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Loans and Allowance for Loan Losses | 6 Months Ended
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Dec. 31, 2022
Loans and Allowance for Loan Losses [Abstract] |
Loans and Allowance for Loan Losses | (5) Loans and Allowance for Loan Losses Loan segments and classes at December 31, 2022 and June 30, 2022 are summarized as follows:
(In thousands) |  | December 31, 2022 |  |  | June 30, 2022 |
Residential real estate: |  |  |  |  |  |
Residential real estate |  | $ | 371,646 |  |  | $ | 360,824 |
Residential construction and land |  |  | 20,334 |  |  |  | 15,298 |
Multi-family |  |  | 67,733 |  |  |  | 63,822 |
Commercial real estate: |  |  |  |  |  |  |  |
Commercial real estate |  |  | 705,649 |  |  |  | 595,635 |
Commercial construction |  |  | 87,267 |  |  |  | 83,748 |
Consumer loan: |  |  |  |  |  |  |  |
Home equity |  |  | 20,669 |  |  |  | 17,877 |
Consumer installment |  |  | 4,588 |  |  |  | 4,512 |
Commercial loans |  |  | 112,169 |  |  |  | 110,271 |
Total gross loans |  |  | 1,390,055 |  |  |  | 1,251,987 |
Allowance for loan losses |  |  | (22,289 | ) |  |  | (22,761 | )
Deferred fees and cost, net |  |  | 100 |  |  |  | 129 |
Loans receivable, net |  | $ | 1,367,866 |  |  | $ | 1,229,355 |
Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality and profitability of the Company’s loan portfolio. The credit quality grade helps management make a consistent assessment of each loan relationship’s credit risk. Consistent with regulatory guidelines, the Company provides for the classification of loans considered being of lesser quality. Such ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in assets classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a full loss reserve and/or charge-off is not warranted. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.” When the Company classifies problem assets as either Substandard or Doubtful, it generally establishes a specific valuation allowance or “loss reserve” in an amount deemed prudent by management. General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular loans. When the Company identifies problem loans as being impaired, it is required to evaluate whether the Company will be able to collect all amounts due either through repayments or the liquidation of the underlying collateral. If it is determined that impairment exists, the Company is required either to establish a specific allowance for losses equal to the amount of impairment of the assets, or to charge-off such amount. The Company’s determination as to the classification of its loans and the amount of its valuation allowance is subject to review by its regulatory agencies, which can order the establishment of additional general or specific loss allowances. The Company reviews its portfolio quarterly to determine whether any assets require classification in accordance with applicable regulations. The Company primarily has four segments within its loan portfolio that it considers when measuring credit quality: residential real estate loans, commercial real estate loans, consumer loans and commercial loans. The residential real estate portfolio consists of residential, construction, and multi-family loan classes. Commercial real estate loans consist of commercial real estate and commercial construction loan classes. Consumer loans consist of home equity loan and consumer installment loan classes. The inherent risk within the loan portfolio varies depending upon each of these loan types. Residential mortgage loans, including home equity loans, which are collateralized by residences are generally made in amounts up to 85.0% of the appraised value of the property. In the event of default by the borrower the Company will acquire and liquidate the underlying collateral. By originating the loan at a loan-to-value ratio of 85.0% or less, the Company limits its risk of loss in the event of default. However, the market values of the collateral may be adversely impacted by declines in the economy. Home equity loans may have an additional inherent risk if the Company does not hold the first mortgage. The Company may stand in a secondary position in the event of collateral liquidation resulting in a greater chance of insufficiency to meet all obligations. Construction lending generally involves a greater degree of risk than other residential mortgage lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the construction of the subject property within specified cost limits. The Company completes inspections during the construction phase prior to any disbursements. The Company limits its risk during the construction as disbursements are not made until the required work for each advance has been completed. Construction delays may further impair the borrower’s ability to repay the loan. Loans collateralized by commercial real estate, and multi-family dwellings, such as apartment buildings generally are larger than residential loans and involve a greater degree of risk. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of the properties or underlying businesses, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of commercial real estate loans makes them more difficult for management to monitor and evaluate. Consumer loans generally have shorter terms and higher interest rates than residential mortgage loans. In addition, consumer loans expand the products and services offered by the Company to better meet the financial services needs of its customers. Consumer loans generally involve greater credit risk than residential mortgage loans because of the difference in the nature of the underlying collateral. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation in the underlying collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections depend on the borrower’s personal financial stability. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans. Commercial lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential and commercial real estate mortgage lending. Real estate lending is generally considered to be collateral-based, with loan amounts based on fixed loan-to-collateral values, and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because equipment and other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. The Company has formed relationships with other community banks within our region to participate in larger commercial loan relationships. These types of loans are generally considered to be riskier due to the size and complexity of the loan relationship. By entering into a participation agreement with the other bank, the Company can obtain the loan relationship while limiting its exposure to credit loss. Management completes its due diligence in underwriting these loans and monitors the servicing of these loans. Loan balances by internal credit quality indicator at December 31, 2022 are shown below.
