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Loans Receivable (Notes)
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Loans Receivable
Loans receivable are as follows:
 
September 30, 2019
 
December 31, 2018
One-to-four family residential real estate
$
60,757

 
$
70,371

Multi-family mortgage
577,656

 
619,870

Nonresidential real estate
140,410

 
152,442

Construction and land
88

 
172

Commercial loans
163,846

 
187,406

Commercial leases
275,800

 
299,394

Consumer
2,052

 
1,539

 
1,220,609

 
1,331,194

Net deferred loan origination costs
942

 
1,069

Allowance for loan losses
(7,603
)
 
(8,470
)
Loans, net
$
1,213,948

 
$
1,323,793


The following tables present the balance in the allowance for loan losses and loans receivable by portfolio segment and based on impairment method:
 
Allowance for loan losses
 
Loan Balances
 
Individually
evaluated  for
impairment
 
Collectively
evaluated  for
impairment
 
Total
 
Individually
evaluated  for
impairment
 
Collectively
evaluated  for
impairment
 
Total
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential real estate
$
—

 
$
580

 
$
580

 
$
2,416

 
$
58,341

 
$
60,757

Multi-family mortgage
—

 
3,728

 
3,728

 
630

 
577,026

 
577,656

Nonresidential real estate
—

 
1,217

 
1,217

 
282

 
140,128

 
140,410

Construction and land
—

 
2

 
2

 
—

 
88

 
88

Commercial loans
—

 
1,308

 
1,308

 
—

 
163,846

 
163,846

Commercial leases
—

 
732

 
732

 
—

 
275,800

 
275,800

Consumer
—

 
36

 
36

 
—

 
2,052

 
2,052

 
$
—

 
$
7,603

 
$
7,603

 
$
3,328

 
$
1,217,281

 
1,220,609

Net deferred loan origination costs
 
 
 
 
 
 
 
 
 
942

Allowance for loan losses
 
 
 
 
 
 
 
 
 
(7,603
)
Loans, net
 
 
 
 
 
 
 
 
 
 
$
1,213,948


 
Allowance for loan losses
 
Loan Balances
 
Individually
evaluated  for
impairment
 
Collectively
evaluated  for
impairment
 
Total
 
Individually
evaluated  for
impairment
 
Collectively
evaluated  for
impairment
 
Total
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential real estate
$
—

 
$
699

 
$
699

 
$
2,218

 
$
68,153

 
$
70,371

Multi-family mortgage
—

 
3,991

 
3,991

 
653

 
619,217

 
619,870

Nonresidential real estate
27

 
1,449

 
1,476

 
270

 
152,172

 
152,442

Construction and land
—

 
4

 
4

 
—

 
172

 
172

Commercial loans
—

 
1,517

 
1,517

 
—

 
187,406

 
187,406

Commercial leases
—

 
755

 
755

 
—

 
299,394

 
299,394

Consumer
—

 
28

 
28

 
—

 
1,539

 
1,539

 
$
27

 
$
8,443

 
$
8,470

 
$
3,141

 
$
1,328,053

 
1,331,194

Net deferred loan origination costs
 
 
 
 
 
 
 
 
 
1,069

Allowance for loan losses
 
 
 
 
 
 
 
 
 
(8,470
)
Loans, net
 
 
 
 
 
 
 
 
 
 
$
1,323,793


Activity in the allowance for loan losses is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Beginning balance
$
7,824

 
$
8,179

 
$
8,470

 
$
8,366

Loans charged off:
 
 
 
 
 
 
 
One-to-four family residential real estate
(44
)
 
(84
)
 
(117
)
 
(214
)
Multi-family mortgage
—

 
—

 
—

 
(35
)
Nonresidential real estate
(55
)
 
—

 
(83
)
 
—

Commercial loans
—

 
—

 
(4,443
)
 
(140
)
Consumer
(5
)
 
(6
)
 
(20
)
 
(7
)
 
(104
)
 
(90
)
 
(4,663
)
 
(396
)
Recoveries:
 
 
 
 
 
 
 
