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Allowance For Loan Losses | 12 Months Ended
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Mar. 31, 2016
Notes |
Allowance For Loan Losses | 5. ALLOWANCE FOR LOAN LOSSES The following tables present a reconciliation of the allowance for loan losses for the periods indicated (in thousands):
March 31, 2016 | Commercial Business | Commercial Real Estate | Land | Multi-Family | Real Estate Construction | Consumer | Unallocated | Total
Beginning balance | $1,263 | $4,268 | $539 | $348 | $769 | $2,548 | $1,027 | $10,762
Provision for (recapture of) loan losses | (245) | 5 | (545) | 364 | (359) | (51) | (319) | (1,150)
Charge-offs | - | - | - | - | - | (274) | - | (274)
Recoveries | 30 | - | 331 | - | 6 | 180 | - | 547
Ending balance | $1,048 | $4,273 | $325 | $712 | $416 | $2,403 | $708 | $9,885
March 31, 2015 | Commercial Business | Commercial Real Estate | Land | Multi-Family | Real Estate Construction | Consumer | Unallocated | Total
Beginning balance | $2,409 | $5,269 | $340 | $203 | $387 | $2,653 | $1,290 | $12,551
Provision for (recapture of) loan losses | (1,060) | (768) | (72) | 145 | 382 | (164) | (263) | (1,800)
Charge-offs | (120) | (233) | - | - | - | (111) | - | (464)
Recoveries | 34 | - | 271 | - | - | 170 | - | 475
Ending balance | $1,263 | $4,268 | $539 | $348 | $769 | $2,548 | $1,027 | $10,762
March 31, 2014 | Commercial Business | Commercial Real Estate | Land | Multi-Family | Real Estate Construction | Consumer | Unallocated | Total
Beginning balance | $2,128 | $5,979 | $2,019 | $541 | $221 | $2,949 | $1,806 | $15,643
Provision for (recapture of) loan losses | 95 | (417) | (2,439) | (338) | 173 | (258) | (516) | (3,700)
Charge-offs | (340) | (316) | (90) | - | (11) | (349) | - | (1,106)
Recoveries | 526 | 23 | 850 | - | 4 | 311 | - | 1,714
Ending balance | $2,409 | $5,269 | $340 | $203 | $387 | $2,653 | $1,290 | $12,551
The following tables present an analysis of loans receivable and the allowance for loan losses, based on impairment methodology, at the dates indicated (in thousands):
| Allowance for Loan Losses |  | Recorded Investment in Loans
March 31, 2016 |  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total |  |  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Total
Commercial business | $ | - |  | $ | 1,048 |  | $ | 1,048 |  | $ | 192 |  | $ | 69,205 |  | $ | 69,397
Commercial real estate |  | - |  |  | 4,273 |  |  | 4,273 |  |  | 9,802 |  |  | 343,947 |  |  | 353,749
Land |  | - |  |  | 325 |  |  | 325 |  |  | 801 |  |  | 11,244 |  |  | 12,045
Multi-family |  | - |  |  | 712 |  |  | 712 |  |  | 1,731 |  |  | 32,002 |  |  | 33,733
Real estate construction |  | - |  |  | 416 |  |  | 416 |  |  | - |  |  | 26,731 |  |  | 26,731
Consumer |  | 110 |  |  | 2,293 |  |  | 2,403 |  |  | 1,678 |  |  | 127,486 |  |  | 129,164
Unallocated |  | - |  |  | 708 |  |  | 708 |  |  | - |  |  | - |  |  | -
Total | $ | 110 |  | $ | 9,775 |  | $ | 9,885 |  | $ | 14,204 |  | $ | 610,615 |  | $ | 624,819
March 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | - |  | $ | 1,263 |  | $ | 1,263 |  | $ | 1,091 |  | $ | 76,095 |  | $ | 77,186
Commercial real estate |  | - |  |  | 4,268 |  |  | 4,268 |  |  | 15,939 |  |  | 283,752 |  |  | 299,691
Land |  | - |  |  | 539 |  |  | 539 |  |  | 801 |  |  | 14,557 |  |  | 15,358
Multi-family |  | - |  |  | 348 |  |  | 348 |  |  | 1,922 |  |  | 28,535 |  |  | 30,457
Real estate construction |  | - |  |  | 769 |  |  | 769 |  |  | - |  |  | 30,498 |  |  | 30,498
Consumer |  | 147 |  |  | 2,401 |  |  | 2,548 |  |  | 2,622 |  |  | 123,960 |  |  | 126,582
Unallocated |  | - |  |  | 1,027 |  |  | 1,027 |  |  | - |  |  | - |  |  | -
Total | $ | 147 |  | $ | 10,615 |  | $ | 10,762 |  | $ | 22,375 |  | $ | 557,397 |  | $ | 579,772
Changes in the allowance for unfunded loan commitments were as follows for the periods indicated (in thousands):
| Year Ended March 31, |
| 2016 |  | 2015 |  | 2014 |
Beginning balance | $ | 259 |  | $ | 294 |  | $ | 229 |
Net change in allowance for unfunded loan commitments |  | 65 |  |  | (35 | ) |  | 65 |
Ending balance | $ | 324 |  | $ | 259 |  | $ | 294 |