(In thousands) |  | Performing |  |  | Special Mention |  |  | Substandard |  |  | Total |
Residential real estate |  | $ | 366,020 |  |  | $ | 172 |  |  | $ | 5,454 |  |  | $ | 371,646 |
Residential construction and land |  |  | 20,334 |  |  |  | - |  |  |  | - |  |  |  | 20,334 |
Multi-family |  |  | 67,644 |  |  |  | 89 |  |  |  | - |  |  |  | 67,733 |
Commercial real estate |  |  | 673,200 |  |  |  | 7,055 |  |  |  | 25,394 |  |  |  | 705,649 |
Commercial construction |  |  | 87,267 |  |  |  | - |  |  |  | - |  |  |  | 87,267 |
Home equity |  |  | 20,484 |  |  |  | - |  |  |  | 185 |  |  |  | 20,669 |
Consumer installment |  |  | 4,574 |  |  |  | - |  |  |  | 14 |  |  |  | 4,588 |
Commercial loans |  |  | 105,613 |  |  |  | 3,232 |  |  |  | 3,324 |  |  |  | 112,169 |
Total gross loans |  | $ | 1,345,136 |  |  | $ | 10,548 |  |  | $ | 34,371 |  |  | $ | 1,390,055 |
Loan balances by internal credit quality indicator at June 30, 2022 are shown below.
(In thousands) |  | Performing |  |  | Special Mention |  |  | Substandard |  |  | Total |
Residential real estate |  | $ | 355,474 |  |  | $ | 28 |  |  | $ | 5,322 |  |  | $ | 360,824 |
Residential construction and land |  |  | 15,297 |  |  |  | - |  |  |  | 1 |  |  |  | 15,298 |
Multi-family |  |  | 63,730 |  |  |  | 92 |  |  |  | - |  |  |  | 63,822 |
Commercial real estate |  |  | 555,451 |  |  |  | 13,777 |  |  |  | 26,407 |  |  |  | 595,635 |
Commercial construction |  |  | 83,748 |  |  |  | - |  |  |  | - |  |  |  | 83,748 |
Home equity |  |  | 17,369 |  |  |  | - |  |  |  | 508 |  |  |  | 17,877 |
Consumer installment |  |  | 4,500 |  |  |  | - |  |  |  | 12 |  |  |  | 4,512 |
Commercial loans |  |  | 104,364 |  |  |  | 996 |  |  |  | 4,911 |  |  |  | 110,271 |
Total gross loans |  | $ | 1,199,933 |  |  | $ | 14,893 |  |  | $ | 37,161 |  |  | $ | 1,251,987 |
The Company had no loans classified doubtful or loss at December 31, 2022 or June 30, 2022. During the quarter ended December 31, 2022, the Company upgraded one commercial loan relationship from special mention to pass, and one from substandard to special mention, due to improvements in borrower cash flows and improving financial performance. There were also loan payoffs during the quarter ended December 31, 2022, comprised of one commercial real estate loan and one commercial loan that were classified as substandard. This was offset by one commercial real estate loan relationship and one commercial loan relationship downgraded to substandard, and one commercial real estate loan relationship downgraded to special mention during the current quarter. At December 31, 2022, these loans were all performing. Management continues to monitor these loan relationships closely. Nonaccrual Loans Management places loans on nonaccrual status once the loans have become 90 days or more delinquent. A nonaccrual loan is defined as a loan in which collectability is questionable and therefore interest on the loan will no longer be recognized on an accrual basis. A loan is not placed back on accrual status until the borrower has demonstrated the ability and willingness to make timely payments on the loan. A loan does not have to be 90 days delinquent in order to be classified as nonaccrual. Loans on nonaccrual status totaled $5.4 million at December 31, 2022 of which $669,000 were in process of foreclosure. At December 31, 2022, there were five residential loans totaling $567,000 and one commercial real estate loan for $102,000 in the process of foreclosure. Included in nonaccrual loans were $3.1 million of loans which were less than 90 days past due at December 31, 2022, but have a recent history of delinquency greater than 90 days