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Loans Held For Investment
 9 Months Ended
Mar. 31, 2015
Loans and Leases Receivable Disclosure [Abstract]  
Loans Held For Investment
Loans Held for Investment
 
Loans held for investment consisted of the following:

(In Thousands)
March 31,
2015
June 30,
2014
Mortgage loans:
 
 
Single-family
$
374,981

$
377,824

Multi-family
344,277

301,191

Commercial real estate
101,618

96,781

Construction
6,039

2,869

Commercial business loans
652

1,237

Consumer loans
246

306

Total loans held for investment, gross
827,813

780,208

 
 
 
Undisbursed loan funds
(2,911
)
(1,090
)
Advance payments of escrows
392

215

Deferred loan costs, net
3,054

2,552

Allowance for loan losses
(8,712
)
(9,744
)
Total loans held for investment, net
$
819,636

$
772,141



As of March 31, 2015, the Corporation had $14.5 million in mortgage loans that are subject to negative amortization, consisting of $10.9 million in multi-family loans, $3.4 million in single-family loans and $241,000 in commercial real estate loans.  This compares to $23.3 million of negative amortization mortgage loans at June 30, 2014, consisting of $18.7 million in multi-family loans, $3.7 million in single-family loans and $856,000 in commercial real estate loans.  During the third quarters and nine months of fiscal 2015 and 2014, 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 March 31, 2015 and June 30, 2014, the interest-only ARM loans were $157.4 million and $170.7 million, or 19% and 22% of loans held for investment, respectively.

The following table sets forth information at March 31, 2015 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 March 31, 2015, unchanged from June 30, 2014.  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
$
312,310

$
4,290

$
42,035

$
2,003

$
14,343

$
374,981

Multi-family
72,603

77,267

184,774

4,725

4,908

344,277

Commercial real estate
20,085

25,410

46,712

—

9,411

101,618

Construction
2,569

—

—

—

3,470

6,039

Commercial business loans
207

—

120

—

325

652

Consumer loans
238

—

—

—

8

246

Total loans held for investment, gross
$
408,012

$
106,967

$
273,641

$
6,728

$
32,465

$
827,813



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.  The provision (recovery) for (from) the allowance for loan losses is charged (credited) 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 a significant increase in 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.

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 troubled debt restructurings (“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 Accounting Standards Codification (“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, an individually evaluated allowance is calculated based on the loan's fair value and if the fair value is higher than the loan balance, no allowance is required.

The following table summarizes the Corporation’s allowance for loan losses at March 31, 2015 and June 30, 2014:

(In Thousands)
March 31,
2015
June 30,
2014
Collectively evaluated for impairment:
 
 
Mortgage loans:
 
 
Single-family
$
4,780

$
5,476

Multi-family
3,089

3,142

Commercial real estate
764

989

Construction
27

35

Commercial business loans
23

51

Consumer loans
9

10

Total collectively evaluated allowance
8,692

9,703

 
 
 
Individually evaluated for impairment:
 
 
Commercial business loans
20

41

Total individually evaluated allowance
20

41

Total loan loss allowance
$
8,712

$
9,744


The following table is provided to disclose additional details on the Corporation’s allowance for loan losses:

 
For the Quarters Ended
March 31,
For the Nine Months Ended
March 31,
(Dollars in Thousands)
2015
2014
2015
2014
 
 
 
 
 
Allowance at beginning of period
$
8,693

$
11,041

$
9,744

$
14,935

 
 
 
 
 
Recovery from the allowance for loan losses
(111
)
(849
)
(1,283
)
(2,689
)
 
 
 
 
 
Recoveries:
 

 

 

 

Mortgage loans:
 

 

 

 

Single-family
226

64

499

331

Multi-family
65

56

229

75

Construction
—

—

—

20

Consumer loans
—

—

1

1

Total recoveries
291

120

729

427

 
 
 
 
 
Charge-offs:
 

 

 

 

Mortgage loans:
 

 

 

 

Single-family
(88
)
(185
)
(405
)
(965
)
Multi-family
—

(94
)
—

(1,671
)
Commercial real estate
(73
)
—

(73
)
—

Commercial business loans
—

(9
)
—

(9
)
Consumer loans
—

—

—

(4
)
Total charge-offs
(161
)
(288
)
(478
)
(2,649
)
 
