Loans Receivable and Allowance for Loan Losses

Loans receivable at March 31, 2019 and December 31, 2018 are summarized as follows:



	March 31,		December 31,
	2019		2018
	(In thousands)
Real estate loans:
One-to-four family	$	1,830,583	$	1,830,186
Multifamily and commercial	2,132,503		2,142,154
Construction	307,429		261,473
Commercial business loans	339,483		333,876
Consumer loans:
Home equity loans and advances	383,143		393,492
Other consumer loans	988		1,108
Total gross loans	4,994,129		4,962,289
Net deferred loan costs, fees and purchased premiums and discounts	17,220		16,893
Loans receivable	$	5,011,349	$	4,979,182

The Company had no loans held-for-sale at March 31, 2019. The Company had $8.1 million of fixed rate one-to-four family real estate loans held-for-sale at December 31, 2018.

The Company sold $17.4 million one-to-four family real estate loans to a third party during the three months ended March 31, 2019, resulting in $132,000 of gross gains and no gross losses. There were no loans sold by the Company during the three months ended March 31, 2018.

The Company purchased $2.3 million of one-to-four family real estate loans from third parties during the three months ended March 31, 2019. The Company purchased $2.7 million of one-to-four family real estate loans and $2.1 million of commercial real estate loans from third parties during the three months ended March 31, 2018.

At March 31, 2019 and December 31, 2018, the carrying value of one-to-four family real estate loans serviced by the Company for investors was $474.7 million and $462.7 million, respectively.

The Company periodically enters into Guarantor Swaps with Freddie Mac which results in improved liquidity. During the three months ended March 31, 2019, the Company exchanged $6.1 million of loans for a Freddie Mac Mortgage Participation Certificate. The Company retained the servicing of these loans. No loans were exchanged with Freddie Mac for Mortgage Participation Certificates during the three months ended March 31, 2018.

7. Loans Receivable and Allowance for Loan Losses (continued)

The following table summarize the aging of loans receivable by portfolio segment at March 31, 2019 and December 31, 2018:



	March 31, 2019
	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current		Total
	(In thousands)
Real estate loans:
One-to-four family	$	5,181	$	1,533	$	3,126	$	9,840	$	1,820,743	$	1,830,583
Multifamily and commercial	—		813		154		967		2,131,536		2,132,503
Construction	—		—		—		—		307,429		307,429
Commercial business loans	77		—		689		766		338,717		339,483
Consumer loans:
Home equity loans and advances	967		886		440		2,293		380,850		383,143
Other consumer loans	—		—		—		—		988		988
Total loans	$	6,225	$	3,232	$	4,409	$	13,866	$	4,980,263	$	4,994,129



	December 31, 2018
	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current		Total
	(In thousands)
Real estate loans:
One-to-four family	$	8,384	$	1,518	$	819	$	10,721	$	1,819,465	$	1,830,186
Multifamily and commercial	1,870		1,425		154		3,449		2,138,705		2,142,154
Construction	—		—		—		—		261,473		261,473
Commercial business loans	208		279		911		1,398		332,478		333,876
Consumer loans:
Home equity loans and advances	1,550		173		905		2,628		390,864		393,492
Other consumer loans	—		—		—		—		1,108		1,108
Total loans	$	12,012	$	3,395	$	2,789	$	18,196	$	4,944,093	$	4,962,289

The Company considers a loan to be delinquent when we have not received a payment within 30 of its contractual due date. Generally, a loan is designated as a non-accrual loan when the payment of interest is 90 or more 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 and there is a sustained period of performance. 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 March 31, 2019 and December 31, 2018, non-accrual loans totaled $6.8 million and $2.8 million, respectively. Included in non-accrual loans at March 31, 2019, are three loans to one borrower totaling $2.4 million that are not delinquent but have been identified as having circumstances that indicate a concern regarding continued collectability.

At March 31, 2019 and December 31, 2018, there were no loans past due 90 days or more and still accruing interest.