past due. These loans will be returned to accrual status once they have demonstrated a history of timely payments. Loans on nonaccrual status totaled $6.3 million at June 30, 2022 of which $528,000 were in the process of foreclosure. At June 30, 2022, there were three residential loans in the process of foreclosure totaling $426,000 and one commercial real estate loan for $102,000 in the process of foreclosure. Included in nonaccrual loans were $4.4 million of loans which were less than 90 days past due at June 30, 2022, but have a recent history of delinquency greater than 90 days past due. The decrease in nonperforming loans during the period was primarily due to $1.1 million in loan repayments, $134,000 in loans returning to performing status, and $7,000 in charge-offs, partially offset by $277,000 of loans placed into nonperforming status. The following table sets forth information regarding delinquent and/or nonaccrual loans at December 31, 2022:
(In thousands) |  | 30-59 days past due |  |  | 60-89 days past due |  |  | 90 days or more past due |  |  | Total past due |  |  | Current |  |  | Total Loans |  |  | Loans on Non- accrual |
Residential real estate |  | $ | 2,410 |  |  | $ | 1,009 |  |  | $ | 1,542 |  |  | $ | 4,961 |  |  | $ | 366,685 |  |  | $ | 371,646 |  |  | $ | 2,685 |
Residential construction and land |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20,334 |  |  |  | 20,334 |  |  |  | - |
Multi-family |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 67,733 |  |  |  | 67,733 |  |  |  | - |
Commercial real estate |  |  | 1,816 |  |  |  | 225 |  |  |  | 178 |  |  |  | 2,219 |  |  |  | 703,430 |  |  |  | 705,649 |  |  |  | 828 |
Commercial construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 87,267 |  |  |  | 87,267 |  |  |  | - |
Home equity |  |  | 46 |  |  |  | 38 |  |  |  | 140 |  |  |  | 224 |  |  |  | 20,445 |  |  |  | 20,669 |  |  |  | 185 |
Consumer installment |  |  | 35 |  |  |  | 19 |  |  |  | - |  |  |  | 54 |  |  |  | 4,534 |  |  |  | 4,588 |  |  |  | - |
Commercial loans |  |  | 1,603 |  |  |  | 91 |  |  |  | 398 |  |  |  | 2,092 |  |  |  | 110,077 |  |  |  | 112,169 |  |  |  | 1,679 |
Total gross loans |  | $ | 5,910 |  |  | $ | 1,382 |  |  | $ | 2,258 |  |  | $ | 9,550 |  |  | $ | 1,380,505 |  |  | $ | 1,390,055 |  |  | $ | 5,377 |
The following table sets forth information regarding delinquent and/or nonaccrual loans at June 30, 2022:
(In thousands) |  | 30-59 days past due |  |  | 60-89 days past due |  |  | 90 days or more past due |  |  | Total past due |  |  | Current |  |  | Total Loans |  |  | Loans on Non- accrual |
Residential real estate |  | $ | 66 |  |  | $ | 1,676 |  |  | $ | 592 |  |  | $ | 2,334 |  |  | $ | 358,490 |  |  | $ | 360,824 |  |  | $ | 2,948 |
Residential construction and land |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | 1 |  |  |  | 15,297 |  |  |  | 15,298 |  |  |  | 1 |
Multi-family |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 63,822 |  |  |  | 63,822 |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | 385 |  |  |  | 1,147 |  |  |  | 1,532 |  |  |  | 594,103 |  |  |  | 595,635 |  |  |  | 1,269 |
Commercial construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 83,748 |  |  |  | 83,748 |  |  |  | - |
Home equity |  |  | 3 |  |  |  | - |  |  |  | 179 |  |  |  | 182 |  |  |  | 17,695 |  |  |  | 17,877 |  |  |  | 188 |
Consumer installment |  |  | 22 |  |  |  | 17 |  |  |  | - |  |  |  | 39 |  |  |  | 4,473 |  |  |  | 4,512 |  |  |  | 7 |
Commercial loans |  |  | - |  |  |  | 28 |  |  |  | 19 |  |  |  | 47 |  |  |  | 110,224 |  |  |  | 110,271 |  |  |  | 1,904 |