 
 
 
 
Net recoveries (charge-offs)
130

(168
)
251

(2,222
)
Balance at end of period
$
8,712

$
10,024

$
8,712

$
10,024

 
 

 

 

 

Allowance for loan losses as a percentage of gross loans held for investment
1.05
 %
1.29
%
1.05
 %
1.29
%
Net (recoveries) charge-offs as a percentage of average loans receivable, net, during the period (annualized)
(0.05
)%
0.08
%
(0.04
)%
0.34
%
Allowance for loan losses as a percentage of gross non-performing loans at the end of the period
79.74
 %
55.55
%
79.74
 %
55.55
%



The following tables denote the past due status of the Corporation's loans held for investment, gross, at the dates indicated.

 
 
March 31, 2015
(In Thousands)
Current
30-89 Days Past Due
Non-Accrual (1)
Total Loans Held for Investment, Gross
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
Single-family
$
363,432

$
4,444

$
7,105

$
374,981

 
Multi-family
342,038

—

2,239

344,277

 
Commercial real estate
100,150

—

1,468

101,618

 
Construction
6,039

—

—

6,039

Commercial business loans
538

—

114

652

Consumer loans
245

1

—

246

 
Total loans held for investment, gross
$
812,442

$
4,445

$
10,926

$
827,813



(1) All loans 90 days or greater past due are placed on non-accrual status.
 
 
June 30, 2014
(In Thousands)
Current
30-89 Days Past Due
Non-Accrual (1)
Total Loans Held for Investment, Gross
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
Single-family
$
365,955

$
322

$
11,547

$
377,824

 
Multi-family
297,744

—

3,447

301,191

 
Commercial real estate
94,429

—

2,352

96,781

 
Construction
2,869

—

—

2,869

Commercial business loans
1,099

—

138

1,237

Consumer loans
306

—

—

306

 
Total loans held for investment, gross
$
762,402

$
322

$
17,484

$
780,208

 
(1) All loans 90 days or greater past due are placed on non-accrual status.


The following tables summarize the Corporation’s allowance for loan losses and recorded investment in gross loans, by portfolio type, at the dates and for the periods indicated.

 
 
Quarter Ended March 31, 2015
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Commercial Business
Consumer
Total
 
 
 
 
 
 
 
 
 
Allowance at beginning of period
$
4,540

$
2,998

$
1,075

$
17

$
53

$
10

$
8,693

Provision (recovery) for loan losses
102

26

(238
)
10

(10
)
(1
)
(111
)
Recoveries
226

65

—

—

—

—

291

Charge-offs
(88
)
—

(73
)
—

—

—

(161
)
 
Allowance for loan losses, end of
  period
$
4,780

$
3,089

$
764

$
27

$
43

$
9

$
8,712

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

$
—

$
—

$
—

$
20

$
—

$
20

Collectively evaluated for impairment
4,780

3,089

764

27

23

9

8,692

 
Allowance for loan losses, end of
  period
$
4,780

$
3,089

$
764

$
27

$
43

$
9

$
8,712

 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
5,651

$
1,982

$
1,468

$
—

$
110

$
—

$
9,211

Collectively evaluated for impairment
369,330

342,295

100,150

6,039

542

246

818,602

 
Total loans held for investment,
  gross
$
374,981

$
344,277

$
101,618

$
6,039

$
652

$
246

$
827,813

Allowance for loan losses as a
  percentage of gross loans held for
  investment
1.27
%
0.90
%
0.75
%
0.45
%
6.60
%
3.66
%
1.05
%

 
 
Quarter Ended March 31, 2014
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Commercial Business
Consumer
Total
 
 
 
 
 
 
 
 
 
Allowance at beginning of period
$
7,307

$
2,554

$
1,060

$
3

$
106

$
11

$
11,041

(Recovery) provision for loan losses
(1,719
)
889

(26
)
17

(9
)
(1
)
(849
)
Recoveries
64

56

—

—

—

—

120

Charge-offs
(185
)
(94
)
—

—

(9
)
—

(288
)
 
