Waterstone Financial, Inc. - 10-K filing on 2014-03-21

Loans Receivable (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Components of Loans Receivable

Loans receivable at December 31, 2013 and 2012 are summarized as follows:

	December 31,
	2013		2012
Mortgage loans:	(In Thousands)
Residential real estate:
One- to four-family	$	413,614		460,821
Over four-family		521,597		514,363
Home equity		35,432		36,494
Construction and land		31,905		33,818
Commercial real estate		71,698		65,495
Consumer		134		132
Commercial loans		18,296		22,549
Total loans receivable	$	1,092,676		1,133,672

Analysis of Past Due Loans Receivable

An analysis of past due loans receivable as of As of December 31, 2013 and 2012 follows:

	As of December 31, 2013
	1-59 Days Past Due ⁽¹⁾		60-89 Days Past Due ⁽²⁾		Greater Than 90 Days		Total Past Due		Current⁽³⁾		Total Loans
Mortgage loans:	(In Thousands)
Residential real estate:
One- to four-family	$	4,994		5,236		17,499		27,729		385,885		413,614
Over four-family		804		1,293		7,743		9,840		511,757		521,597
Home equity		373		205		465		1,043		34,389		35,432
Construction and land		-		39		4,195		4,234		27,671		31,905
Commercial real estate		287		-		357		644		71,054		71,698
Consumer		-		-		-		-		134		134
Commercial loans		-		-		521		521		17,775		18,296
Total	$	6,458		6,773		30,780		44,011		1,048,665		1,092,676

	As of December 31, 2012
	1-59 Days Past Due ⁽¹⁾		60-89 Days Past Due⁽²⁾		Greater Than 90 Days		Total Past Due		Current⁽³⁾		Total Loans
Mortgage loans:	(In Thousands)
Residential real estate:
One- to four-family	$	11,745		5,402		29,259		46,406		414,415		460,821
Over four-family		3,543		1,498		18,336		23,377		490,986		514,363
Home equity		416		111		404		931		35,563		36,494
Construction and land		87		-		2,180		2,266		31,552		33,818
Commercial real estate		290		-		668		959		64,536		65,495
Consumer		-		-		-		-		132		132
Commercial loans		-		-		511		511		22,038		22,549
Total	$	16,081		7,011		51,358		74,450		1,059,222		1,133,672

⁽¹⁾	Includes $1.1 million and $2.4 million for December 31, 2013 and 2012, respectively, which are on non-accrual status.

⁽²⁾	Includes $5.7 million and $2.8 million for December 31, 2013 and 2012, respectively, which are on non-accrual status.

⁽³⁾	Includes $12.9 million and $18.2 million for December 31, 2013 and 2012, respectively, which are on non-accrual status.

Allowance for Loan Losses

A summary of the activity for the years ended December 31, 2013, 2012 and 2011 in the allowance for loan losses follows:

	One- to Four- Family			Over Four Family			Home Equity			Construction and Land			Commercial Real Estate			Consumer			Commercial			Total
	(In Thousands)
Year ended December 31, 2013
Balance at beginning of period	$	17,819			7,734			2,097			1,323			1,259			30			781			31,043
Provision for loan losses		1,479			859			305			1,719			303			(2	)		(131	)		4,532
Charge-offs		(8,706	)		(1,640	)		(630	)		(1,480	)		(160	)		-			(8	)		(12,624	)
Recoveries		957			258			35			51			-			6			6			1,313
Balance at end of period	$	11,549			7,211			1,807			1,613			1,402			34			648			24,264

Year ended December 31, 2012
Balance at beginning of period	$	17,475			8,252			1,998			2,922			941			28			814			32,430
Provision for loan losses		6,149			534			559			(181	)		1,500			6			(267	)		8,300
Charge-offs		(6,472	)		(1,108	)		(485	)		(1,668	)		(1,182	)		(4	)		(59	)		(10,978	)
Recoveries		667			56			25			250			-			-			293			1,291
Balance at end of period	$	17,819			7,734			2,097			1,323			1,259			30			781			31,043

Year ended December 31, 2011
Balance at beginning of period	$	16,150			6,877			1,196			3,252			671			28			1,001			29,175
Provision for loan losses		12,567			5,331			1,429			1,346			998			9			397			22,077
Charge-offs		(11,553	)		(3,996	)		(634	)		(1,745	)		(734	)		(10	)		(619	)		(19,291	)
Recoveries		311			40			7			69			6			1			35			469
Balance at end of period	$	17,475			8,252			1,998			2,922			941			28			814			32,430

Schedule of Allowance for Loan Loss for Loans Evaluated Individually and Collectively For Impairment

A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment by collateral class as of the year ended December 31, 2013 follows:

	One- to Four- Family		Over Four Family		Home Equity		Construction and Land		Commercial Real Estate		Consumer		Commercial		Total
	(In Thousands)
Allowance related to loans individually evaluated for impairment	$	2,631		2,196		862		624		370		-		258		6,941
Allowance related to loans collectively evaluated for impairment		8,918		5,015		945		989		1,032		34		390		17,323