Total gross loans |  | $ | 91 |  |  | $ | 2,107 |  |  | $ | 1,937 |  |  | $ | 4,135 |  |  | $ | 1,247,852 |  |  | $ | 1,251,987 |  |  | $ | 6,317 |
The Company had no accruing loans delinquent 90 days or more at December 31, 2022 and June 30, 2022. The borrowers have made arrangements with the Bank to bring the loans current within a specified time period and have made a series of payments as agreed. Impaired Loan Analysis The Company identifies impaired loans and measures the impairment in accordance with FASB ASC subtopic “Receivables – Loan Impairment.” Management may consider a loan impaired once it is classified as nonaccrual and when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a troubled debt restructuring. It should be noted that management does not evaluate all loans individually for impairment. Generally, the Company considers residential mortgages, home equity loans and installment loans as small, homogeneous loans, which are evaluated for impairment collectively based on historical loan experience and other factors. In contrast, large commercial mortgage, construction, multi-family, business loans and select larger balance residential mortgage loans or nonaccrual loans that are over $250 thousand and all trouble debt restructured loans are reviewed individually and considered impaired if it is probable that the Company will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the underlying collateral. The majority of the Company’s loans, including most nonaccrual loans, are small homogeneous loan types adequately supported by collateral. Management considers the payment status of loans in the process of evaluating the adequacy of the allowance for loan losses among other factors. Based on this evaluation, a delinquent loan’s risk rating may be downgraded to either pass-watch, special mention, or substandard, and the allocation of the allowance for loan loss is based upon the risk associated with such designation. The tables below detail additional information on impaired loans at the date or periods indicated:
|  | At December 31, 2022 |  |  | For the three months ended December 31, 2022 |  |  | For the six months ended December 31, 2022 |
(In thousands) |  | Recorded Investment |  |  | Unpaid Principal |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  | $ | 785 |  |  | $ | 785 |  |  | $ | - |  |  | $ | 923 |  |  | $ | 2 |  |  | $ | 954 |  |  | $ | 2 |
Commercial real estate |  |  | 371 |  |  |  | 371 |  |  |  | - |  |  |  | 372 |  |  |  | 6 |  |  |  | 218 |  |  |  | 8 |
Home equity |  |  | 128 |  |  |  | 128 |  |  |  | - |  |  |  | 128 |  |  |  | - |  |  |  | 128 |  |  |  | - |
Consumer installment |  |  | 4 |  |  |  | 4 |  |  |  | - |  |  |  | 4 |  |  |  | - |  |  |  | 5 |  |  |  | 1 |
Commercial loans |  |  | 340 |  |  |  | 340 |  |  |  | - |  |  |  | 341 |  |  |  | 4 |  |  |  | 343 |  |  |  | 8 |
Impaired loans with no allowance |  |  | 1,628 |  |  |  | 1,628 |  |  |  | - |  |  |  | 1,768 |  |  |  | 12 |  |  |  | 1,648 |  |  |  | 19 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 2,428 |  |  |  | 2,428 |  |  |  | 587 |  |  |  | 2,301 |  |  |  | 5 |  |  |  | 2,120 |  |  |  | 7 |
Commercial real estate |  |  | 4,100 |  |  |  | 4,100 |  |  |  | 1,090 |  |  |  | 3,805 |  |  |  | 41 |  |  |  | 3,517 |  |  |  | 73 |
Commercial construction |  |  | 102 |  |  |  | 102 |  |  |  | 1 |  |  |  | 102 |  |  |  | - |  |  |  | 102 |  |  |  | - |
Home equity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 160 |  |  |  | 4 |
Commercial loans |  |  | 1,984 |  |  |  | 1,984 |  |  |  | 939 |  |  |  | 2,591 |  |  |  | 11 |  |  |  | 2,799 |  |  |  | 27 |
Impaired loans with allowance |  |  | 8,614 |  |  |  | 8,614 |  |  |  | 2,617 |  |  |  | 8,799 |  |  |  | 57 |  |  |  | 8,698 |  |  |  | 111 |