Allowance for loan losses, end of
  period
$
5,467

$
3,405

$
1,034

$
20

$
88

$
10

$
10,024

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

$
—

$
—

$
—

$
41

$
—

$
41

Collectively evaluated for impairment
5,467

3,405

1,034

20

47

10

9,983

 
Allowance for loan losses, end of
  period
$
5,467

$
3,405

$
1,034

$
20

$
88

$
10

$
10,024

 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
6,821

$
2,565

$
3,562

$
—

$
123

$
—

$
13,071

Collectively evaluated for impairment
374,205

286,684

100,980

1,792

928

324

764,913

 
Total loans held for investment,
  gross
$
381,026

$
289,249

$
104,542

$
1,792

$
1,051

$
324

$
777,984

Allowance for loan losses as a
  percentage of gross loans held for
  investment
1.43
%
1.18
%
0.99
%
1.12
%
8.37
%
3.09
%
1.29
%

 
 
Nine Months Ended March 31, 2015
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Commercial Business
Consumer
Total
 
 
 
 
 
 
 
 
 
Allowance at beginning of period
$
5,476

$
3,142

$
989

$
35

$
92

$
10

$
9,744

Recovery from the allowance for loan
  losses
(790
)
(282
)
(152
)
(8
)
(49
)
(2
)
(1,283
)
Recoveries
499

229

—

—

—

1

729

Charge-offs
(405
)
—

(73
)
—

—

—

(478
)
 
Allowance for loan losses, end of
  period
$
4,780

$
3,089

$
764

$
27

$
43

$
9

$
8,712

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

$
—

$
—

$
—

$
20

$
—

$
20

Collectively evaluated for impairment
4,780

3,089

764

27

23

9

8,692

 
Allowance for loan losses, end of
  period
$
4,780

$
3,089

$
764

$
27

$
43

$
9

$
8,712

 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
5,651

$
1,982

$
1,468

$
—

$
110

$
—

$
9,211

Collectively evaluated for impairment
369,330

342,295

100,150

6,039

542

246

818,602

 
Total loans held for investment,
  gross
$
374,981

$
344,277

$
101,618

$
6,039

$
652

$
246

$
827,813

Allowance for loan losses as a
  percentage of gross loans held for
  investment
1.27
%
0.90
%
0.75
%
0.45
%
6.60
%
3.66
%
1.05
%



Nine Months Ended March 31, 2014
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Commercial Business
Consumer
Total









Allowance at beginning of period
$
9,062

$
4,689

$
1,053

$
—

$
119

$
12

$
14,935

(Recovery) provision for loan losses
(2,961
)
312

(19
)
—

(22
)
1

(2,689
)
Recoveries
331

75

—

20

—

1

427

Charge-offs
(965
)
(1,671
)
—

—

(9
)
(4
)
(2,649
)
 
Allowance for loan losses, end of
  period
$
5,467

$
3,405

$
1,034

$
20

$
88

$
10

$
10,024



















Individually evaluated for impairment
$
—

$
—

$
—

$
—

$
41

$
—

$
41

Collectively evaluated for impairment
5,467

3,405

1,034

20

47

10

9,983

 
Allowance for loan losses, end of
  period
$
5,467

$
3,405

$
1,034

$
20

$
88

$
10

$
10,024










Individually evaluated for impairment
$
6,821

$
2,565

$
3,562

$
—

$
123

$
—

$
13,071

Collectively evaluated for impairment
374,205

286,684

100,980

1,792

928

324

764,913


Total loans held for investment,
  gross
$
381,026

$
289,249

$
104,542

$
1,792

$
1,051

$
324

$
777,984

Allowance for loan losses as a
  percentage of gross loans held for
  investment
1.43
%
1.18
%
0.99
%
1.12
%
8.37
%
3.09
%
1.29
%



The following tables identify the Corporation’s total recorded investment in non-performing loans by type at the dates and for the periods indicated. Generally, a loan is placed on non-accrual status when it becomes 90 days past due as to principal or interest or if the loan is deemed impaired, after considering economic and business conditions and collection efforts, where the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. In addition, interest income is not recognized on any loan where management has determined that collection is not reasonably assured. A non-performing loan may be restored to accrual status when delinquent principal and interest payments are brought current and future monthly principal and interest payments are expected to be collected on a timely basis. Loans with a related allowance reserve have been individually evaluated for impairment using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals less costs to sell to establish realizable value. These analysis may identify a specific impairment amount needed or may conclude that no reserve is needed. Loans without a related allowance reserve have not been individually evaluated for impairment, but have been included in pools of homogeneous loans for evaluation of related allowance reserves.
 
