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Loans | 12 Months Ended
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Dec. 31, 2012
Loans | NOTE 4 – LOANS Loans at year-end were as follows:
|  | 2012 |  |  | 2011 |
Commercial |  | $ | 25,408 |  |  | $ | 25,994 |
Real estate: |  |  |  |  |  |  |  |
Single-family residential |  |  | 43,058 |  |  |  | 18,214 |
Multi-family residential |  |  | 21,576 |  |  |  | 27,163 |
Commercial |  |  | 54,291 |  |  |  | 69,757 |
Construction |  |  | 14 |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |
Home equity lines of credit |  |  | 12,963 |  |  |  | 14,921 |
Other |  |  | 970 |  |  |  | 1,221 |
Subtotal |  |  | 158,280 |  |  |  | 157,270 |
Less: ALLL |  |  | (5,237 | ) |  |  | (6,110 | )
Loans, net |  | $ | 153,043 |  |  | $ | 151,160 |
Mortgage Purchase Program On December 11, 2012 the Bank entered into a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation. At December 31, 2012, CFBank held $25,373 of such loans which have been included in single family residential loan totals above. Through a participation agreement, CFBank agreed to purchase from Northpointe 75% interest in fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S. The participation agreement provides for CFBank to purchase individually (MERS registered) loans from Northpointe and hold them until funded by the end investor. The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions such as Wells Fargo Bank. This process on average takes approximately 14 days. Given the short term nature of each of these individual loans, common credit risks such as past due, impairment and TDR, nonperforming, and nonaccrual classification are substantially reduced. The maximum aggregate purchase interest shall not exceed $45,000. Northpointe maintains a 25% ownership interest in each loan it participates. The agreement further calls for full control to be relinquished by the Broker to Northpointe and its participants with recourse to the broker after 120 days, at the sole discretion of Northpointe. As such, these purchased loans are classified as portfolio loans. These loans are 100% risk rated for CFBank capital adequacy purposes. The ALLL is a valuation allowance for probable incurred credit losses in the loan portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1 of the Notes to Consolidated Financial Statements. The following tables present the activity in the ALLL by portfolio segment for the year ended December 31, 2012 and 2011:
December 31, 2012: |
|  |  |  |  | Real Estate |  |  |  |  |  | Consumer |  |  |  |
|  | Commercial |  |  | Single-family |  |  | Multi-family |  |  | Commercial |  |  | Construction |  |  | Home equity lines of credit |  |  | Other |  |  | Total |
Beginning balance |  | $ | 2,281 |  |  | $ | 207 |  |  | $ | 1,470 |  |  | $ | 1,863 |  |  | $ | — |  |  | $ | 272 |  |  | $ | 17 |  |  | $ | 6,110 |
Addition to (reduction in) provision for loan losses |  |  | (1,251 | ) |  |  | 180 |  |  |  | 700 |  |  |  | 1,412 |  |  |  | — |  |  |  | 78 |  |  |  | 10 |  |  |  | 1,129 |
Charge-offs |  |  | (99 | ) |  |  | (64 | ) |  |  | (796 | ) |  |  | (1,467 | ) |  |  | — |  |  |  | (126 | ) |  |  | (39 | ) |  |  | (2,591 | )
Recoveries |  |  | 380 |  |  |  | 9 |  |  |  | 22 |  |  |  | 138 |  |  |  | — |  |  |  | 17 |  |  |  | 23 |  |  |  | 589 |
Ending balance |  | $ | 1,311 |  |  | $ | 332 |  |  | $ | 1,396 |  |  | $ | 1,946 |  |  | $ | — |  |  | $ | 241 |  |  | $ | 11 |  |  | $ | 5,237 |
December 31, 2011: |
|  |  |  |  | Real Estate |  |  | Consumer |  |  |  |
|  | Commercial |  |  | Single-family |  |  | Multi-family |  |  | Commercial |  |  | Construction |  |  | Home equity lines of credit |  |  | Other |  |  | Total |
Beginning balance |  | $ | 1,879 |  |  | $ | 241 |  |  | $ | 2,520 |  |  | $ | 4,719 |  |  | $ | 74 |  |  | $ | 303 |  |  | $ | 22 |  |  | $ | 9,758 |