Total impaired: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 3,213 |  |  |  | 3,213 |  |  |  | 587 |  |  |  | 3,224 |  |  |  | 7 |  |  |  | 3,074 |  |  |  | 9 |
Commercial real estate |  |  | 4,471 |  |  |  | 4,471 |  |  |  | 1,090 |  |  |  | 4,177 |  |  |  | 47 |  |  |  | 3,735 |  |  |  | 81 |
Commercial construction |  |  | 102 |  |  |  | 102 |  |  |  | 1 |  |  |  | 102 |  |  |  | - |  |  |  | 102 |  |  |  | - |
Home equity |  |  | 128 |  |  |  | 128 |  |  |  | - |  |  |  | 128 |  |  |  | - |  |  |  | 288 |  |  |  | 4 |
Consumer installment |  |  | 4 |  |  |  | 4 |  |  |  | - |  |  |  | 4 |  |  |  | - |  |  |  | 5 |  |  |  | 1 |
Commercial loans |  |  | 2,324 |  |  |  | 2,324 |  |  |  | 939 |  |  |  | 2,932 |  |  |  | 15 |  |  |  | 3,142 |  |  |  | 35 |
Total impaired loans |  | $ | 10,242 |  |  | $ | 10,242 |  |  | $ | 2,617 |  |  | $ | 10,567 |  |  | $ | 69 |  |  | $ | 10,346 |  |  | $ | 130 |
|  | At June 30, 2022 |  |  | For the three months ended December 31, 2021 |  |  | For the six months ended December 31, 2021 |
(In thousands) |  | Recorded Investment |  |  | Unpaid Principal |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |
Residential real estate |  | $ | 990 |  |  | $ | 990 |  |  | $ | - |  |  | $ | 664 |  |  | $ | 10 |  |  | $ | 442 |  |  | $ | 10 |
Commercial real estate |  |  | 67 |  |  |  | 67 |  |  |  | - |  |  |  | 539 |  |  |  | 5 |  |  |  | 492 |  |  |  | 8 |
Home equity |  |  | 128 |  |  |  | 128 |  |  |  | - |  |  |  | 128 |  |  |  | - |  |  |  | 128 |  |  |  | - |
Consumer Installment |  |  | 5 |  |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial loans |  |  | 346 |  |  |  | 346 |  |  |  | - |  |  |  | 180 |  |  |  | 2 |  |  |  | 139 |  |  |  | 2 |
Impaired loans with no allowance |  |  | 1,536 |  |  |  | 1,536 |  |  |  | - |  |  |  | 1,511 |  |  |  | 17 |  |  |  | 1,201 |  |  |  | 20 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 1,953 |  |  |  | 1,953 |  |  |  | 588 |  |  |  | 1,958 |  |  |  | 28 |  |  |  | 1,338 |  |  |  | 33 |
Commercial real estate |  |  | 3,698 |  |  |  | 3,698 |  |  |  | 1,118 |  |  |  | 612 |  |  |  | 8 |  |  |  | 696 |  |  |  | 18 |
Commercial construction |  |  | 102 |  |  |  | 102 |  |  |  | 1 |  |  |  | 102 |  |  |  | - |  |  |  | 102 |  |  |  | - |
Home equity |  |  | 320 |  |  |  | 320 |  |  |  | 44 |  |  |  | 321 |  |  |  | 3 |  |  |  | 321 |  |  |  | 6 |
Commercial loans |  |  | 3,162 |  |  |  | 3,162 |  |  |  | 596 |  |  |  | 3,484 |  |  |  | 47 |  |  |  | 3,356 |  |  |  | 87 |
Impaired loans with allowance |  |  | 9,235 |  |  |  | 9,235 |  |  |  | 2,347 |  |  |  | 6,477 |  |  |  | 86 |  |  |  | 5,813 |  |  |  | 144 |
Total impaired: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 2,943 |  |  |  | 2,943 |  |  |  | 588 |  |  |  | 2,622 |  |  |  | 38 |  |  |  | 1,780 |  |  |  | 43 |
Commercial real estate |  |  | 3,765 |  |  |  | 3,765 |  |  |  | 1,118 |  |  |  | 1,151 |  |  |  | 13 |  |  |  | 1,188 |  |  |  | 26 |
Commercial construction |  |  | 102 |  |  |  | 102 |  |  |  | 1 |  |  |  | 102 |  |  |  | - |  |  |  | 102 |  |  |  | - |
Home equity |  |  | 448 |  |  |  | 448 |  |  |  | 44 |  |  |  | 449 |  |  |  | 3 |  |  |  | 449 |  |  |  | 6 |
Consumer Installment |  |  | 5 |  |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial loans |  |  | 3,508 |  |  |  | 3,508 |  |  |  | 596 |  |  |  | 3,664 |  |  |  | 49 |  |  |  | 3,495 |  |  |  | 89 |
Total impaired loans |  | $ | 10,771 |  |  | $ | 10,771 |  |  | $ | 2,347 |  |  | $ | 7,988 |  |  | $ | 103 |  |  | $ | 7,014 |  |  | $ | 164 |
The table below details loans that have been modified as a troubled debt restructuring during the periods indicated.