 
 
At March 31, 2015
 
 
 
Unpaid
 
 
 
Net
 
 
 
Principal
Related
Recorded
 
Recorded
(In Thousands)
Balance
Charge-offs
Investment
Allowance(1)
Investment
 
 
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
Single-family:
 
 
 
 
 
 
 
With a related allowance
$
1,454

$
—

$
1,454

$
(307
)
$
1,147

 
 
Without a related allowance(2)
7,504

(1,853
)
5,651

—

5,651

 
Total single-family
8,958

(1,853
)
7,105

(307
)
6,798

 
 
 
 
 
 
 
 
 
Multi-family:
 
 
 
 
 
 
 
With a related allowance
257

—

257

(77
)
180

 
 
Without a related allowance(2)
3,332

(1,350
)
1,982

—

1,982

 
Total multi-family
3,589

(1,350
)
2,239

(77
)
2,162

 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
Without a related allowance(2)
1,468

—

1,468

—

1,468

 
Total commercial real estate
1,468

—

1,468

—

1,468

 
 
 
 
 
 
 
 
Commercial business loans:
 
 
 
 
 
 
With a related allowance
114

—

114

(21
)
93

Total commercial business loans
114

—

114

(21
)
93

 
 
 
 
 
 
 
 
Total non-performing loans
$
14,129

$
(3,203
)
$
10,926

$
(405
)
$
10,521


(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
 
 
 
Unpaid
 
 
 
Net
 
 
 
Principal
Related
Recorded
 
Recorded
(In Thousands)
Balance
Charge-offs
Investment
Allowance(1)
Investment
 
 
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
Single-family:
 
 
 
 
 
 
 
With a related allowance
$
5,480

$
—

$
5,480

$
(1,148
)
$
4,332

 
 
Without a related allowance(2)
8,208

(2,141
)
6,067

—

6,067

 
Total single-family
13,688

(2,141
)
11,547

(1,148
)
10,399

 
 
 
 
 
 
 
 
 
Multi-family:
 
 
 
 
 
 
 
With a related allowance
956

—

956

(354
)
602

 
 
Without a related allowance(2)
4,146

(1,655
)
2,491

—

2,491

 
Total multi-family
5,102

(1,655
)
3,447

(354
)
3,093

 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
Without a related allowance(2)
2,352

—

2,352

—

2,352

 
Total commercial real estate
2,352

—

2,352

—

2,352

 
 
 
 
 
 
 
 
Commercial business loans:
 
 
 
 
 
 
With a related allowance
138

—

138

(46
)
92

Total commercial business loans
138

—

138

(46
)
92

 
 
 
 
 
 
 
 
Total non-performing loans
$
21,280

$
(3,796
)
$
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.

At March 31, 2015 and June 30, 2014, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

For the quarters ended March 31, 2015 and 2014, the Corporation’s average investment in non-performing loans was $11.3 million and $18.7 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 quarters ended March 31, 2015 and 2014, interest income of $50,000 and $95,000, respectively, was recognized, based on cash receipts from loan payments on non-performing loans; and $125,000 and $173,000, respectively, was collected and applied to the net loan balances under the cost recovery method. Foregone interest income, which would have been recorded had the non-performing loans been current in accordance with their original terms, amounted to $87,000 and $105,000 for the quarters ended March 31, 2015 and 2014, respectively, and was not included in the results of operations.  

For the nine months ended March 31, 2015 and 2014, the Corporation’s average investment in non-performing loans was $13.2 million and $19.7 million, respectively. For the nine months ended March 31, 2015 and 2014, interest income of $255,000 and $437,000, respectively, was recognized, based on cash receipts from loan payments on non-performing loans; and $361,000 and $376,000, respectively, was collected and applied to the net loan balances under the cost recovery method. Foregone interest income, which would have been recorded had the non-performing loans been current in accordance with their original terms, amounted to $292,000 and $498,000 for the nine months ended March 31, 2015 and 2014, respectively, and was not included in the results of operations.