Addition to (reduction in) provision for loan losses |  |  | 1,481 |  |  |  | 83 |  |  |  | 2,108 |  |  |  | (406 | ) |  |  | (74 | ) |  |  | 183 |  |  |  | — |  |  |  | 3,375 |
Charge-offs |  |  | (1,296 | ) |  |  | (124 | ) |  |  | (3,167 | ) |  |  | (2,652 | ) |  |  | — |  |  |  | (241 | ) |  |  | (18 | ) |  |  | (7,498 | )
Recoveries |  |  | 214 |  |  |  | 7 |  |  |  | 9 |  |  |  | 202 |  |  |  | — |  |  |  | 27 |  |  |  | 13 |  |  |  | 472 |
Reclass of ALLL on loan-related commitments (1) |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |
Ending balance |  | $ | 2,281 |  |  | $ | 207 |  |  | $ | 1,470 |  |  | $ | 1,863 |  |  | $ | — |  |  | $ | 272 |  |  | $ | 17 |  |  | $ | 6,110 |
(1) | Reclassified from (to) accrued interest payable and other liabilities in the consolidated balance sheet.
Activity in the ALLL was as follows:
|  | 2010 |
Beginning balance |  | $ | 7,090 |
Provision for loan losses |  |  | 8,468 |
Reclassification of ALLL on loan-related commitments (1) |  |  | 10 |
Loans charged-off |  |  | (6,165 | )
Recoveries |  |  | 355 |
Ending balance |  | $ | 9,758 |
(1) | Reclassified from (to) accrued interest payable and other liabilities in the consolidated balance sheet.
The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2012:
|  |  |  |  | Real Estate |  |  |  |  |  | Consumer |  |  |  |
|  | Commercial |  |  | Single-family |  |  | Multi-family |  |  | Commercial |  |  | Construction |  |  | Home equity lines of credit |  |  | Other |  |  | Total |
ALLL: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 609 |  |  | $ | 71 |  |  | $ | 24 |  |  | $ | 126 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 830 |
Collectively evaluated for impairment |  |  | 702 |  |  |  | 261 |  |  |  | 1,372 |  |  |  | 1,820 |  |  |  | — |  |  |  | 241 |  |  |  | 11 |  |  |  | 4,407 |
Total ending allowance balance |  | $ | 1,311 |  |  | $ | 332 |  |  | $ | 1,396 |  |  | $ | 1,946 |  |  | $ | — |  |  | $ | 241 |  |  | $ | 11 |  |  | $ | 5,237 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,091 |  |  | $ | 129 |  |  | $ | 2,167 |  |  | $ | 6,467 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 9,854 |
Collectively evaluated for impairment |  |  | 24,317 |  |  |  | 42,929 |  |  |  | 19,409 |  |  |  | 47,824 |  |  |  | 14 |  |  |  | 12,963 |  |  |  | 970 |  |  |  | 148,426 |
Total ending loan balance |  | $ | 25,408 |  |  | $ | 43,058 |  |  | $ | 21,576 |  |  | $ | 54,291 |  |  | $ | 14 |  |  | $ | 12,963 |  |  | $ | 970 |  |  | $ | 158,280 |
The following table presents the balance in the ALLL and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2011:
|  |  |  |  | Real Estate |  |  | Consumer |  |  |  |
|  | Commercial |  |  | Single-family |  |  | Multi-family |  |  | Commercial |  |  | Home equity lines of credit |  |  | Other |  |  | Total |
ALLL: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 624 |  |  | $ | — |  |  | $ | 11 |  |  | $ | 262 |  |  | $ | — |  |  | $ | — |  |  | $ | 897 |
Collectively evaluated for impairment |  |  | 1,657 |  |  |  | 207 |  |  |  | 1,459 |  |  |  | 1,601 |  |  |  | 272 |  |  |  | 17 |  |  |  | 5,213 |
Total ending allowance balance |  | $ | 2,281 |  |  | $ | 207 |  |  | $ | 1,470 |  |  | $ | 1,863 |  |  | $ | 272 |  |  | $ | 17 |  |  | $ | 6,110 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 821 |  |  | $ | — |  |  | $ | 5,090 |  |  | $ | 6,085 |  |  | $ | 135 |  |  | $ | — |  |  | $ | 12,131 |
Collectively evaluated for impairment |  |  | 25,173 |  |  |  | 18,214 |  |  |  | 22,073 |  |  |  | 63,672 |  |  |  | 14,786 |  |  |  | 1,221 |  |  |  | 145,139 |
Total ending loan balance |  | $ | 25,994 |  |  | $ | 18,214 |  |  | $ | 27,163 |  |  | $ | 69,757 |  |  | $ | 14,921 |  |  | $ | 1,221 |  |  | $ | 157,270 |
The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2012. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs and includes accrued interest.