(Dollars in thousands) |  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post- Modification Outstanding Recorded Investment |  |  | Current outstanding Recorded Investment |
For the six months ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 2 |  |  | $ | 778 |  |  | $ | 778 |  |  | $ | 778 |
Commercial real estate |  |  | 2 |  |  | $ | 1,228 |  |  | $ | 1,233 |  |  | $ | 1,233 |
Commercial loans |  |  | 1 |  |  | $ | 379 |  |  | $ | 379 |  |  | $ | 379 |
For the year ended June 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Installment |  |  | 1 |  |  | $ | 5 |  |  | $ | 5 |  |  | $ | 5 |
There were no loans that had been modified as a troubled debt restructuring during the six months ended December 31, 2021. There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to June 30, 2022 or 2021, which have subsequently defaulted during the six months ended December 31, 2022 or 2021. Allowance for Loan Losses The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the loan portfolio, specific impaired loans and current economic conditions. Such evaluation, which includes a review of certain identified loans on which full collectability may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, payment status of the loan, historical loan loss experience and other factors that warrant recognition in providing for the loan loss allowance. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. The Company disaggregates its loan portfolio as noted in the below allowance for loan losses tables to evaluate for impairment collectively based on historical loss experience. The Company evaluates nonaccrual loans that are over $250 thousand and all trouble debt restructured loans individually for impairment, if it is probable that the Company will not be able to collect scheduled payments of principal and interest when due, according to the contractual terms of the loan agreements. Loans that are guaranteed, such as SBA loans, are excluded from the homogeneous pool of loans and no allowance is allocated to this segment of the portfolio. The measurement of impaired loans is generally based on the fair value of the underlying collateral. The Company charges loans off against the allowance for credit losses when it becomes evident that a loan cannot be collected within a reasonable amount of time or that it will cost the Company more than it will receive, and all possible avenues of repayment have been analyzed, including the potential of future cash flow, the value of the underlying collateral, and strength of any guarantors or co-borrowers. Generally, consumer loans and smaller business loans (not secured by real estate) in excess of 90 days are charged-off against the allowance for loan losses, unless equitable arrangements are made. Included within consumer installment loan charge-offs and recoveries are deposit accounts that have been overdrawn in excess of 60 days. With continued growth in the number of deposit accounts, charge-off activity within this category has also grown, as can be seen from the tables below. For loans secured by real estate, a charge-off is recorded when it is determined that the collection of all or a portion of a loan may not be collected and the amount of that loss can be reasonably estimated. The allowance for loan losses is increased by a provision for loan losses (which results in a charge to expense) and recoveries of loans previously charged off and is reduced by charge-offs. The following tables set forth the activity and allocation of the allowance for loan losses by loan class during and at the periods indicated. The allowance is allocated to each loan class based on historical loss experience, current economic conditions, and other considerations.
