774	2,788	$	423
Multifamily and commercial	1,635		2,208	28
Commercial business loans	2,741		2,741	80
Consumer loans:
Home equity loans and advances	430		430	15
	$	7,580	8,167	$	546
Total:
Real estate loans:
One to four family	$	11,644	12,492	$	423
Multifamily and commercial	3,693		5,141	28
Commercial business loans	4,263		4,756	80
Consumer loans:
Home equity loans and advances	2,591		3,031	15
Total loans	$	22,191	25,420	$	546



	September 30, 2017
	Recorded investment		Unpaid principal balance	Specific allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	9,272	10,156	$	—
Multifamily and commercial	4,701		5,577	—
Commercial business loans	1,545		2,038	—
Consumer loans:
Home equity loans and advances	2,745		3,214	—
	$	18,263	20,985	$	—
With a specific allowance recorded:
Real estate loans:
One to four family	$	2,975	2,989	$	407
Multifamily and commercial	1,642		2,215	35
Commercial business loans	2,782		2,782	84
Consumer loans:
Home equity loans and advances
	253		253	14
Total:	$	7,652	8,239	$	540
Real estate loans:
One to four family	$	12,247	13,145	$	407
Multifamily and commercial	6,343		7,792	35
Commercial business loans	4,327		4,820	84
Consumer loans:
Home equity loans and advances	2,998		3,467	14
Total loans	$	25,915	29,224	$	540

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $546 thousand and $540 thousand at December 31, 2017 and September 30, 2017, respectively. At December 31, 2017 and September 30, 2017, impaired loans for which there was no related allowance for loan losses totaled $14.6 million and $18.3 million, respectively.

The following table presents interest income recognized for loans individually evaluated for impairment by loan segment for the three months ended December 31, 2017 and 2016:



	December 31, 2017				December 31, 2016
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized
	(In thousands)				(In thousands)
Real estate loans:
One to four family	$	14,015	$	110	$	16,419	$	118
Multifamily and commercial	4,087		39		4,879		70
Commercial business loans	3,870		46		3,861		49
Consumer loans:
Home equity loans and advances	3,618		35		3,952		34
Total loans	$	25,590	$	230	$	29,111	$	271

The Company utilizes an internal eight-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (Watch) or 6 (Special Mention). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss), respectively. The risk ratings are also confirmed through periodic loan review examinations which are currently performed by both an independent third-party and the Company's internal loan review department. Results from examinations are presented to the Audit Committee of the Board of Directors.

The following table presents loans receivable by credit quality risk indicator and by loan segment:



	December 31, 2017
	Real Estate
	One to four family		Multifamily and commercial	Construction	Home equity loans and advances	Commercial business	Other consumer	Total
	(In thousands)

Pass	$	1,606,672	1,851,772	233,652	446,364	268,355	998	$	4,407,813
Special mention	—		4,782	—	—	3,678	—	8,460
Substandard	9,587		14,656	—	1,656	5,937	—	31,836
Doubtful	—		—	—	—	—	—	—
Total	$	1,616,259	1,871,210	233,652	448,020	277,970	998	$	4,448,109



	September 30, 2017
	Real Estate
	One to four family		Multifamily and commercial	Construction	Home equity loans and advances	Commercial business	Other consumer	Total
	(In thousands)

Pass	$	1,569,064	1,796,786	218,408	463,257	258,454	1,270	$	4,307,239
Special mention	—		11,600	—	—	3,347	—	14,947
Substandard	9,771		13,596	—	1,705	5,863	—	30,935
Doubtful	—		—	—	—	—	—	—
Total	$	1,578,835	1,821,982	218,408	464,962	267,664	1,270	$	4,353,121