The following tables present the average recorded investment in non-performing loans and the related interest income recognized for the quarters and nine months ended March 31, 2015 and 2014:

 
 
 
Quarter Ended March 31,
 
 
 
2015
 
2014
 
 
 
Average
Interest
 
Average
Interest
 
 
 
Recorded
Income
 
Recorded
Income
 
 
 
Investment
Recognized
 
Investment
Recognized
 
 
 
 
 
 
 
 
Without related allowances:
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
 
Single-family
$
5,827

$
19

 
$
6,966

$
—

 
 
Multi-family
1,988

—

 
2,517

2

 
 
Commercial real estate
1,487

21

 
2,999

30

 
 
 
9,302

40

 
12,482

32

 
 
 
 
 
 
 
 
With related allowances:
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
 
Single-family
1,619

8

 
5,039

48

 
 
Multi-family
259

—

 
969

12

 
Commercial business loans
116

2

 
226

3

 
 
1,994

10

 
6,234

63

 
 
 
 
 
 
 
 
Total
$
11,296

$
50

 
$
18,716

$
95



 
 
 
Nine Months Ended March 31,
 
 
 
2015
 
2014
 
 
 
Average
Interest
 
Average
Interest
 
 
 
Recorded
Income
 
Recorded
Income
 
 
 
Investment
Recognized
 
Investment
Recognized
 
 
 
 
 
 
 
 
Without related allowances:
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
 
Single-family
$
6,813

$
53

 
$
6,689

$
19

 
 
Multi-family
2,094

—

 
2,845

36

 
 
Commercial real estate
1,926

146

 
3,416

218

 
 
 
10,833

199

 
12,950

273

 
 
 
 
 
 
 
 
With related allowances:
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
 
Single-family
1,872

36

 
5,584

116

 
 
Multi-family
417

13

 
1,005

39

 
Commercial business loans
124

7

 
197

9

 
 
2,413

56

 
6,786

164

 
 
 
 
 
 
 
 
Total
$
13,246

$
255

 
$
19,736

$
437



For the quarters and nine months ended March 31, 2015 and 2014, there were no loans that were newly modified from their original terms, re-underwritten or identified in the Corporation’s asset quality reports as restructured loans, except one loan with an outstanding balance of $221,000 that had been newly modified and subsequently paid off during the quarter ended March 31, 2014. During the quarters and nine months ended March 31, 2015 and 2014, no restructured loans were in default within a 12-month period subsequent to their original restructuring.  Additionally, during the quarter and nine months ended March 31, 2015, there was one loan for $113,000 whose modification was extended beyond the initial maturity of the modification. This compares to the quarter and nine months ended March 31, 2014 when there were two loans to a single borrower totaling $810,000 whose modifications were extended beyond the initial maturity of the modification.

As of March 31, 2015, the net outstanding balance of the 19 restructured loans was $6.8 million:  three were classified as special mention and remain on accrual status ($1.2 million); and 16 were classified as substandard ($5.5 million, 14 of 16 or $4.7 million were on non-accrual status).  As of June 30, 2014, the net outstanding balance of the 17 restructured loans was $6.0 million:  one was classified as special mention on accrual status ($343,000); and 16 were classified as substandard ($5.6 million, all of which were 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 March 31, 2015 and June 30, 2014, $4.1 million or 60 percent, and $3.7 million or 62 percent, respectively, of the restructured loans were current with respect to their modified payment terms.

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; 12 months for those loans that were restructured more than once; and if 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: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others.

To qualify for restructuring, a borrower must provide evidence of their creditworthiness such as, current financial statements, their most recent income tax returns, current paystubs, current W-2s, and most recent bank statements, among other documents, which are then verified by the Corporation.  The Corporation re-underwrites the loan with the borrower’s updated financial information, new credit report, current loan balance, new interest rate, remaining loan term, updated property value and modified payment schedule, among other considerations, to determine if the borrower qualifies.