|  | Activity for the three months ended December 31, 2022 |
(In thousands) |  | Balance at September 30, 2022 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at December 31, 2022 |
Residential real estate |  | $ | 2,471 |  |  | $ | - |  |  | $ | 2 |  |  | $ | 19 |  |  | $ | 2,492 |
Residential construction and land |  |  | 177 |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | 193 |
Multi-family |  |  | 159 |  |  |  | - |  |  |  | - |  |  |  | 8 |  |  |  | 167 |
Commercial real estate |  |  | 15,392 |  |  |  | - |  |  |  | - |  |  |  | 58 |  |  |  | 15,450 |
Commercial construction |  |  | 1,044 |  |  |  | - |  |  |  | - |  |  |  | 56 |  |  |  | 1,100 |
Home equity |  |  | 44 |  |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | 38 |
Consumer installment |  |  | 274 |  |  |  | 137 |  |  |  | 29 |  |  |  | 118 |  |  |  | 284 |
Commercial loans |  |  | 2,586 |  |  |  | 7 |  |  |  | 11 |  |  |  | (25 | ) |  |  | 2,565 |
Total |  | $ | 22,147 |  |  | $ | 144 |  |  | $ | 42 |  |  | $ | 244 |  |  | $ | 22,289 |
|  | Activity for the six months ended December 31, 2022 |
(In thousands) |  | Balance at June 30, 2022 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at December 31, 2022 |
Residential real estate |  | $ | 2,373 |  |  | $ | - |  |  | $ | 5 |  |  | $ | 114 |  |  | $ | 2,492 |
Residential construction and land |  |  | 141 |  |  |  | - |  |  |  | - |  |  |  | 52 |  |  |  | 193 |
Multi-family |  |  | 119 |  |  |  | - |  |  |  | - |  |  |  | 48 |  |  |  | 167 |
Commercial real estate |  |  | 16,221 |  |  |  | - |  |  |  | - |  |  |  | (771 | ) |  |  | 15,450 |
Commercial construction |  |  | 1,114 |  |  |  | - |  |  |  | - |  |  |  | (14 | ) |  |  | 1,100 |
Home equity |  |  | 89 |  |  |  | - |  |  |  | - |  |  |  | (51 | ) |  |  | 38 |
Consumer installment |  |  | 349 |  |  |  | 304 |  |  |  | 75 |  |  |  | 164 |  |  |  | 284 |
Commercial loans |  |  | 2,355 |  |  |  | 11 |  |  |  | 18 |  |  |  | 203 |  |  |  | 2,565 |
Total |  | $ | 22,761 |  |  | $ | 315 |  |  | $ | 98 |  |  | $ | (255 | ) |  | $ | 22,289 |
|  | Allowance for Loan Losses |  |  | Loans Receivable |
|  | Ending Balance At December 31, 2022 Impairment Analysis |  |  | Ending Balance At December 31, 2022 Impairment Analysis |
(In thousands) |  | Individually Evaluated |  |  | Collectively Evaluated |  |  | Individually Evaluated |  |  | Collectively Evaluated |
Residential real estate |  | $ | 587 |  |  | $ | 1,905 |  |  | $ | 3,213 |  |  | $ | 368,433 |
Residential construction and land |  |  | - |  |  |  | 193 |  |  |  | - |  |  |  | 20,334 |
Multi-family |  |  | - |  |  |  | 167 |  |  |  | - |  |  |  | 67,733 |
Commercial real estate |  |  | 1,090 |  |  |  | 14,360 |  |  |  | 4,471 |  |  |  | 701,178 |
Commercial construction |  |  | 1 |  |  |  | 1,099 |  |  |  | 102 |  |  |  | 87,165 |
Home equity |  |  | - |  |  |  | 38 |  |  |  | 128 |  |  |  | 20,541 |
Consumer installment |  |  | - |  |  |  | 284 |  |  |  | 4 |  |  |  | 4,584 |
Commercial loans |  |  | 939 |  |  |  | 1,626 |  |  |  | 2,324 |  |  |  | 109,845 |
Total |  | $ | 2,617 |  |  | $ | 19,672 |  |  | $ | 10,242 |  |  | $ | 1,379,813 |
|  | Activity for the three months ended December 31, 2021 |
(In thousands) |  | Balance at September 30, 2021 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at December 31, 2021 |
Residential real estate |  | $ | 1,997 |  |  | $ | - |  |  | $ | 7 |  |  | $ | (23 | ) |  | $ | 1,981 |
