Loans Receivable (Notes)

3 Months Ended

Mar. 31, 2020

Loans receivable are as follows:



	March 31, 2020			December 31, 2019
One-to-four family residential real estate	$	52,849		$	55,750
Multi-family mortgage	542,421			563,750
Nonresidential real estate	133,432			134,674
Commercial loans	158,049			145,714
Commercial leases	266,063			272,629
Consumer	2,078			2,211
	1,154,892			1,174,728
Net deferred loan origination costs	848			912
Allowance for loan losses	(8,112		)	(7,632		)
Loans, net	$	1,147,628		$	1,168,008

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
March 31, 2020
One-to-four family residential real estate	$	—	$	682	$	682	$	1,826	$	51,023	$	52,849
Multi-family mortgage	—		3,869		3,869		612		541,809		542,421
Nonresidential real estate	—		1,460		1,460		288		133,144		133,432
Commercial loans	—		1,275		1,275		—		158,049		158,049
Commercial leases	—		780		780		88		265,975		266,063
Consumer	—		46		46		—		2,078		2,078
	$	—	$	8,112	$	8,112	$	2,814	$	1,152,078	1,154,892
Net deferred loan origination costs											848
Allowance for loan losses											(8,112		)
Loans, net											$	1,147,628



	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, 2019
One-to-four family residential real estate	$	—	$	675	$	675	$	1,835	$	53,915	$	55,750
Multi-family mortgage	—		3,676		3,676		620		563,130		563,750
Nonresidential real estate	—		1,176		1,176		288		134,386		134,674
Commercial loans	—		1,308		1,308		—		145,714		145,714
Commercial leases	—		757		757		—		272,629		272,629
Consumer	—		40		40		—		2,211		2,211
	$	—	$	7,632	$	7,632	$	2,743	$	1,171,985	1,174,728
Net deferred loan origination costs											912
Allowance for loan losses											(7,632		)
Loans, net											$	1,168,008

The following table represents the activity in the allowance for loan losses by portfolio segment:



	One-to-four family residential real estate			Multi-family mortgage		Non-residential real estate			Construc-tion and land			Commer-cial loans			Commer-cial leases			Consumer			Total
March 31, 2020
Allowance for loan losses:
Beginning balance	$	675		$	3,676	$	1,176		$	—		$	1,308		$	757		$	40		$	7,632
Provision for (recovery of) loan losses	(1		)	181		284			—			(35		)	23			19			471
Loans charged off	(5		)	—		—			—			—			—			(13		)	(18		)
Recoveries	13			12		—			—			2			—			—			27
Total ending allowance balance	$	682		$	3,869	$	1,460		$	—		$	1,275		$	780		$	46		$	8,112

March 31, 2019
Allowance for loan losses:
Beginning balance	699			3,991		1,476			4			1,517			755			28			$	8,470
Provision for (recovery of) loan losses	(44		)	80		39			(1		)	(97		)	(65		)	1			(87		)
Loans charged off	(23		)	—		(28		)	—			—			—			(5		)	(56		)
Recoveries	17			8		—			—			2			—			—			27
Total ending allowance balance	$	649		$	4,079	$	1,487		$	3		$	1,422		$	690		$	24		$	8,354

Impaired loans

The following tables present loans individually evaluated for impairment by class of loans:



									Three months ended March 31, 2020
	Loan Balance		Recorded Investment		Partial Charge-off		Allowance for Loan Losses Allocated		Average Investment in Impaired Loans		Interest Income Recognized
March 31, 2020
With no related allowance recorded:
One-to-four family residential real estate	$	2,162	$	1,826	$	346	$	—	$	1,845	$	12
Multi-family mortgage - Illinois	612		612		—		—		616		9
Nonresidential real estate	280		288		—		—		288		—
Other commercial leases	96		88		—		—		50		2
	$	3,150	$	2,814	$	346	$	—	$	2,799	$	23



									Year ended December 31, 2019
	Loan Balance		Recorded Investment		Partial Charge-off		Allowance for Loan Losses Allocated		Average Investment in Impaired Loans		Interest Income Recognized
December 31, 2019
With no related allowance recorded:
One-to-four family residential real estate	$	2,168	$	1,835	$	339	$	—	$	2,208	$	51
Multi-family mortgage - Illinois	620		620		—		—		637		37
Nonresidential real estate	280		288		—		—		589		2
	$	3,068	$	2,743	$	339	$	—	$	3,434	$	90

Nonaccrual Loans

The following tables present the recorded investment in nonaccrual and loans 90 days or more past due still on accrual by class of loans:



	Loan Balance		Recorded Investment		Loans Past Due Over 90 Days, Still Accruing
March 31, 2020
One-to-four family residential real estate	$	500	$	476	$	—
Nonresidential real estate	280		288		—
	$	780	$	764	$	—
December 31, 2019
One-to-four family residential real estate	$	598	$	512	$	—
Nonresidential real estate	280		288		—
Investment-rated commercial leases	47		—		47
	$	925	$	800	$	47

