Loans Receivable and Allowance for Loan Losses

Loans receivable at September 30, 2018 and December 31, 2017 are summarized as follows:



	September 30,			December 31,
	2018			2017
	(In thousands)
Real estate loans:
One-to-four family	$	1,823,266		$	1,616,259
Multifamily and commercial	2,089,130			1,871,210
Construction	269,729			233,652
Commercial business loans	304,221			277,970
Consumer loans:
Home equity loans and advances	404,028			448,020
Other consumer loans	1,028			998
Total loans	4,891,402			4,448,109
Net deferred loan costs	15,301			10,539
Allowance for loan losses	(63,406		)	(58,178		)
Loans receivable, net	$	4,843,297		$	4,400,470

The Company transferred $1.9 million of residential mortgage and home equity loans from the held-for-investment loan portfolio to loans held-for-sale during the three months ended September 30, 2018. The transferred loans were recorded at their fair values based upon the third party contract price, which was determined to be lower than cost. The Company had no loans held-for-sale at December 31, 2017.

There were no loans sold by the Company during the three months ended September 30, 2018. The Company sold $3.7 million of residential loans to third parties during the nine months ended September 30, 2018. The Company sold $46.6 million of residential loans to third parties during the three months ended September 30, 2017. The Company sold $77.8 million of residential loans to third parties during the nine months ended September 30, 2017.

There were no loans purchased by the Company during the three months ended September 30, 2018. The Company purchased $2.6 million of residential loans and $2.1 million of commercial real estate loans from third parties during the nine months ended September 30, 2018. The Company purchased $3.7 million of residential loans from third parties during the three months months ended September 30, 2017 and $11.1 million of residential loans during the nine months ended September 30, 2017.

At September 30, 2018 and December 31, 2017, the carrying value of real estate loans serviced by the Company for investors was $443.5 million and $478.8 million, respectively.

The following tables summarize the aging of loans receivable by portfolio segment at September 30, 2018 and December 31, 2017:



	September 30, 2018
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total
	(In Thousands)
Real estate loans:
One to four family	$	9,853	1,665	2,008	13,526	1,809,740	$	1,823,266
Multifamily and commercial	130		—	—	130	2,089,000	2,089,130
Construction	—		—	—	—	269,729	269,729
Commercial business loans	—		500	480	980	303,241	304,221
Consumer loans:
Home equity loans advances	2,134		266	1,439	3,839	400,189	404,028
Other consumer loans	4		—	—	4	1,024	1,028
Total loans	$	12,121	2,431	3,927	18,479	4,872,923	$	4,891,402



	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

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 September 30, 2018 and December 31, 2017, non-accrual loans totaled $3.9 million and $6.5 million, respectively.

At September 30, 2018 and December 31, 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:



	September 30, 2018
	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	$	473	—	—	377	34	—	—	$	884
Collectively evaluated for impairment	17,052		23,767	7,148	11,488	2,809	7	251	62,522
Total	$	17,525	23,767	7,148	11,865	2,843	7	251	$	63,406

Total loans:
Individually evaluated for impairment	$	10,416	2,717	—	2,936	3,822	—	—	$	19,891
Collectively evaluated for impairment	1,812,850		2,086,413	269,729	301,285	400,206	1,028	—	4,871,511
Total	$	1,823,266	2,089,130	269,729	304,221	404,028	1,028	—	$	4,891,402



	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	4,562	8	177	57,632
Total	$	19,991	19,933	5,217	8,275	4,577	8	177	$	58,178

Total loans:
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

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 and nine months ended September 30, 2018 and 2017, along with their balances immediately prior to the modification date and post-modification. Post-modification recorded investment represents the net book balance immediately following modification.



	For the Three Months Ended
	September 30, 2018					September 30, 2017
	No. of Loans	Pre-modification recorded investment		Post-modification recorded investment		No. of Loans	Pre-modification recorded investment		Post-modification recorded investment
	(In thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	—	$	—	$	—	—	$	—	$	—
Multifamily commercial	—	—		—		1	3,964		3,964
Commercial business loans	—	—		—		1	18		18
Consumer loans:
Home equity loans and advances	—	—		—		1	210		210
Total loans	—	$	—	$	—	3	$	4,192	$	4,192



	For the Nine Months Ended
	September 30, 2018					September 30, 2017
	No. of Loans	Pre-modification recorded investment		Post-modification recorded investment		No. of Loans	Pre-modification recorded investment		Post-modification recorded investment
	(In thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	4	$	462	$	462	3	$	543	$	543
Multifamily commercial	—	—		—		1	3,964		—
Commercial business loans	—	—		—		1	18		—
Consumer loans:
Home equity loans and advances	1	588		588		2	248		248
Total loans	5	$	1,050	$	1,050	7	$	4,773	$	791

The activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2018 and 2017 was as follows:



	For the Three Months Ended September 30,
	One to four family			Multifamily and commercial		Construction	Commercial Business		Home equity loans and advances		Other consumer		Unallocated		Total
	(In Thousands)
2018
Balance at beginning of period	$	18,549		22,802		6,728	10,920		2,870		7		648		$	62,524
Provision charged (credited) to operations	(809		)	965		420	1,118		202		1		(397	)	1,500
Recoveries	108			—		—	24		17		—		—		149
Charge-offs	(323		)	—		—	(197	)	(246	)	(1	)	—		(767		)
Balance at end of period	$	17,525		23,767		7,148	11,865		2,843		7		251		$	63,406

2017
Balance at beginning of period	$	18,762		18,085		4,598	6,563		3,965		8		85		$	52,066
Provision charged (credited) to operations	631			743		701	2,338		1,251		3		9		5,676
Recoveries	150			75		—	14		40		—		—		279
Charge-offs	(1,010		)	(874	)	—	(435	)	(1,066	)	(3	)	—		(3,388		)
Balance at end of period	$	18,533		18,029		5,299	8,480		4,190		8		94		$	54,633



	For the Nine Months Ended September 30,
	One to four family			Multifamily and commercial		Construction	Commercial Business		Home equity loans and advances		Other consumer		Unallocated		Total
2018
Balance at beginning of period	$	19,991		19,933		5,217	8,275		4,577		8		177		$	58,178
Provision charged (credited) to operations	(2,362		)	3,962		1,928	3,902		(1,607	)	3		74		5,900
Recoveries	280			—		3	111		119		5		—		518
Charge-offs	(384		)	(128	)	—	(423	)	(246	)	(9	)	—		(1,190		)
Balance at end of period	$	17,525		23,767		7,148	11,865		2,843		7		251		$	63,406

2017
Balance at beginning of period	$	18,599		17,616		4,598	6,358		4,231		11		436		$	51,849
Provision charged (credited) to operations	1,058			1,417		701	2,541		1,042		9		(342	)	6,426
Recoveries	265			75		—	163		53		—		—		556
Charge-offs	(1,389		)	(1,079	)	—	(582	)	(1,136	)	(12	)	—		(4,198		)
Balance at end of period	$	18,533		18,029		5,299	8,480		4,190		8		94		$	54,633

The following tables present loans individually evaluated for impairment by loan segment:



	September 30, 2018
	Recorded investment		Unpaid principal balance		Specific allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	6,629	$	7,417	$	—
Multifamily and commercial	2,717		2,727		—
Commercial business loans	—		—		—
Consumer loans:
Home equity loans and advances	2,605		3,183		—
	11,951		13,327		—
With a specific allowance recorded:
Real estate loans:
One to four family	3,787		4,216		473
Commercial business loans	2,936		2,895		377
Consumer loans:
Home equity loans and advances	1,217		1,633		34
	7,940		8,744		884
Total:
Real estate loans:
One to four family	10,416		11,633		473
Multifamily and commercial	2,717		2,727		—
Commercial business loans	2,936		2,895		377
Consumer loans:
Home equity loans and advances	3,822		4,816		34
Total loans	$	19,891	$	22,071	$	884



	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
Total:	7,580		8,167		546
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

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $884 thousand and $546 thousand at September 30, 2018 and December 31, 2017, respectively. At September 30, 2018 and December 31, 2017, impaired loans for which there was no related allowance for loan losses totaled $12.0 million and $14.6 million, respectively.

The following tables present interest income recognized for loans individually evaluated for impairment by loan segment for the three and nine months ended September 30, 2018 and 2017:



	For the Three Months Ended
	September 30, 2018				September 30, 2017
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One to four family	$	10,606	$	107	$	14,154	$	113
Multifamily and commercial	2,717		30		5,084		39
Commercial business loans	3,098		24		3,508		31
Consumer loans:
Home equity loans and advances	3,447		39		3,560		43
Total loans	$	19,868	$	200	$	26,306	$	226



	For the Nine Months Ended
	September 30, 2018				September 30, 2017
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One to four family	$	10,873	$	105	$	15,476	$	135
Multifamily and commercial	2,961		29		6,504		33
Construction	—		—		168		—
Commercial business loans	3,390		25		3,843		29
Consumer loans:
Home equity loans and advances	3,233		39		3,522		45
Total loans	$	20,457	$	198	$	29,513	$	242

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 (Pass), with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (Special Mention) or 6 (Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss). 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 tables present loans receivable by credit quality risk indicator and by loan segment:



	September 30, 2018
	Real Estate
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Total
	(In thousands)
Pass	$	1,816,636	2,074,363	269,729	290,382	402,011	1,028	$	4,854,149
Special mention	—		1,340	—	9,874	—	—	11,214
Substandard	6,630		13,427	—	3,965	2,017	—	26,039
Doubtful	—		—	—	—	—	—	—
Total	$	1,823,266	2,089,130	269,729	304,221	404,028	1,028	$	4,891,402



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

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