One-to-four family residential real estate
5

 
25

 
28

 
130

Multi-family mortgage
8

 
8

 
24

 
26

Construction and land
—

 
2

 
—

 
2

Commercial loans
4

 
2

 
8

 
227

Commercial leases
—

 
—

 
—

 
5

Consumer
—

 
—

 
—

 
1

 
17

 
37

 
60

 
391

Net charge-offs
(87
)
 
(53
)
 
(4,603
)
 
(5
)
Provision for (recovery of) loan losses
(134
)
 
(23
)
 
3,736

 
(258
)
Ending balance
$
7,603

 
$
8,103

 
$
7,603

 
$
8,103

Impaired loans
Several of the following disclosures are presented by “recorded investment,” which the FASB defines as “the amount of the investment in a loan, which is not net of a valuation allowance, but which does reflect any direct write-down of the investment.” The following represents the components of recorded investment:
Loan principal balance
Less unapplied payments
Plus negative unapplied balance
Less escrow balance
Plus negative escrow balance
Plus unamortized net deferred loan costs
Less unamortized net deferred loan fees
Plus unamortized premium
Less unamortized discount
Less previous charge-offs
Plus recorded accrued interest
Less reserve for uncollected interest
= Recorded investment
The following tables present loans individually evaluated for impairment by class of loans:
 
 
 
 
 
 
 
 
 
Three months ended
September 30, 2019
 
Nine months ended
September 30, 2019
 
Loan
Balance
 
Recorded
Investment
 
Partial Charge-off
 
Allowance
for Loan
Losses
Allocated
 
Average
Investment
in Impaired
Loans
 
Interest
Income
Recognized
 
Average
Investment
in Impaired
Loans
 
Interest
Income
Recognized
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential real estate
$
2,812

 
$
2,280

 
$
542

 
$
—

 
$
2,253

 
$
12

 
$
2,245

 
$
40

One-to-four family residential real estate - non-owner occupied
136

 
136

 
—

 
—

 
161

 
—

 
102

 
1

Multi-family mortgage - Illinois
629

 
630

 
—

 
—

 
633

 
9

 
642

 
28

Nonresidential real estate
280

 
282

 
—

 
—

 
1,447

 
—

 
679

 
1

 
$
3,857

 
$
3,328

 
$
542

 
$
—

 
$
4,494

 
$
21

 
$
3,668

 
$
70

 
 
 
 
 
 
 
 
 
Year ended
December 31, 2018
 
Loan
Balance
 
Recorded
Investment
 
Partial Charge-off
 
Allowance
for Loan
Losses
Allocated
 
Average
Investment
in Impaired
Loans
 
Interest
Income
Recognized
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential real estate
$
2,751

 
$
2,155

 
$
575

 
$
—

 
$
3,274

 
$
41

One-to-four family residential real estate - non-owner occupied
86

 
46

 
43

 
—

 
95

 
—

Multi-family mortgage - Illinois
654

 
653

 
—

 
—

 
795

 
39

 
3,491

 
2,854

 
$
618

 
—

 
4,164

 
80

With an allowance recorded - Nonresidential real estate
356

 
270

 
93

 
27

 
21

 
—

 
$
3,847

 
$
3,124

 
$
711

 
$
27

 
$
4,185

 
$
80

Nonaccrual Loans
The following tables present the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans:
 
Loan Balance
 
Recorded
Investment
 
Loans Past
Due Over 90
Days, Still
Accruing
September 30, 2019
 
 
 
 
 
One-to-four family residential real estate
$
1,460

 
$
1,160

 
$
—

Nonresidential real estate
280

 
282

 
—

 
$
1,740

 
$
1,442

 
$
—

December 31, 2018
 
 
 
 
 