The following tables present an analysis of loans by aging category at the dates indicated (in thousands):
March 31, 2016 |  | 30-89 Days Past Due |  |  | 90 Days and Greater Past Due |  |  | Non-accrual |  |  | Total Past Due and Non-accrual |  |  | Current |  |  | Total Loans Receivable
Commercial business | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | 69,397 |  | $ | 69,397
Commercial real estate |  | - |  |  | - |  |  | 1,559 |  |  | 1,559 |  |  | 352,190 |  |  | 353,749
Land |  | - |  |  | - |  |  | 801 |  |  | 801 |  |  | 11,244 |  |  | 12,045
Multi-family |  | - |  |  | - |  |  | - |  |  | - |  |  | 33,733 |  |  | 33,733
Real estate construction |  | - |  |  | - |  |  | - |  |  | - |  |  | 26,731 |  |  | 26,731
Consumer |  | 611 |  |  | 20 |  |  | 334 |  |  | 965 |  |  | 128,199 |  |  | 129,164
Total | $ | 611 |  | $ | 20 |  | $ | 2,694 |  | $ | 3,325 |  | $ | 621,494 |  | $ | 624,819
March 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 359 |  | $ | - |  | $ | - |  | $ | 359 |  | $ | 76,827 |  | $ | 77,186
Commercial real estate |  | 225 |  |  | - |  |  | 3,291 |  |  | 3,516 |  |  | 296,175 |  |  | 299,691
Land |  | - |  |  | - |  |  | 801 |  |  | 801 |  |  | 14,557 |  |  | 15,358
Multi-family |  | - |  |  | - |  |  | - |  |  | - |  |  | 30,457 |  |  | 30,457
Real estate construction |  | - |  |  | - |  |  | - |  |  | - |  |  | 30,498 |  |  | 30,498
Consumer |  | 902 |  |  | - |  |  | 1,226 |  |  | 2,128 |  |  | 124,454 |  |  | 126,582
Total | $ | 1,486 |  | $ | - |  | $ | 5,318 |  | $ | 6,804 |  | $ | 572,968 |  | $ | 579,772
Interest income foregone on non-accrual loans was $112,000, $433,000 and $949,000 for the years ended March 31, 2016, 2015 and 2014, respectively. Credit quality indicators: The Company monitors credit risk in its loan portfolio using a risk rating system (on a scale of one to nine) for all commercial (non-consumer) loans. The risk rating system is a measure of the credit risk of the borrower based on their historical, current and anticipated future financial characteristics. The Company assigns a risk rating to each commercial loan at origination and subsequently updates these ratings, as necessary, so that the risk rating continues to reflect the appropriate risk characteristics of the loan. Application of appropriate risk ratings is key to management of loan portfolio risk. In determining the appropriate risk rating, the Company considers the following factors: delinquency, payment history, quality of management, liquidity, leverage, earnings trends, alternative funding sources, geographic risk, industry risk, cash flow adequacy, account practices, asset protection and extraordinary risks. Consumer loans, including custom construction loans, are not assigned a risk rating but rather are grouped into homogeneous pools with similar risk characteristics. When a consumer loan is delinquent 90 days, it is placed on non-accrual status and assigned a substandard risk rating. Loss factors are assigned to each risk rating and homogeneous pool based on historical loss experience for similar loans. This historical loss experience is adjusted for qualitative factors that are likely to cause the estimated credit losses to differ from the Company’s historical loss experience. The Company uses these loss factors to estimate the general component of its allowance for loan losses. Pass – These loans have a risk rating between 1 and 4 and are to borrowers that meet normal credit standards. Any deficiencies in satisfactory asset quality, liquidity, debt servicing capacity and coverage are offset by strengths in other areas. The borrower currently has the capacity to perform according to the loan terms. Any concerns about risk factors such as stability of margins, stability of cash flows, liquidity, dependence on a single product/supplier/customer, depth of management, etc. are offset by strength in other areas. Typically, these loans are secured by the operating assets of the borrower and/or real estate. The borrower’s management is considered competent. The borrower has the ability to repay the debt in the normal course of business. Watch – These