Balance at end of period	$	11,549		7,211		1,807		1,613		1,402		34		648		24,264

Loans individually evaluated for impairment	$	37,064		17,221		1,956		6,527		1,298		17		580		64,663

Loans collectively evaluated for impairment		376,550		504,376		33,476		25,378		70,400		117		17,716		1,028,013
Total gross loans	$	413,614		521,597		35,432		31,905		71,698		134		18,296		1,092,676

A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment by collateral class as of the year ended December 31, 2012 follows:

	One- to Four- Family		Over Four Family		Home Equity		Construction and Land		Commercial Real Estate		Consumer		Commercial		Total
	(In Thousands)
Allowance related to loans individually evaluated for impairment	$	7,058		3,268		1,033		377		341		-		331		12,408
Allowance related to loans collectively evaluated for impairment		10,761		4,466		1,064		946		918		30		450		18,635

Balance at end of period	$	17,819		7,734		2,097		1,323		1,259		30		781		31,043

Loans individually evaluated for impairment	$	57,467		28,281		2,127		4,470		1,250		24		1,352		94,971

Loans collectively evaluated for impairment		403,354		486,082		34,367		29,348		64,245		108		21,197		1,038,701
Total gross loans	$	460,821		514,363		36,494		33,818		65,495		132		22,549		1,133,672

Internal Risk Rating of Loans Receivable

The following table presents information relating to the Company's internal risk ratings of its loans receivable as of December 31, 2013 and 2012:

	One- to Four- Family			Over Four Family		Home Equity		Construction and Land		Commercial Real Estate		Consumer		Commercial		Total
At December 31, 2013	(In Thousands)
Substandard		$	37,060		14,809		2,169		6,576		1,298		17		580		62,509
Watch			14,402		13,108		1,077		1,866		1,401		-		1,120		32,974
Pass			362,152		493,680		32,186		23,463		68,999		117		16,596		997,193
		$	413,614		521,597		35,432		31,905		71,698		134		18,296		1,092,676

At December 31, 2012	(In Thousands)
Substandard		$	53,242		24,767		2,913		3,705		1,251		23		1,365		87,266
Watch			17,082		14,157		606		2,803		1,234		-		964		36,846
Pass			390,497		475,439		32,975		27,310		63,010		109		20,220		1,009,560
		$	460,821		514,363		36,494		33,818		65,495		132		22,549		1,133,672

Impaired Loan Receivables

The following tables present data on impaired loans at December 31, 2013 and 2012.

	As of or for the Year Ended December 31, 2013
	Recorded Investment		Unpaid Principal		Reserve		Cumulative Charge-Offs		Average Recorded Investment		Int Paid YTD
Total Impaired with Reserve					(in thousands)
One- to four-family	$	12,263		12,674		2,631		411		13,256		577
Over four-family		13,352		13,400		2,196		48		14,047		660
Home equity		1,427		1,427		862		-		1,536		59
Construction and land		3,087		3,087		624		-		3,092		93
Commercial real estate		839		1,324		370		485		1,339		35
Consumer		-		-		-		-		-		-
Commercial		569		569		258		-		570		1
	$	31,537		32,481		6,941		944		33,840		1,425

Total Impaired with no Reserve

One- to four-family	$	24,801		30,519		-		5,718		30,629		1,080
Over four-family		3,869		4,902		-		1,033		5,431		114
Home equity		529		529		-		-		533		12
Construction and land		3,440		6,133		-		2,693		6,135		62
Commercial real estate		459		523		-		64		524		27
Consumer		17		17		-		-		19		1
Commercial		11		11		-		-		11		1
	$	33,126		42,634		-		9,508		43,282		1,297

Total Impaired

One- to four-family	$	37,064		43,193		2,631		6,129		43,885		1,657
Over four-family		17,221		18,302		2,196		1,081		19,478		774
Home equity		1,956		1,956		862		-		2,069		71
Construction and land		6,527		9,220		624		2,693		9,227		155
Commercial real estate		1,298		1,847		370		549		1,863		62
Consumer		17		17		-		-		19		1
Commercial		580		580		258		-		581		2
	$	64,663		75,115		6,941		10,452		77,122		2,722

The difference between a loan's recorded investment and the unpaid principal balance represents a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management's assessment that the full collection of the loan balance is not likely.

When a loan is considered impaired, interest payments received are treated as interest income on a cash basis as long as the remaining book value of the loan (i.e., after charge-off of all identified losses) is deemed to be fully collectible. If the remaining book value is not deemed to be fully collectible, all payments received are applied to unpaid principal. Determination as to the ultimate collectability of the remaining book value is supported by an updated credit department evaluation of the borrower's financial condition and prospects for repayment, including consideration of the borrower's sustained historical repayment performance and other relevant factors.