Residential construction and land |  |  | 120 |  |  |  | - |  |  |  | - |  |  |  | (5 | ) |  |  | 115 |
Multi-family |  |  | 100 |  |  |  | - |  |  |  | - |  |  |  | (24 | ) |  |  | 76 |
Commercial real estate |  |  | 14,298 |  |  |  | - |  |  |  | - |  |  |  | 1,318 |  |  |  | 15,616 |
Commercial construction |  |  | 1,198 |  |  |  | - |  |  |  | - |  |  |  | 52 |  |  |  | 1,250 |
Home equity |  |  | 140 |  |  |  | - |  |  |  | - |  |  |  | (51 | ) |  |  | 89 |
Consumer installment |  |  | 290 |  |  |  | 107 |  |  |  | 20 |  |  |  | 77 |  |  |  | 280 |
Commercial loans |  |  | 2,350 |  |  |  | 10 |  |  |  | 1 |  |  |  | (64 | ) |  |  | 2,277 |
Total |  | $ | 20,493 |  |  | $ | 117 |  |  | $ | 28 |  |  | $ | 1,280 |  |  | $ | 21,684 |
|  | Activity for the six months ended December 31, 2021 |
(In thousands) |  | Balance at June 30, 2021 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at December 31, 2021 |
Residential real estate |  | $ | 2,012 |  |  | $ | - |  |  | $ | 7 |  |  | $ | (38 | ) |  | $ | 1,981 |
Residential construction and land |  |  | 106 |  |  |  | - |  |  |  | - |  |  |  | 9 |  |  |  | 115 |
Multi-family |  |  | 186 |  |  |  | - |  |  |  | - |  |  |  | (110 | ) |  |  | 76 |
Commercial real estate |  |  | 13,049 |  |  |  | - |  |  |  | - |  |  |  | 2,567 |  |  |  | 15,616 |
Commercial construction |  |  | 1,535 |  |  |  | - |  |  |  | - |  |  |  | (285 | ) |  |  | 1,250 |
Home equity |  |  | 165 |  |  |  | - |  |  |  | - |  |  |  | (76 | ) |  |  | 89 |
Consumer installment |  |  | 267 |  |  |  | 211 |  |  |  | 57 |  |  |  | 167 |  |  |  | 280 |
Commercial loans |  |  | 2,348 |  |  |  | 107 |  |  |  | 2 |  |  |  | 34 |  |  |  | 2,277 |
Total |  | $ | 19,668 |  |  | $ | 318 |  |  | $ | 66 |  |  | $ | 2,268 |  |  | $ | 21,684 |
|  | Allowance for Loan Losses |  |  | Loans Receivable |
|  | Ending Balance June 30, 2022 Impairment Analysis |  |  | Ending Balance June 30, 2022 Impairment Analysis |
(In thousands) |  | Individually Evaluated |  |  | Collectively Evaluated |  |  | Individually Evaluated |  |  | Collectively Evaluated |
Residential real estate |  | $ | 588 |  |  | $ | 1,785 |  |  | $ | 2,943 |  |  | $ | 357,881 |
Residential construction and land |  |  | - |  |  |  | 141 |  |  |  | - |  |  |  | 15,298 |
Multi-family |  |  | - |  |  |  | 119 |  |  |  | - |  |  |  | 63,822 |
Commercial real estate |  |  | 1,118 |  |  |  | 15,103 |  |  |  | 3,765 |  |  |  | 591,870 |
Commercial construction |  |  | 1 |  |  |  | 1,113 |  |  |  | 102 |  |  |  | 83,646 |
Home equity |  |  | 44 |  |  |  | 45 |  |  |  | 448 |  |  |  | 17,429 |
Consumer installment |  |  | - |  |  |  | 349 |  |  |  | 5 |  |  |  | 4,507 |
Commercial loans |  |  | 596 |  |  |  | 1,759 |  |  |  | 3,508 |  |  |  | 106,763 |
Total |  | $ | 2,347 |  |  | $ | 20,414 |  |  | $ | 10,771 |  |  | $ | 1,241,216 |
Foreclosed real estate (FRE) FRE consists of properties acquired through mortgage loan foreclosure proceedings or in full or partial satisfaction of loans. The following table sets forth information regarding FRE at:
(in thousands) |  | December 31, 2022 |  |  | June 30, 2022 |
Residential real estate |  | $ | - |  |  | $ | 68 |
Total foreclosed real estate |  | $ | - |  |  | $ | 68 |

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- 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. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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