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | ALLL Allocated |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 136 |  |  | $ | 121 |  |  | $ | — |  |  | $ | 503 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Multi-family residential |  |  | 2,001 |  |  |  | 1,879 |  |  |  | — |  |  |  | 2,223 |  |  |  | — |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 3,000 |  |  |  | 2,195 |  |  |  | — |  |  |  | 1,819 |  |  |  | — |
Owner occupied |  |  | 2,195 |  |  |  | 1,244 |  |  |  | — |  |  |  | 1,258 |  |  |  | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Purchased for portfolio |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total with no allowance recorded |  |  | 7,332 |  |  |  | 5,439 |  |  |  | — |  |  |  | 5,803 |  |  |  | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 970 |  |  |  | 970 |  |  |  | 609 |  |  |  | 658 |  |  |  | 5 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 129 |  |  |  | 129 |  |  |  | 71 |  |  |  | 129 |  |  |  | 2 |
Multi-family residential |  |  | 288 |  |  |  | 288 |  |  |  | 24 |  |  |  | 1,975 |  |  |  | 1 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 2,239 |  |  |  | 2,239 |  |  |  | 105 |  |  |  | 2,650 |  |  |  | 56 |
Owner occupied |  |  | 396 |  |  |  | 396 |  |  |  | 7 |  |  |  | 397 |  |  |  | 6 |
Land |  |  | 438 |  |  |  | 393 |  |  |  | 14 |  |  |  | 396 |  |  |  | 6 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |
Purchased for portfolio |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |
Total with an allowance recorded |  |  | 4,460 |  |  |  | 4,415 |  |  |  | 830 |  |  |  | 6,205 |  |  |  | 76 |
Total |  | $ | 11,792 |  |  | $ | 9,854 |  |  | $ | 830 |  |  | $ | 12,008 |  |  | $ | 76 |
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011:
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | ALLL Allocated |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 573 |  |  | $ | 47 |  |  | $ | — |  |  | $ | 1,171 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | — |
Multi-family residential |  |  | 6,748 |  |  |  | 4,996 |  |  |  | — |  |  |  | 3,396 |  |  |  | — |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 2,171 |  |  |  | 1,755 |  |  |  | — |  |  |  | 1,446 |  |  |  | — |
Owner occupied |  |  | 876 |  |  |  | 446 |  |  |  | — |  |  |  | 1,017 |  |  |  | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | 135 |  |  |  | 135 |  |  |  | — |  |  |  | 136 |  |  |  | — |
Total with no allowance recorded |  |  | 10,503 |  |  |  | 7,379 |  |  |  | — |  |  |  | 7,189 |  |  |  | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 796 |  |  |  | 774 |  |  |  | 624 |  |  |  | 428 |  |  |  | 30 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multi-family residential |  |  | 94 |  |  |  | 94 |  |  |  | 11 |  |  |  | 48 |  |  |  | 3 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 2,823 |  |  |  | 2,823 |  |  |  | 210 |  |  |  | 1,322 |  |  |  | 85 |
Owner occupied |  |  | 411 |  |  |  | 411 |  |  |  | 20 |  |  |  | 211 |  |  |  | 43 |
Land |  |  | 766 |  |  |  | 650 |  |  |  | 32 |  |  |  | 681 |  |  |  | 42 |
Total with an allowance recorded |  |  | 4,890 |  |  |  | 4,752 |  |  |  | 897 |  |  |  | 2,690 |  |  |  | 203 |
Total |  | $ | 15,393 |  |  | $ | 12,131 |  |  | $ | 897 |  |  | $ | 9,879 |  |  | $ | 203 |
|  | 2010 |
Average of individually impaired loans during the year |  | $ | 11,722 |
Interest income recognized during impairment |  |  | 41 |
There was no cash basis interest income recognized during the years ended December 31, 2012, 2011 or 2010. The following table presents the recorded investment in nonaccrual loans by class of loans as of December 31, 2012 and 2011:
|  | December 31, 2012 |  |  | December 31, 2011 |
Loans past due over 90 days still on accrual: |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |
Commercial: |  | $ | — |  |  | $ | — |
Non-owner occupied |  |  | — |  |  |  | — |
Other consumer loans |  |  | — |  |  |  | — |
Total over 90 days still on accrual loans |  |  | — |  |  |  | — |
Nonaccrual loans: |  |  |  |  |  |  |  |
Commercial |  | $ | 714 |  |  | $ | 47 |
Real estate: |  |  |  |  |  |  |  |
Single-family residential |  |  | 113 |  |  |  | 736 |