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 $94,000 and $81,000 at March 31, 2020 and December 31, 2019, 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 nonaccrual 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 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
March 31, 2020
One-to-four family residential real estate loans:
Owner occupied	$	657	$	—	$	472	$	1,129	$	41,651	$	42,780
Non-owner occupied	131		—		—		131		9,938		10,069
Multi-family mortgage:
Illinois	1,258		—		—		1,258		233,404		234,662
Other	—		—		—		—		307,759		307,759
Nonresidential real estate	—		—		288		288		133,144		133,432
Commercial loans:
Regional commercial banking	—		—		—		—		23,704		23,704
Health care	—		—		—		—		54,806		54,806
Direct commercial lessor	—		—		—		—		79,539		79,539
Commercial leases:
Investment-rated commercial leases	5,109		—		—		5,109		119,342		124,451
Other commercial leases	4,093		443		—		4,536		137,076		141,612
Consumer	7		7		—		14		2,064		2,078
	$	11,255	$	450	$	760	$	12,465	$	1,142,427	$	1,154,892



	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Loans Not Past Due		Total
December 31, 2019
One-to-four family residential real estate loans:
Owner occupied	$	777	$	340	$	507	$	1,624	$	43,365	$	44,989
Non-owner occupied	280		15		—		295		10,466		10,761
Multi-family mortgage:
Illinois	981		302		—		1,283		246,680		247,963
Other	—		—		—		—		315,787		315,787
Nonresidential real estate	—		—		288		288		134,386		134,674
Commercial loans:
Regional commercial banking	—		—		—		—		24,853		24,853
Health care	—		—		—		—		70,430		70,430
Direct commercial lessor	—		—		—		—		50,431		50,431
Commercial leases:
Investment-rated commercial leases	826		—		47		873		132,966		133,839
Other commercial leases	543		136		—		679		138,111		138,790
Consumer	24		37		—		61		2,150		2,211
	$	3,431	$	830	$	842	$	5,103	$	1,169,625	$	1,174,728

Troubled Debt Restructurings

Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides that a qualifying loan modification or extension is exempt by law from classification as a Troubled Debt Restructuring ("TDR") pursuant to FASB ASC 340-10. In addition, OCC Bulletin 2020-35 provides more limited circumstances in which a loan modification or extension is not subject to classification as a TDR pursuant to FASB ASC 340-10.

The Company evaluates loan extensions or modifications not qualified under Section 4013 of the CARES Act or under OCC Bulletin 2020-35 in accordance with FASB ASC 340-10 with respect to the classification of the loan as a TDR.

Under ASC 340-10, 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 no TDRs at March 31, 2020 and December 31, 2019. During the three months ended March 31, 2020 and 2019, there were no loans modified and classified as TDRs. 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.

Based on the most recent analysis performed, the risk categories of loans by class of loans are as follows:



	Pass		Special Mention		Substandard		Nonaccrual		Total
March 31, 2020
One-to-four family residential real estate loans:
Owner occupied	$	41,815	$	83	$	406	$	476	$	42,780
Non-owner occupied	10,006		29		34		—		10,069
Multi-family mortgage:
Illinois	234,662		—		—		—		234,662
Other	307,759		—		—		—		307,759
Nonresidential real estate	132,894		161		89		288		133,432
Commercial loans:
Regional commercial banking	23,704		—		—		—		23,704
Health care	53,863		943		—		—		54,806
Direct commercial lessor	79,539		—		—		—		79,539
Commercial leases:
Investment-rated commercial leases	124,451		—		—		—		124,451
Other commercial leases	139,882		307		1,423		—		141,612
Consumer	2,059		10		9		—		2,078
	$	1,150,634	$	1,533	$	1,961	$	764	$	1,154,892



	Pass		Special Mention		Substandard		Nonaccrual		Total
December 31, 2019
One-to-four family residential real estate loans
Owner occupied	$	43,908	$	36	$	533	$	512	$	44,989
Non-owner occupied	10,696		30		35		—		10,761
Multi-family mortgage:
Illinois	247,757		—		206		—		247,963
Other	315,787		—		—		—		315,787
Nonresidential real estate	134,134		162		90		288		134,674
Commercial loans:
Regional commercial banking	24,853		—		—		—		24,853
Health care	62,084		8,346		—		—		70,430
Direct commercial lessor	50,431		—		—		—		50,431
Commercial leases:
Investment-rated commercial leases	133,332		507		—		—		133,839
Other commercial leases	137,893		761		136		—		138,790
Consumer	2,153		5		53		—		2,211
	$	1,163,028	$	9,847	$	1,053	$	800	$	1,174,728

- 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.

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