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Loans Held For Investment | 12 Months Ended
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Jun. 30, 2014
Loans and Leases Receivable Disclosure [Abstract] |
Loans Held For Investment | Loans Held for Investment Loans held for investment consisted of the following at June 30, 2014 and 2013:
(In Thousands) | June 30, 2014 | June 30, 2013
Mortgage loans: |  |
Single-family | $ | 377,997 |  | $ | 404,341 |
Multi-family | 301,211 |  | 262,316 |
Commercial real estate | 96,803 |  | 92,488 |
Construction | 2,869 |  | 292 |
Commercial business loans | 1,237 |  | 1,687 |
Consumer loans | 306 |  | 437 |
Total loans held for investment, gross | 780,423 |  | 761,561 |
Undisbursed loan funds | (1,090 | ) | (292 | )
Deferred loan costs, net | 2,552 |  | 2,063 |
Allowance for loan losses | (9,744 | ) | (14,935 | )
Total loans held for investment, net | $ | 772,141 |  | $ | 748,397 |
As of June 30, 2014, the Corporation had $23.3 million in mortgage loans that were subject to negative amortization, consisting of $18.7 million in multi-family loans, $3.7 million in single-family loans and $856,000 in commercial real estate loans. This compares to $33.3 million of negative amortization mortgage loans at June 30, 2013, consisting of $24.4 million in multi-family loans, $5.1 million in single-family loans and $3.8 million in commercial real estate loans. During fiscal 2014 and 2013, no loan interest income was added to the negative amortization loan balance. Negative amortization involves a greater risk to the Corporation because the loan principal balance may increase by a range of 110% to 115% of the original loan amount during the period of negative amortization and because the loan payment may increase beyond the means of the borrower when loan principal amortization is required. Also, the Corporation has originated interest-only ARM loans, which typically have a fixed interest rate for the first two to five years coupled with an interest only payment, followed by a periodic adjustable rate and a fully amortizing loan payment. As of June 30, 2014 and 2013, the interest-only ARM loans totaled $170.7 million and $188.5 million, or 21.8% and 24.7% of gross loans held for investment, respectively. The following table sets forth information at June 30, 2014 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans. Fixed-rate loans comprised 4% of loans held for investment at June 30, 2014, down from 5% at June 30, 2013. Adjustable rate loans having no stated repricing dates that reprice when the index they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year. The table does not include any estimate of prepayments which may cause the Corporation’s actual repricing experience to differ materially from that shown.
| Adjustable Rate |  |
(In Thousands) | Within One Year | After One Year Through 3 Years | After 3 Years Through 5 Years | After 5 Years Through 10 Years | Fixed Rate | Total
Mortgage loans: |  |  |  |  |  |
Single-family | $ | 331,852 |  | $ | 10,509 |  | $ | 12,216 |  | $ | 7,925 |  | $ | 15,495 |  | $ | 377,997 |
Multi-family | 94,646 |  | 39,494 |  | 152,610 |  | 8,264 |  | 6,197 |  | 301,211 |
Commercial real estate | 35,613 |  | 6,163 |  | 44,935 |  | — |  | 10,092 |  | 96,803 |
Construction | 2,869 |  | — |  | — |  | — |  | — |  | 2,869 |
Commercial business loans | 328 |  | — |  | 125 |  | — |  | 784 |  | 1,237 |
Consumer loans | 294 |  | — |  | — |  | — |  | 12 |  | 306 |
Total loans held for investment, gross | $ | 465,602 |  | $ | 56,166 |  | $ | 209,886 |  | $ | 16,189 |  | $ | 32,580 |  | $ | 780,423 |
The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management’s continuing analysis of the factors underlying the quality of the loans held for investment. These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans. Provisions for loan losses are charged against operations on a quarterly basis, as necessary, to maintain the allowance at appropriate levels. Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Corporation’s loans held for investment, will not request the Corporation to significantly increase its allowance for loan losses. Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control. In compliance with the regulatory reporting requirements of the Office of the Comptroller of the Currency (“OCC”), the Bank’s primary federal regulator, non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans. For loans that were modified from their original terms, were re-underwritten and identified in the Corporation's asset quality reports as restructured loans, the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent. The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the allowance for loan losses. The allowance for loan losses for non-performing loans is determined by applying ASC 310, “Receivables.” For restructured loans that are less than 90 days delinquent, the allowance for loan losses are segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their restructuring period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method. For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, individually evaluated allowances are calculated based on their fair values and if their fair values are higher than their loan balances, no allowances are required. The following tables summarize the Corporation’s allowance for loan losses at June 30, 2014 and 2013:
(In Thousands) | June 30, 2014 | June 30, 2013
Collectively evaluated for impairment: |  |
Mortgage loans: |  |
Single-family | $ | 5,476 |  | $ | 8,949 |
Multi-family | 3,142 |  | 4,689 |
Commercial real estate | 989 |  | 1,053 |
Construction | 35 |  | — |
Commercial business loans | 51 |  | 78 |
Consumer loans | 10 |  | 12 |
Total collectively evaluated allowance | 9,703 |  | 14,781 |
Individually evaluated for impairment: |  |
Mortgage loans: |  |
Single-family | — |  | 113 |
Commercial business loans | 41 |  | 41 |
Total individually evaluated allowance | 41 |  | 154 |
Total loan loss allowance | $ | 9,744 |  | $ | 14,935 |
The following summarizes the components of the net change in the allowance for loan losses for the periods indicated:
(In Thousands) | Year Ended June 30,
2014 |  | 2013 |  | 2012 |
Balance, beginning of year | $ | 14,935 |  |  | $ | 21,483 |  |  | $ | 30,482 |  |
(Recovery) provision for loan losses | (3,380 | ) |  | (1,499 | ) |  | 5,777 |  |
Recoveries | 929 |  |  | 762 |  |  | 375 |  |
Charge-offs | (2,740 | ) |  | (5,811 | ) |  | (15,151 | ) |
Balance, end of year | $ | 9,744 |  |  | $ | 14,935 |  |  | $ | 21,483 |  |
The following tables identify the Corporation’s total recorded investment in non-performing loans by type, net of allowance for loan losses or charge-offs at June 30, 2014 and 2013:
(In Thousands) | June 30, 2014
Recorded Investment | Allowance for Loan Losses (1) | Net Investment
Mortgage loans: |  |  |
Single-family: |  |  |
With a related allowance | $ | 5,480 |  | $ | (1,148 | ) | $ | 4,332 |
Without a related allowance (2) | 6,067 |  | — |  | 6,067 |
Total single-family loans | 11,547 |  | (1,148 | ) | 10,399 |
Multi-family: |  |  |
With a related allowance | 956 |  | (354 | ) | 602 |
Without a related allowance (2) | 2,491 |  | — |  | 2,491 |
Total multi-family loans | 3,447 |  | (354 | ) | 3,093 |
Commercial real estate: |  |  |
Without a related allowance (2) | 2,352 |  | — |  | 2,352 |
Total commercial real estate loans | 2,352 |  | — |  | 2,352 |
Commercial business loans: |  |  |
With a related allowance | 138 |  | (46 | ) | 92 |
Total commercial business loans | 138 |  | (46 | ) | 92 |
Total non-performing loans | $ | 17,484 |  | $ | (1,548 | ) | $ | 15,936 |
(1) | Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.
(2) | There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.
(In Thousands) | June 30, 2013
Recorded Investment | Allowance for Loan Losses (1) | Net Investment
Mortgage loans: |  |  |
Single-family: |  |  |
With a related allowance | $ | 9,908 |  | $ | (2,350 | ) | $ | 7,558 |
Without a related allowance (2) | 5,665 |  | — |  | 5,665 |
Total single-family loans | 15,573 |  | (2,350 | ) | 13,223 |
Multi-family: |  |  |
With a related allowance | 4,519 |  | (1,320 | ) | 3,199 |
Without a related allowance (2) | 558 |  | — |  | 558 |
Total multi-family loans | 5,077 |  | (1,320 | ) | 3,757 |
Commercial real estate: |  |  |
Without a related allowance (2) | 4,572 |  | — |  | 4,572 |
Total commercial real estate loans | 4,572 |  | — |  | 4,572 |
Commercial business loans: |  |  |
With a related allowance | 189 |  | (59 | ) | 130 |
Total commercial business loans | 189 |  | (59 | ) | 130 |
Total non-performing loans | $ | 25,411 |  | $ | (3,729 | ) | $ | 21,682 |
(1) | Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.
(2) | There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.