One-to-four family residential real estate
$
2,167

 
$
1,162

 
$
—

One-to-four family residential real estate – non-owner occupied
270

 
78

 
—

Nonresidential real estate
356

 
270

 
—

 
$
2,793

 
$
1,510

 
$
—


Nonaccrual loans and impaired loans are defined differently. Some loans may be included in both categories, and some loans may only be included in one category. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.
The Company’s reserve for uncollected loan interest was $120,000 and $72,000 at September 30, 2019 and December 31, 2018, respectively. When a loan is on nonaccrual status and the ultimate collectability of the total principal of an impaired loan is in doubt, all payments are applied to principal under the cost recovery method. Alternatively, when a loan is on non-accrual status but there is doubt concerning only the ultimate collectability of interest, contractual interest is credited to interest income only when received, under the cash basis method pursuant to the provisions of FASB ASC 310–10, as applicable. In all cases, the average balances are calculated based on the month–end balances of the financing receivables within the period reported pursuant to the provisions of FASB ASC 310–10, as applicable.
Past Due Loans
The following tables present the aging of the recorded investment of loans at September 30, 2019 by class of loans:
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
90 Days or
Greater
Past Due
 
Total Past
Due
 
Loans Not
Past Due
 
Total
One-to-four family residential real estate loans:
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
$
3

 
$
255

 
$
1,017

 
$
1,275

 
$
47,989

 
$
49,264

Non-owner occupied
4

 
269

 
137

 
410

 
11,062

 
11,472

Multi-family mortgage:
 
 
 
 
 
 
 
 
 
 
 
Illinois
—

 
—

 
—

 
—

 
256,662

 
256,662

Other
—

 
—

 
—

 
—

 
314,698

 
314,698

Nonresidential real estate
—

 
—

 
282

 
282

 
138,884

 
139,166

Construction and land
—

 
—

 
—

 
—

 
80

 
80

Commercial loans:
 
 
 
 
 
 

 
 
 

Regional commercial banking
—

 
—

 
—

 
—

 
28,193

 
28,193

Health care
—

 
—

 
—

 
—

 
75,454

 
75,454

Direct commercial lessor
—

 
—

 
—

 
—

 
60,664

 
60,664

Commercial leases:
 
 
 
 
 
 


 
 
 


Investment rated commercial leases
197

 
14

 
—

 
211

 
133,697

 
133,908

Other commercial leases
1,710

 
—

 
—

 
1,710

 
141,877

 
143,587

Consumer
6

 
3

 
—

 
9

 
2,060

 
2,069

 
$
1,920

 
$
541

 
$
1,436

 
$
3,897

 
$
1,211,320

 
$
1,215,217


The following tables present the aging of the recorded investment of loans at December 31, 2018 by class of loans:
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
90 Days or
Greater
Past Due
 
Total Past
Due
 
Loans Not
Past Due
 
Total
One-to-four family residential real estate loans:
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
$
1,380

 
$
637

 
$
1,162

 
$
3,179

 
$
53,820

 
$
56,999

Non-owner occupied
387

 
10

 
78

 
475

 
12,460

 
12,935

Multi-family mortgage:
 
 
 
 
 
 
 
 
 
 
 
Illinois
458

 
—

 
—

 
458

 
275,283

 
275,741

Other
—

 
—

 
—

 
—

 
340,470

 
340,470

Nonresidential real estate
—

 
270

 
—

 
270

 
149,271

 
149,541

Construction and land
—

 
—

 
—

 
—

 
169

 
169

Commercial loans:
 
 
 
 
 
 

 
 
 

Regional commercial banking
—

 
—

 
—

 
—

 
39,712

 
39,712

Health care
—

 
—

 
—

 
—

 
85,418

 
85,418

Direct commercial lessor
—

 
—

 
—

 
—

 
62,719

 
62,719

Commercial leases:
 
 
 
 
 
 


 
 
 


Investment rated commercial leases
505

 
—

 
—

 
505

 
166,713

 
167,218

Other commercial leases
—

 
—

 
—

 
—

 
133,958

 
133,958

Consumer
40

 
4

 
—

 
44

 
1,508

 
1,552

 
$
2,770

 
$
921

 
$
1,240

 
$
4,931

 
$
1,321,501

 
$
1,326,432

Troubled Debt Restructurings
The Company evaluates loan extensions or modifications in accordance with FASB ASC 310–40 with respect to the classification of the loan as a Troubled Debt Restructuring ("TDR"). In general, if the Company grants a loan extension or modification to a borrower experiencing financial difficulties for other than an insignificant period of time that includes a below–market interest rate, principal forgiveness, payment forbearance or other concession intended to minimize the economic loss to the Company, the loan extension or loan modification is classified as a TDR. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above.
The Company had $17,000 of TDRs at September 30, 2019 and December 31, 2018. No specific valuation reserves were allocated to those loans at September 30, 2019 and December 31, 2018. The Company had no outstanding commitments to borrowers whose loans were classified as TDRs at either date.
The following table presents loans classified as TDRs:
 