	As of or for the Year Ended December 31, 2012
	Recorded Investment		Unpaid Principal		Reserve		Cumulative Charge-Offs		Average Recorded Investment		Int Paid YTD
Total Impaired with Reserve					(in thousands)
One- to four-family	$	29,057		29,456		7,058		399		29,768		874
Over four-family		17,397		17,642		3,268		245		18,073		722
Home equity		1,544		1,544		1,033		-		1,615		74
Construction and land		2,316		2,316		377		-		2,316		78
Commercial real estate		813		1,179		341		366		1,748		50
Consumer		-		-		-		-		-		-
Commercial		1,352		1,352		331		-		1,352		42
	$	52,479		53,489		12,408		1,010		54,872		1,840

Total Impaired with no Reserve

One- to four-family	$	28,410		31,315		-		2,905		31,358		1,175
Over four-family		10,884		11,179		-		295		11,649		549
Home equity		583		749		-		166		755		14
Construction and land		2,154		3,655		-		1,501		3,656		5
Commercial real estate		437		461		-		24		473		12
Consumer		24		24		-		-		24		1
Commercial		-		-		-		-		-		-
	$	42,492		47,383		-		4,891		47,915		1,756

Total Impaired

One- to four-family	$	57,467		60,771		7,058		3,304		61,126		2,049
Over four-family		28,281		28,821		3,268		540		29,722		1,271
Home equity		2,127		2,293		1,033		166		2,370		88
Construction and land		4,470		5,971		377		1,501		5,972		83
Commercial real estate		1,250		1,640		341		390		2,221		62
Consumer		24		24		-		-		24		1
Commercial		1,352		1,352		331		-		1,352		42
	$	94,971		100,872		12,408		5,901		102,787		3,596

Troubled Debt Restructurings on Loan Receivables

The following presents data on troubled debt restructurings:

	As of December 31, 2013
	Accruing					Non-accruing				Total
	Amount			Number		Amount		Number		Amount		Number
	(dollars in thousands)
One- to four-family		$	6,218		13	$	11,875		70	$	18,093		83
Over four-family			2,710		1		5,314		4		8,024		5
Home equity			-		-		972		3		972		3
Construction and land			1,408		1		833		2		2,241		3
Commercial real estate			-		-		257		2		257		2
		$	10,336		15	$	19,251		81	$	29,587		96

	As of December 31, 2012
	Accruing					Non-accruing				Total
	Amount			Number		Amount		Number		Amount		Number
	(dollars in thousands)
One- to four-family		$	9,921		17	$	21,847		95	$	31,768		112
Over four-family			3,917		4		20,030		13		23,947		17
Home equity			-		-		986		3		986		3
Construction and land			2,173		2		79		1		2,252		3
Commercial real estate			-		-		668		2		668		2
		$	16,011		23	$	43,610		114	$	59,621		137

Schedule of Troubled Debt Restructurings by Concession Type

The following presents troubled debt restructurings by concession type at December 31, 2013 and 2012:

	As of December 31, 2013
	Performing in accordance with modified terms					In Default				Total
	Amount			Number		Amount		Number		Amount		Number
	(dollars in thousands)
Interest reduction and principal forebearance		$	15,160		37		3,638		19		18,798		56
Principal forebearance			5,240		5		-		-		5,240		5
Interest reduction			3,317		11		2,232		24		5,549		35
		$	23,717		53		5,870		43		29,587		96

	As of December 31, 2012
	Performing in accordance with modified terms					In Default				Total
	Amount			Number		Amount		Number		Amount		Number
	(dollars in thousands)
Interest reduction and principal forebearance		$	26,051		77		2,770		11		28,821		88
Principal forebearance			17,574		11		348		1		17,922		12
Interest reduction			11,984		35		894		2		12,878		37
		$	55,609		123		4,012		14		59,621		137

Schedule of Data on Troubled Debt Restructurings

The following presents data on troubled debt restructurings:

	For the Year Ended
	December 31, 2013					December 31, 2012
	Amount			Number		Amount		Number
	(dollars in thousands)					(dollars in thousands)
Loans modified as a troubled debt restructure
One- to four-family		$	1,682		9		14,821		27
Over four-family			-		-		18,520		8
Home equity			37		1		12		1
Land and construction			-		-		764		1
		$	1,719		10		34,117		37

Troubled debt restructuring modified within the past twelve months for which there was a default
One- to four-family			-		-		-		-
		$	-		-		-		-

Schedule of Loans Receivables, Non Accrual Status

The following table presents data on non-accrual loans:

	As of December 31,
	2013			2012
	(Dollars in Thousands)
Residential
One- to four-family	$	30,207			46,467
Over four-family		13,498			23,205
Home equity		1,585			1,578
Construction and land		4,195			2,215
Commercial real estate		938			668
Commercial		521			511
Consumer		17			24
Total non-accrual loans	$	50,961			74,668

Total non-accrual loans to total loans, net		4.66	%		6.59	%
Total non-accrual loans and performing troubled debt restructurings to total loans receivable		5.61	%		8.00	%
Total non-accrual loans to total assets		2.62	%		4.50	%