At June 30, 2014 and 2013, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing. The following table describes the aging analysis (length of time on non-performing status) of non-performing loans, net of allowance for loan losses or charge-offs, as of June 30, 2014 and 2013:
As of June 30, 2014 (In Thousands) | 3 Months or Less | Over 3 to 6 Months | Over 6 to 12 Months | Over 12 Months | Total
Mortgage loans: |  |  |  |  |
Single-family | $ | 1,433 |  | $ | — |  | $ | 2,655 |  | $ | 6,311 |  | $ | 10,399 |
Multi-family | 413 |  | — |  | 165 |  | 2,515 |  | 3,093 |
Commercial real estate | — |  | 455 |  | 576 |  | 1,321 |  | 2,352 |
Commercial business loans | — |  | — |  | — |  | 92 |  | 92 |
Total | $ | 1,846 |  | $ | 455 |  | $ | 3,396 |  | $ | 10,239 |  | $ | 15,936 |
As of June 30, 2013 (In Thousands) | 3 Months or Less | Over 3 to 6 Months | Over 6 to 12 Months | Over 12 Months | Total
Mortgage loans: |  |  |  |  |
Single-family | $ | 2,089 |  | $ | 1,650 |  | $ | 1,801 |  | $ | 7,683 |  | $ | 13,223 |
Multi-family | 2,109 |  | 383 |  | — |  | 1,265 |  | 3,757 |
Commercial real estate | 1,183 |  | — |  | 1,744 |  | 1,645 |  | 4,572 |
Commercial business loans | — |  | — |  | — |  | 130 |  | 130 |
Total | $ | 5,381 |  | $ | 2,033 |  | $ | 3,545 |  | $ | 10,723 |  | $ | 21,682 |
During the fiscal years ended June 30, 2014, 2013 and 2012, the Corporation’s average investment in non-performing loans was $17.0 million, $24.2 million and $34.4 million, respectively. The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status. For the fiscal years ended June 30, 2014, 2013 and 2012, interest income of $546,000, $885,000 and $1.6 million, respectively, was recognized, based on cash receipts from loan payments on non-performing loans. Foregone interest income, which would have been recorded had the non-performing loans been current in accordance with their original terms, amounted to $800,000 , $878,000 and $876,000 for the fiscal years ended June 30, 2014, 2013 and 2012, respectively, and was not included in the loan interest income; while $498,000, $542,000 and $0, respectively, were collected and applied to the net loan balances. The effect of the non-performing loans on interest income for the years ended June 30, 2014, 2013 and 2012 is presented below:
(In Thousands) | Year Ended June 30,
2014 |  | 2013 |  | 2012 |
Contractual interest due | $ | 1,346 |  |  | $ | 1,763 |  |  | $ | 2,432 |  |
Interest recognized | (546 | ) |  | (885 | ) |  | (1,556 | ) |
Net foregone interest | $ | 800 |  |  | $ | 878 |  |  | $ | 876 |  |
For the fiscal year ended June 30, 2014, there was one loan with an outstanding balance of $221,000 that was newly modified from its original terms, re-underwritten and identified as a restructured loan. Subsequent to the modification, this loan was paid off in fiscal 2014. This compares to no loans that were restructured during the fiscal year ended June 30, 2013. During the fiscal year ended June 30, 2014 and 2013, no restructured loans were in default within a 12-month period subsequent to their original restructuring. Additionally, during the fiscal year ended June 30, 2014, there were two restructured loans for $810,000 whose modifications were extended beyond the initial maturity of the modification. For the fiscal year ended June 30, 2013, one r estructured loan with a total balance of $131,000 had its modification extended beyond the initial maturity of the modification. As of June 30, 2014, the net outstanding balance of the Corporation's 17 restructured loans was $6.0 million: one was classified as special mention and remains on accrual status ($343,000); and 16 were classified as substandard ($5.6 million, all of which are on non-accrual status). Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Assets that do not currently expose the Corporation to sufficient risk to warrant adverse classification but possess weaknesses are designated as special mention and are closely monitored by the Corporation. As of June 30, 2014, $3.7 million, or 62 percent, of the restructured loans were current with respect to their payment status. As of June 30, 2013, the net outstanding balance the Corporation's of 26 restructured loans was $9.5 million: one loan was classified as special mention and remains on accrual status ($434,000); and 25 loans were classified as substandard ($9.1 million, all on non-accrual status). As of June 30, 2013, $6.5 million, 68 percent, of the restructured loans had a current payment status. The Corporation upgrades