7. Loans Receivable and Allowance for Loan Losses (continued)

The following table provides information with respect to our non-accrual loans at March 31, 2019 and December 31, 2018:



	March 31,		December 31,
	2019		2018
	(In thousands)
Non-accrual loans:
Real estate loans:
One-to-four family	$	3,126	$	819
Multifamily and commercial	154		154
Construction	1,700		—
Commercial business loans	1,349		911
Consumer loans:
Home equity loans and advances	440		905
Total non-accrual loans	6,769		2,789

We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. At March 31, 2019, the Company had no real estate owned. At December 31, 2018, we held one single-family property in real estate owned with a carrying value of $92,000 that was acquired through foreclosure on a residential mortgage loan. At March 31, 2019 and December 31, 2018, we had 6 and 14 residential mortgage loans with carrying values of $963,000 and $1.6 million, respectively, collateralized by residential real estate which are in the process of foreclosure.

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



	March 31, 2019
	One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	534	$	1	$	381	$	410	$	16	$	—	$	—	$	1,342
Collectively evaluated for impairment	16,841		20,985		8,652		11,815		3,130		6		—		61,429
Total gross loans	$	17,375	$	20,986	$	9,033	$	12,225	$	3,146	$	6	$	—	$	62,771

Total loans:
Individually evaluated for impairment	$	8,566	$	2,671	$	1,700	$	7,874	$	2,593	$	—	$	—	$	23,404
Collectively evaluated for impairment	1,822,017		2,129,832		305,729		331,609		380,550		988		—		4,970,725
Total gross loans	$	1,830,583	$	2,132,503	$	307,429	$	339,483	$	383,143	$	988	$	—	$	4,994,129

7. Loans Receivable and Allowance for Loan Losses (continued)



	December 31, 2018
	One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	537	$	—	$	—	$	366	$	12	$	—	$	—	$	915
Collectively evaluated for impairment	14,695		23,251		7,217		13,810		2,446		8		—		61,427
Total gross loans	$	15,232	$	23,251	$	7,217	$	14,176	$	2,458	$	8	$	—	$	62,342

Total loans:
Individually evaluated for impairment	$	9,048	$	2,695	$	—	$	2,944	$	3,100	$	—	$	—	$	17,787
Collectively evaluated for impairment	1,821,138		2,139,459		261,473		330,932		390,392		1,108		—		4,944,502
Total gross loans	$	1,830,186	$	2,142,154	$	261,473	$	333,876	$	393,492	$	1,108	$	—	$	4,962,289

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.

7. Loans Receivable and Allowance for Loan Losses (continued)

The following tables present the number of loans modified as TDRs during the three months ended March 31, 2019 and 2018, 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 March 31,
	2019					2018
	No. of Loans	Pre-modification Recorded Investment		Post-modification Recorded Investment		No. of Loans	Pre-modification Recorded Investment		Pre-modification Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Real estate loans:
One-to-four family	—	$	—	$	—	1	$	588	$	588
Commercial business loans	1	4,095		4,095		—	—		—
Consumer loans:
Home equity loans and advances	—	—		—		1	84		84
Total restructured loans	1	$	4,095	$	4,095	2	$	672	$	672

The activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019 and 2018 are as follows:



	For the Three Months Ended March 31, 2019
	One-to-Four Family		Multifamily and Commercial			Construction		Commercial Business			Home Equity Loans and Advances			Other Consumer Loans			Unallocated		Total
	(In thousands)

Balance at beginning of period	$	15,232	$	23,251		$	7,217	$	14,176		$	2,458		$	8		$	—	$	62,342
Provision charged (credited)	2,122		(2,265		)	1,816		(1,996		)	761			(2		)	—		436
Recoveries	21		—			—		313			7			—			—		341
Charge-offs	—		—			—		(268		)	(80		)	—			—		(348		)
Balance at end of period	$	17,375	$	20,986		$	9,033	$	12,225		$	3,146		$	6		$	—	$	62,771

7. Loans Receivable and Allowance for Loan Losses (continued)



	For the Three Months Ended March 31, 2018
	One-to-Four Family			Multifamily and Commercial			Construction		Commercial Business			Home Equity Loans and Advances			Other Consumer Loans			Unallocated		Total
	(In thousands)

Balance at beginning of period	$	19,991		$	19,933		$	5,217	$	8,275		$	4,576		$	8		$	178	$	58,178
Provision charged (credited)	(1,229		)	(707		)	1,354		2,697			(657		)	(2		)	544		2,000
Recoveries	120			—			3		52			5			1			—		181
Charge-offs	(54		)	(129		)	—		(224		)	—			—			—		(407		)
Balance at end of period	$	18,828		$	19,097		$	6,574	$	10,800		$	3,924		$	7		$	722	$	59,952