loans have a risk rating of 5 and are included in the “pass” rating. However, there would typically be some reason for additional management oversight, such as the borrower’s recent financial setbacks and/or deteriorating financial position, industry concerns and failure to perform on other borrowing obligations. Loans with this rating are monitored closely in an effort to correct deficiencies. Special mention – These loans have a risk rating of 6 and are rated in accordance with regulatory guidelines. These loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the credit position at some future date. These loans pose elevated risk but their weakness does not yet justify a “Substandard” classification. Substandard – These loans have a risk rating of 7 and are rated in accordance with regulatory guidelines, for which the accrual of interest may or may not be discontinued. By definition under regulatory guidelines, a “substandard” loan has defined weaknesses which make payment default or principal exposure likely but not yet certain. Repayment of such loans is likely to be dependent upon collateral liquidation, a secondary source of repayment, or an event outside of the normal course of business. Doubtful – These loans have a risk rating of 8 and are rated in accordance with regulatory guidelines. Such loans are placed on non-accrual status and repayment may be dependent upon collateral which has value that is difficult to determine or upon some near-term event which lacks certainty. Loss – These loans have a risk rating of 9 and are rated in accordance with regulatory guidelines. Such loans are charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt. The following tables present an analysis of loans by credit quality indicators at the dates indicated (in thousands):
March 31, 2016 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total Loans Receivable
Commercial business | $ | 68,221 |  | $ | 813 |  | $ | 363 |  | $ | - |  | $ | - |  | $ | 69,397
Commercial real estate |  | 343,306 |  |  | 7,659 |  |  | 2,784 |  |  | - |  |  | - |  |  | 353,749
Land |  | 9,760 |  |  | 1,484 |  |  | 801 |  |  | - |  |  | - |  |  | 12,045
Multi-family |  | 33,721 |  |  | - |  |  | 12 |  |  | - |  |  | - |  |  | 33,733
Real estate construction |  | 26,731 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 26,731
Consumer |  | 128,830 |  |  | - |  |  | 334 |  |  | - |  |  | - |  |  | 129,164
Total | $ | 610,569 |  | $ | 9,956 |  | $ | 4,294 |  | $ | - |  | $ | - |  | $ | 624,819
March 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 75,643 |  | $ | 977 |  | $ | 566 |  | $ | - |  | $ | - |  | $ | 77,186
Commercial real estate |  | 277,156 |  |  | 15,570 |  |  | 6,965 |  |  | - |  |  | - |  |  | 299,691
Land |  | 11,665 |  |  | 2,892 |  |  | 801 |  |  | - |  |  | - |  |  | 15,358
Multi-family |  | 28,508 |  |  | 14 |  |  | 1,935 |  |  | - |  |  | - |  |  | 30,457
Real estate construction |  | 28,670 |  |  | - |  |  | 1,828 |  |  | - |  |  | - |  |  | 30,498
Consumer |  | 125,356 |  |  | - |  |  | 1,226 |  |  | - |  |  | - |  |  | 126,582
Total | $ | 546,998 |  | $ | 19,453 |  | $ | 13,321 |  | $ | - |  | $ | - |  | $ | 579,772
Impaired loans: The following tables present the total and average recorded investment in impaired loans at the dates and for the periods indicated (in thousands):
March 31, 2016 |  | Recorded Investment with No Specific Valuation Allowance |  |  | Recorded Investment with Specific Valuation Allowance |  |  | Total Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Specific Valuation Allowance |
Commercial business | $ | 192 |  | $ | - |  | $ | 192 |  | $ | 192 |  | $ | - |
Commercial real estate |  | 9,802 |  |  | - |  |  | 9,802 |  |  | 10,758 |  |  | - |
Land |  | 801 |  |  | - |  |  | 801 |  |  | 807 |  |  | - |
Multi-family |  | 1,731 |  |  | - |  |  | 1,731 |  |  | 1,871 |  |  | - |
Consumer |  | 477 |  |  | 1,201 |  |  | 1,678 |  |  | 1,845 |  |  | 110 |
Total | $ | 13,003 |  | $ | 1,201 |  | $ | 14,204 |  | $ | 15,473 |  | $ | 110 |
March 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 1,091 |  | $ | - |  | $ | 1,091 |  | $ | 1,125 |  | $ | - |