September 30, 2019
 
December 31, 2018
One-to-four family residential real estate - nonaccrual
$
17

 
$
17


During the nine months ended September 30, 2019 and 2018, there were no loans modified and classified as TDRs. During the nine months ended September 30, 2019 and 2018, there were no TDR loans that subsequently defaulted within twelve months of their modification.
A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.
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.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans based on credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings:
Special Mention. A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.
Substandard. Loans categorized as Substandard continue to accrue interest, but exhibit a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt. The loans continue to accrue interest because they are well secured and collection of principal and interest is expected within a reasonable time. The risk rating guidance published by the Office of the Comptroller of the Currency clarifies that a loan with a well-defined weakness does not have to present a probability of default for the loan to be rated Substandard, and that an individual loan’s loss potential does not have to be distinct for the loan to be rated Substandard.
Nonaccrual. An asset classified Nonaccrual has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered “Pass” rated loans.
As of September 30, 2019, the risk categories of loans by class of loans are as follows:
 
Pass
 
Special
Mention
 
Substandard
 
Nonaccrual
 
Total
One-to-four family residential real estate loans:
 
 
 
 
 
 
 
 
 
Owner occupied
$
47,584

 
$
401

 
$
541

 
$
799

 
$
49,325

Non-owner occupied
11,230

 
30

 
36

 
136

 
11,432

Multi-family mortgage:
 
 
 
 
 
 
 
 
 
Illinois
257,690

 
—

 
211

 
—

 
257,901

Other
319,344

 
411

 
—

 
—

 
319,755

Nonresidential real estate
140,033

 
—

 
93

 
284

 
140,410

Construction and land
88

 
—

 
—

 
—

 
88

Commercial loans:
 
 
 
 
 
 
 
 

Regional commercial banking
28,094

 
—

 
—

 
—

 
28,094

Health care
74,767

 
595

 
—

 
—

 
75,362

Direct commercial lessor
60,390

 
—

 
—

 
—

 
60,390

Commercial leases:
 
 
 
 
 
 
 
 


Investment rated commercial leases
132,493

 
556

 
—

 
—

 
133,049

Other commercial leases
141,187

 
1,564

 
—

 
—

 
142,751

Consumer
2,045

 
4

 
3

 
—

 
2,052


$
1,214,945

 
$
3,561

 
$
884

 
$
1,219

 
$
1,220,609

 
As of December 31, 2018, the risk categories of loans by class of loans are as follows:
 
Pass
 
Special
Mention
 
Substandard
 
Nonaccrual
 
Total
One-to-four family residential real estate loans
 
 
 
 
 
 
 
 
 
Owner occupied
$
55,353

 
$
495

 
$
328

 
$
993

 
$
57,169

Non-owner occupied
12,911

 
—

 
37

 
254

 
13,202

Multi-family mortgage:
 
 
 
 
 
 
 
 
 
Illinois
279,021

 
—

 
216

 
—

 
279,237

Other
340,633

 
—

 
—

 
—

 
340,633

Nonresidential real estate
151,793

 
281

 
98

 
270

 
152,442

Construction and land
172

 
—

 
—

 
—

 
172

Commercial loans:
 
 
 
 
 
 
 
 

Regional commercial banking
34,764

 
4,810

 
—

 
—

 
39,574

Health care
85,001

 
—

 
342

 
—

 
85,343

Direct commercial lessor
62,489

 
—

 
—

 
—

 
62,489

Commercial leases:
 
 
 
 
 
 
 
 


Investment rated commercial leases
165,508

 
701

 
—

 
—

 
166,209

Other commercial leases
133,185

 
—

 
—

 
—

 
133,185

Consumer
1,529

 
3

 
7

 
—

 
1,539

 
$
1,322,359

 
$
6,290

 
$
1,028

 
$
1,517

 
$
1,331,194