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



	At March 31, 2019
	Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family	$	3,765	$	4,911	$	—
Multifamily and commercial	1,544		2,331		—
Commercial business loans	2,648		2,860		—
Consumer loans:
Home equity loans and advances	1,222		1,577		—
	9,179		11,679		—
With a specific allowance recorded:
Real estate loans:
One-to-four family	4,801		4,851		534
Multifamily and commercial	1,127		1,127		1
Construction	1,700		1,700		381
Commercial business loans	5,226		5,226		410
Consumer loans:
Home equity loans and advances	1,371		1,371		16
	14,225		14,275		1,342
Total:
Real estate loans:
One-to-four family	8,566		9,762		534
Multifamily and commercial	2,671		3,458		1
Construction	1,700		1,700		381
Commercial business loans	7,874		8,086		410
Consumer loans:
Home equity loans and advances	2,593		2,948		16
Total loans	$	23,404	$	25,954	$	1,342

7. Loans Receivable and Allowance for Loan Losses (continued)



	At December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family	$	4,156	$	5,307	$	—
Multifamily and commercial	2,695		3,482		—
Commercial business loans	2,285		2,374		—
Consumer loans:
Home equity loans and advances	2,511		2,866		—
	11,647		14,029		—
With a specific allowance recorded:
Real estate loans:
One-to-four family	4,892		4,939		537
Commercial business loans	659		768		366
Consumer loans:
Home equity loans and advances	589		589		12
	6,140		6,296		915
Total:
Real estate loans:
One-to-four family	9,048		10,246		537
Multifamily and commercial	2,695		3,482		—
Commercial business loans	2,944		3,142		366
Consumer loans:
Home equity loans and advances	3,100		3,455		12
	$	17,787	$	20,325	$	915

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $1.3 million and $915,000 at March 31, 2019 and December 31, 2018, respectively. At March 31, 2019 and December 31, 2018, impaired loans for which there was no related allowance for loan losses totaled $9.2 million and $11.6 million, respectively.

The recorded investment in TDRs totaled $19.7 million at March 31, 2019, of which four loans totaling $894,000 were 30-59 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at March 31, 2019. The recorded investment in TDRs totaled $16.0 million at December 31, 2018, of which one loan totaling $101,000 was over 90 days past due, and seven loans totaling $1.0 million were 30-59 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at December 31, 2018.

7. Loans Receivable and Allowance for Loan Losses (continued)

The following tables presents interest income recognized for loans individually evaluated for impairment, by loan segment, for the three months ended March 31, 2019 and 2018:



	For the Three Months Ended March 31,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One-to-four family	$	8,807	$	106	$	11,235	$	102
Multifamily and commercial	2,683		37		3,136		26
Construction	1,700		25		—		—
Commercial business loans	5,409		80		3,836		26
Consumer loans:
Home equity loans and advances	2,847		52		2,837		36
Total loans	$	21,446	$	300	$	21,044	$	190

The Company utilizes an 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 credit risk review department. The Company requires an annual review be performed above certain dollar thresholds, depending on loan type, to help determine the appropriate risk ratings. Results from examinations are presented to the Audit Committee of the Board of Directors.

The following tables present loans receivable by credit risk indicator and by loan segment:



	At March 31, 2019
	One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)

Pass	$	1,824,967	$	2,119,049	$	305,729	$	323,622	$	382,186	$	988	$	4,956,541
Special mention	—		90		—		11,244		—		—		11,334
Substandard	5,616		13,364		1,700		4,617		957		—		26,254
Doubtful	—		—		—		—		—		—		—
Total	$	1,830,583	$	2,132,503	$	307,429	$	339,483	$	383,143	$	988	$	4,994,129



	December 31, 2018
	One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)

Pass	$	1,826,066	$	2,128,680	$	261,473	$	320,451	$	392,092	$	1,108	$	4,929,870
Special mention	—		—		—		9,074		—		—		9,074
Substandard	4,120		13,474		—		4,351		1,400		—		23,345
Doubtful	—		—		—		—		—		—		—
Total	$	1,830,186	$	2,142,154	$	261,473	$	333,876	$	393,492	$	1,108	$	4,962,289