The following table summarizes at the dates indicated the restructured loan balances, net of allowance for loan losses, by loan type and non-accrual versus accrual status:

(In Thousands)
March 31, 2015
June 30, 2014
Restructured loans on non-accrual status:
 
 
Mortgage loans:
 
 
Single-family
$
2,037

$
2,957

Multi-family
1,580

1,760

Commercial real estate
1,024

800

Commercial business loans
93

92

Total
4,734

5,609

 
 
 
Restructured loans on accrual status:
 

 

Mortgage loans:
 

 

Single-family
2,023

343

Total
2,023

343

 
 
 
Total restructured loans
$
6,757

$
5,952



The following tables identify the Corporation’s total recorded investment in restructured loans by type at the dates and for the periods indicated.

 
 
 
At March 31, 2015
 
 
 
Unpaid
 
 
 
Net
 
 
 
Principal
Related
Recorded
 
Recorded
(In Thousands)
Balance
Charge-offs
Investment
Allowance(1)
Investment
 
 
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
Single-family:
 
 
 
 
 
 
 
With a related allowance
$
335

$
—

$
335

$
(67
)
$
268

 
 
Without a related allowance(2)
4,708

(916
)
3,792

—

3,792

 
Total single-family
5,043

(916
)
4,127

(67
)
4,060

 
 
 
 
 
 
 
 
 
Multi-family:
 
 
 
 
 
 
 
Without a related allowance(2)
2,862

(1,282
)
1,580

—

1,580

 
Total multi-family
2,862

(1,282
)
1,580

—

1,580

 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
Without a related allowance(2)
1,024

—

1,024

—

1,024

 
Total commercial real estate
1,024

—

1,024

—

1,024

 
 
 
 
 
 
 
 
Commercial business loans:
 
 
 
 
 
 
With a related allowance
114

—

114

(21
)
93

Total commercial business loans
114

—

114

(21
)
93

 
 
 
 
 
 
 
 
Total restructured loans
$
9,043

$
(2,198
)
$
6,845

$
(88
)
$
6,757


(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
 
 
 
Unpaid
 
 
 
Net
 
 
 
Principal
Related
Recorded
 
Recorded
(In Thousands)
Balance
Charge-offs
Investment
Allowance(1)
Investment
 
 
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
 
Single-family
 
 
 
 
 
 
 
With a related allowance
$
994

$
—

$
994

$
(248
)
$
746

 
 
Without a related allowance(2)
3,564

(1,010
)
2,554

—

2,554

 
Total single-family
4,558

(1,010
)
3,548

(248
)
3,300

 
 
 
 
 
 
 
 
 
Multi-family:
 
 
 
 
 
 
 
Without a related allowance(2)
3,138

(1,378
)
1,760

—

1,760

 
Total multi-family
3,138

(1,378
)
1,760

—

1,760

 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
Without a related allowance(2)
800

—

800

—

800

 
Total commercial real estate
800

—

800

—

800

 
 
 
 
 
 
 
 
Commercial business loans:
 
 
 
 
 
 
With a related allowance
138

—

138

(46
)
92

Total commercial business loans
138

—

138

(46
)
92

 
 
 
 
 
 
 
 
Total restructured loans
$
8,634

$
(2,388
)
$
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.

During the quarter ended March 31, 2015, one property was acquired in the settlement of loans, while two previously foreclosed upon properties were sold.  This compares to the quarter ended March 31, 2014 when one property was acquired in the settlement of loans, while two previously foreclosed upon properties were sold. For the nine months ended March 31, 2015, eight properties were acquired in the settlement of loans, while six previously foreclosed upon properties were sold and one real estate owned property was written off.  This compares to the nine months ended March 31, 2014 when seven properties were acquired in the settlement of loans, while 11 previously foreclosed upon properties were sold. As of March 31, 2015, real estate owned was comprised of five properties with a net fair value of $3.2 million, primarily located in Southern California.  This compares to four real estate owned properties, primarily located in Southern California, with a net fair value of $2.5 million at June 30, 2014.  A new appraisal was obtained on each of the properties at the time of foreclosure and fair value was calculated by using the lower of the appraised value or the listing price of the property, net of disposition costs.  Any initial loss was recorded as a charge to the allowance for loan losses before being transferred to real estate owned.  Subsequent to transfer to real estate owned, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the statement of operations.  In addition, the Corporation records costs to carry real estate owned as real estate operating expenses as incurred.