Multi-family residential |  |  | 2,082 |  |  |  | 4,996 |
Commercial: |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 2,195 |  |  |  | 1,910 |
Owner occupied |  |  | 1,243 |  |  |  | 446 |
Construction |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |
Originated for portfolio |  |  | — |  |  |  | 157 |
Purchased for portfolio |  |  | 9 |  |  |  | 9 |
Other consumer |  |  | — |  |  |  | — |
Total nonaccrual loans |  |  | 6,356 |  |  |  | 8,301 |
Total nonaccrual and nonperforming loans |  | $ | 6,356 |  |  | $ | 8,301 |
Nonaccrual loans include both smaller balance single-family mortgage and consumer loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2012:
|  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Loans Not Past Due |  |  | Nonaccrual Loans Not > 90 days Past Due |
Commercial |  | $ | — |  |  | $ | 65 |  |  | $ | 121 |  |  | $ | 186 |  |  | $ | 25,222 |  |  | $ | 593 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 1,105 |  |  |  | 122 |  |  |  | 74 |  |  |  | 1,301 |  |  |  | 41,757 |  |  |  | 39 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21,576 |  |  |  | 2,082 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 40 |  |  |  | — |  |  |  | 1,611 |  |  |  | 1,651 |  |  |  | 28,299 |  |  |  | 583 |
Owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19,774 |  |  |  | 1,244 |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,568 |  |  |  | — |
Construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | 20 |  |  |  | 10,699 |  |  |  | — |
Purchased for portfolio |  |  | — |  |  |  | — |  |  |  | 9 |  |  |  | 9 |  |  |  | 2,235 |  |  |  | — |
Other |  |  | 18 |  |  |  | — |  |  |  | — |  |  |  | 18 |  |  |  | 951 |  |  |  | — |
Total |  | $ | 1,183 |  |  | $ | 187 |  |  | $ | 1,815 |  |  | $ | 3,185 |  |  | $ | 155,095 |  |  | $ | 4,541 |
The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2011:
|  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Loans Not Past Due |  |  | Nonaccrual Loans Not > 90 days Past Due |
Commercial |  | $ | 103 |  |  | $ | — |  |  | $ | — |  |  | $ | 103 |  |  | $ | 25,891 |  |  | $ | 47 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 714 |  |  |  | 474 |  |  |  | 491 |  |  |  | 1,679 |  |  |  | 16,535 |  |  |  | 245 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | 3,065 |  |  |  | 3,065 |  |  |  | 24,098 |  |  |  | 1,931 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 173 |  |  |  | 275 |  |  |  | 68 |  |  |  | 516 |  |  |  | 35,899 |  |  |  | 1,842 |
Owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27,900 |  |  |  | 446 |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,442 |  |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | 22 |  |  |  | — |  |  |  | 135 |  |  |  | 157 |  |  |  | 12,126 |  |  |  | 22 |
Purchased for portfolio |  |  | — |  |  |  | — |  |  |  | 9 |  |  |  | 9 |  |  |  | 2,629 |  |  |  | — |
Other |  |  | — |  |  |  | 30 |  |  |  | — |  |  |  | 30 |  |  |  | 1,191 |  |  |  | — |
Total |  | $ | 1,012 |  |  | $ | 779 |  |  | $ | 3,768 |  |  | $ | 5,559 |  |  | $ | 151,711 |  |  | $ | 4,533 |
TDRs: The Company has allocated $830 and $897 of specific reserves to loans whose terms have been modified in TDRs as of December 31, 2012 and 2011. The Company has not committed to lend additional amounts as of December 31, 2012 or 2011 to customers with outstanding loans that are classified as TDRs. During the year ended December 31, 2012, the terms of certain loans were modified as TDRs, where concessions had been granted to borrowers experiencing financial difficulties. The modification of the terms of such loans may have included one or a combination of the following: a reduction of the stated interest rate of the loan; an increase in the stated rate of interest lower than the current market rate for new debt with similar risk; an extension of the maturity date; or a change in the payment terms. There were no modifications involving a reduction of the stated interest rate. Modifications involving an extension of the maturity date were for periods ranging from 2 months to 4 years. The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2012:
|  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
Commercial |  |  | 2 |  |  | $ | 319 |  |  | $ | 319 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 1 |  |  |  | 132 |  |  |  | 138 |
Multi-family residential |  |  | 1 |  |  |  | 2,017 |  |  |  | 203 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 1 |  |  |  | 478 |  |  |  | 428 |
Total |  |  | 5 |  |  | $ | 2,946 |  |  | $ | 1,088 |
The TDRs described above increased the allowance for loan losses by $97 and resulted in charge-offs of $797 during the year ended December 31, 2012. The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2011:
|  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
TDR’s: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 4 |  |  | $ | 1,127 |  |  | $ | 1,105 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Multi-family residential |  |  | 2 |  |  |  | 2,507 |  |  |  | 2,051 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 5 |  |  |  | 2,710 |  |  |  | 2,710 |
Owner occupied |  |  | 3 |  |  |  | 1,355 |  |  |  | 1,355 |
Land |  |  | 7 |  |  |  | 655 |  |  |  | 655 |
Total |  |  | 21 |  |  | $ | 8,354 |  |  | $ | 7,876 |
The TDRs described above increased the allowance for loan losses by $897 and resulted in charge-offs of $699 during the year ended December 31, 2011. During 2012 there were no loans classified as troubled debt restructurings for which there was a payment default within twelve months following the modification. During the year ending 2011, there was one commercial loan with a total recorded investment of $47 at December 31, 2011 which had been modified as a TDR in May 2011 for which there was a payment default within twelve months following the modification. The terms of certain other loans were modified during the year ended December 31, 2012 and 2011 that did not meet the definition of a TDR. These loans had a total recorded investment of $13,298 and $17,498 as of December 31, 2012 and 2011, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties, a delay in a payment that was considered to be insignificant or there were no concessions granted. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing. At December 31, 2012 and 2011, nonaccrual troubled debt restructurings were as follows:
|  | 2012 |  |  | 2011 |
Commercial |  | $ | 528 |  |  | $ | 47 |
Real estate: |  |  |  |  |  |  |  |
Single-family residential |  |  | — |  |  |  |  |
Multi-family residential |  |  | 2,082 |  |  |  | 2,527 |
Commercial: |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 388 |  |  |  | — |
Owner occupied |  |  | 288 |  |  |  | 446 |
Total |  | $ | 3,286 |  |  |  | 3,020 |
Nonaccrual loans at December 31, 2012 and 2011 do not include $3,684 and $4,597, respectively, in troubled debt restructurings where customers have established a sustained period of repayment performance, loans are current according to their modified terms and repayment of the remaining contractual payments is expected. These loans are included in total impaired loans. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Management analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial, commercial real estate and multi-family residential real estate loans. Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are based on the reviews and at any time information is received that may affect risk ratings. The following definitions are used for risk ratings: Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of CFBank’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that there will be some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, condition and values, highly questionable and improbable. Loans not meeting the criteria to be classified into one of the above categories are considered to be not rated or pass-rated loans. Loans listed as not rated are included in groups of homogeneous loans. Past due information is the primary credit indicator for groups of homogenous loans. Loans listed as pass-rated loans are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard, doubtful or loss. The recorded investment in loans by risk category and by class of loans as of December 31, 2012 and based on the most recent analysis performed follows.