restructured single-family loans to the pass category if the borrower has demonstrated satisfactory contractual payments for at least six consecutive months or 12 months for those loans that were restructured more than once. Once the borrower has demonstrated satisfactory contractual payments beyond 12 consecutive months, the loan is no longer categorized as a restructured loan. In addition to the payment history described above, multi-family, commercial real estate, construction and commercial business loans (which are sometimes referred to in this report as “preferred loans”) must also demonstrate a combination of the following characteristics to be upgraded to the pass category: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others. The following table summarizes at the dates indicated the restructured loan balances, net of allowance for loan losses or charge-offs, by loan type and non-accrual versus accrual status at June 30, 2014 and 2013:
(In Thousands) | June 30, 2014 | June 30, 2013
Restructured loans on non-accrual status: |  |
Mortgage loans: |  |
Single-family | $ | 2,957 |  | $ | 5,094 |
Multi-family | 1,760 |  | 2,521 |
Commercial real estate | 800 |  | 1,354 |
Commercial business loans | 92 |  | 123 |
Total | 5,609 |  | 9,092 |
Restructured loans on accrual status: |  |  |  |
Mortgage loans: |  |  |  |
Single-family | 343 |  | 434 |
Total | 343 |  | 434 |
Total restructured loans | $ | 5,952 |  | $ | 9,526 |
The following table shows the restructured loans by type, net of allowance for loan losses or charge-offs, at June 30, 2014 and 2013:
(In Thousands) | June 30, 2014
Recorded Investment | Allowance for Loan Losses (1) | Net Investment
Mortgage loans: |  |  |
Single-family: |  |  |
With a related allowance | $ | 994 |  | $ | (248 | ) | $ | 746 |
Without a related allowance (2) | 2,554 |  | — |  | 2,554 |
Total single-family loans | 3,548 |  | (248 | ) | 3,300 |
Multi-family: |  |  |
Without a related allowance (2) | 1,760 |  | — |  | 1,760 |
Total multi-family loans | 1,760 |  | — |  | 1,760 |
Commercial real estate: |  |  |
Without a related allowance (2) | 800 |  | — |  | 800 |
Total commercial real estate loans | 800 |  | — |  | 800 |
Commercial business loans: |  |  |
With a related allowance | 138 |  | (46 | ) | 92 |
Total commercial business loans | 138 |  | (46 | ) | 92 |
Total restructured loans | $ | 6,246 |  | $ | (294 | ) | $ | 5,952 |
(1) | Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.
(2) | There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.
(In Thousands) | June 30, 2013
Recorded Investment | Allowance for Loan Losses (1) | Net Investment
Mortgage loans: |  |  |
Single-family: |  |  |
With a related allowance | $ | 3,774 |  | $ | (795 | ) | $ | 2,979 |
Without a related allowance (2) | 2,549 |  | — |  | 2,549 |
Total single-family loans | 6,323 |  | (795 | ) | 5,528 |
Multi-family: |  |  |
With a related allowance | 3,266 |  | (1,006 | ) | 2,260 |
Without a related allowance (2) | 261 |  | — |  | 261 |
Total multi-family loans | 3,527 |  | (1,006 | ) | 2,521 |
Commercial real estate: |  |  |
Without a related allowance (2) | 1,354 |  | — |  | 1,354 |
Total commercial real estate loans | 1,354 |  | — |  | 1,354 |
Commercial business loans: |  |  |
With a related allowance | 180 |  | (57 | ) | 123 |
Total commercial business loans | 180 |  | (57 | ) | 123 |
Total restructured loans | $ | 11,384 |  | $ | (1,858 | ) | $ | 9,526 |
(1) | Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.
(2) | There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.
In the ordinary course of business, the Bank makes loans to its directors, officers and employees on substantially the same terms prevailing at the time of origination for comparable transactions with unaffiliated borrowers. The following is a summary of related-party loan activity:
(In Thousands) | Year Ended June 30,
2014 |  | 2013 |  | 2012 |
Balance, beginning of year | $ | 2,024 |  |  | $ | 2,030 |  |  | $ | 2,036 |  |
Originations | 691 |  |  | 3,581 |  |  | 2,807 |  |
Sales and payments | (704 | ) |  | (3,587 | ) |  | (2,813 | ) |
Balance, end of year | $ | 2,011 |  |  | $ | 2,024 |  |  | $ | 2,030 |  |
As of June 30, 2014 and 2013, all of the related-party loans were performing in accordance with their original contractual terms.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=32702940&loc=SL6953791-111525 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35738203&loc=d3e4975-111524 + Details
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