Commercial real estate |  | 15,939 |  |  | - |  |  | 15,939 |  |  | 17,188 |  |  | - |
Land |  | 801 |  |  | - |  |  | 801 |  |  | 804 |  |  | - |
Multi-family |  | 1,922 |  |  | - |  |  | 1,922 |  |  | 2,058 |  |  | - |
Consumer |  | 1,276 |  |  | 1,346 |  |  | 2,622 |  |  | 3,211 |  |  | 147 |
Total | $ | 21,029 |  | $ | 1,346 |  | $ | 22,375 |  | $ | 24,386 |  | $ | 147 |
| Year ended March 31, 2016 |  | Year ended March 31, 2015 |  | Year ended March 31, 2014
|  | Average Recorded Investment |  |  | Interest Recognized on Impaired Loans |  |  | Average Recorded Investment |  |  | Interest Recognized on Impaired Loans |  |  | Average Recorded Investment |  |  |  | Interest Recognized on Impaired Loans
Commercial business | $ | 542 |  | $ | 17 |  | $ | 1,075 |  | $ | 62 |  | $ | 1,150 |  |  | $ | 43
Commercial real estate |  | 13,130 |  |  | 456 |  |  | 17,136 |  |  | 478 |  |  | 19,451 |  |  |  | 472
Land |  | 801 |  |  | - |  |  | 817 |  |  | - |  |  | 1,854 |  |  |  | 5
Multi-family |  | 1,842 |  |  | 99 |  |  | 2,176 |  |  | 17 |  |  | 2,758 |  |  |  | 16
Real estate construction |  | - |  |  | - |  |  | - |  |  | - |  |  | 69 |  |  |  | -
Consumer |  | 1,947 |  |  | 72 |  |  | 3,187 |  |  | 85 |  |  | 3,679 |  |  |  | 47
Total | $ | 18,262 |  | $ | 644 |  | $ | 24,391 |  | $ | 642 |  | $ | 28,961 |  |  | $ | 583
The cash basis interest income on impaired loans was not materially different than the interest recognized on impaired loans as shown in the above table. TDRs are loans for which the Company, for economic or legal reasons related to the borrower's financial condition, has granted a concession to the borrower that it would otherwise not consider. A TDR typically involves a modification of terms such as a reduction of the stated interest rate or face amount of the loan, a reduction of accrued interest, and/or an extension of the maturity date(s) at a stated interest rate lower than the current market rate for a new loan with similar risk. TDRs are considered impaired loans and as such, impairment is measured as described for impaired loans in Note 1 – Summary of Significant Accounting Policies – Allowance for Loan Losses. The following table presents TDRs by interest accrual status at the dates indicated (in thousands):
| March 31, 2016 |  |  | March 31, 2015 |
|  | Accrual |  |  | Nonaccrual |  |  | Total |  |  | Accrual |  |  | Nonaccrual |  |  | Total |
Commercial business | $ | 192 |  | $ | - |  | $ | 192 |  | $ | 1,091 |  | $ | - |  | $ | 1,091 |
Commercial real estate |  | 8,244 |  |  | 1,289 |  |  | 9,533 |  |  | 12,647 |  |  | 2,298 |  |  | 14,945 |
Land |  | - |  |  | 801 |  |  | 801 |  |  | - |  |  | 801 |  |  | 801 |
Multi-family |  | 1,731 |  |  | - |  |  | 1,731 |  |  | 1,922 |  |  | - |  |  | 1,922 |
Consumer |  | 1,678 |  |  | - |  |  | 1,678 |  |  | 1,673 |  |  | 949 |  |  | 2,622 |
Total | $ | 11,845 |  | $ | 2,090 |  | $ | 13,935 |  | $ | 17,333 |  | $ | 4,048 |  | $ | 21,381 |
At March 31, 2016, the Company had no commitments to lend additional funds on these loans. At March 31, 2016, all of the Company’s TDRs were paying as agreed except for one of the Company’s TDRs that defaulted after the loan was modified. The following table presents new TDRs for the periods indicated (dollars in thousands):
| Year ended March 31, 2016 |  | Year ended March 31, 2015 |  | Year ended March 31, 2014
|  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment
Commercial business |  | - |  | $ | - |  | $ | - |  | - |  | $ | - |  | $ | - |  | 3 |  | $ | 504 |  | $ | 465
Commercial real estate |  | - |  |  | - |  |  | - |  | 1 |  |  | 344 |  |  | 327 |  | 4 |  |  | 6,295 |  |  | 6,210
Multi-family |  | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  | 1 |  |  | 2,562 |  |  | 2,014
Consumer |  | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  | 4 |  |  | 573 |  |  | 561
Total |  | - |  | $ | - |  | $ | - |  | 1 |  | $ | 344 |  | $ | 327 |  | 12 |  | $ | 9,934 |  | $ | 9,250
There were no loans modified as a TDR within the previous twelve months that subsequently defaulted in the twelve months ended March 31, 2016.

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