|  | Not Rated |  |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Total |
Commercial |  | $ | 285 |  |  | $ | 21,013 |  |  | $ | 2,637 |  |  | $ | 1,473 |  |  | $ | 25,408 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 42,945 |  |  |  | — |  |  |  | — |  |  |  | 113 |  |  |  | 43,058 |
Multi-family residential |  |  | — |  |  |  | 12,846 |  |  |  | 5,790 |  |  |  | 2,939 |  |  |  | 21,575 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 322 |  |  |  | 21,147 |  |  |  | 2,995 |  |  |  | 5,486 |  |  |  | 29,950 |
Owner occupied |  |  | — |  |  |  | 16,385 |  |  |  | 762 |  |  |  | 2,627 |  |  |  | 19,774 |
Land |  |  | 119 |  |  |  | 987 |  |  |  | 434 |  |  |  | 3,028 |  |  |  | 4,568 |
Construction |  |  | — |  |  |  | 14 |  |  |  | — |  |  |  | — |  |  |  | 14 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | 10,719 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,719 |
Purchased for portfolio |  |  | 1,800 |  |  |  | — |  |  |  | 435 |  |  |  | 9 |  |  |  | 2,244 |
Other |  |  | 970 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 970 |
|  | $ | 57,160 |  |  | $ | 72,392 |  |  | $ | 13,053 |  |  | $ | 15,675 |  |  | $ | 158,280 |
The recorded investment in loans by risk category and class of loans as of December 31, 2011 follows:
|  | Not Rated |  |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
Commercial |  | $ | 432 |  |  | $ | 19,591 |  |  | $ | 2,062 |  |  | $ | 3,909 |  |  |  |  |  |  | $ | 25,994 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family residential |  |  | 17,478 |  |  |  | — |  |  |  | — |  |  |  | 736 |  |  |  |  |  |  |  | 18,214 |
Multi-family residential |  |  | — |  |  |  | 15,395 |  |  |  | 4,539 |  |  |  | 6,822 |  |  |  | 407 |  |  |  | 27,163 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied |  |  | 365 |  |  |  | 22,159 |  |  |  | 5,717 |  |  |  | 8,176 |  |  |  |  |  |  |  | 36,417 |
Owner occupied |  |  | — |  |  |  | 22,526 |  |  |  | 3,474 |  |  |  | 1,898 |  |  |  |  |  |  |  | 27,898 |
Land |  |  | 954 |  |  |  | 1,123 |  |  |  | — |  |  |  | 3,365 |  |  |  |  |  |  |  | 5,442 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines of credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Originated for portfolio |  |  | 12,126 |  |  |  | — |  |  |  | — |  |  |  | 157 |  |  |  |  |  |  |  | 12,283 |
Purchased for portfolio |  |  | 2,182 |  |  |  | — |  |  |  | 447 |  |  |  | 9 |  |  |  |  |  |  |  | 2,638 |
Other |  |  | 1,221 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 1,221 |
|  | $ | 34,758 |  |  | $ | 80,794 |  |  | $ | 16,239 |  |  | $ | 25,072 |  |  | $ | 407 |  |  | $ | 157,270

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5074-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5162-111524 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 01-6 -Paragraph 13 -Subparagraph d -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5066-111524 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 + Details
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