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NET LOANS RECEIVABLE | 6 Months Ended
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Dec. 31, 2020
NET LOANS RECEIVABLE |
NET LOANS RECEIVABLE | 6.NET LOANS RECEIVABLE A summary of net loans receivable is as follows (dollars in thousands):
|  | December 31, 2020 |  | June 30, 2020
Commercial: |  |  |  |  |  |
Real estate |  | $ | 452,468 |  | $ | 450,452
Commercial and industrial |  |  | 192,393 |  |  | 237,223
Construction |  |  | 94,817 |  |  | 91,805
Total commercial |  |  | 739,678 |  |  | 779,480
Residential mortgages |  |  | 287,176 |  |  | 279,960
Home equity loans and lines |  |  | 77,068 |  |  | 80,345
Consumer |  |  | 29,222 |  |  | 30,860
|  |  | 1,133,144 |  |  | 1,170,645
Net deferred loan costs |  |  | 1,726 |  |  | 605
Allowance for loan losses |  |  | (23,393) |  |  | (22,851)
Net loans receivable |  | $ | 1,111,477 |  | $ | 1,148,399
The following tables present the activity in the allowance for loan losses by portfolio segment (dollars in thousands):
|  | For the Three Months Ended December 31, 2020
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses at beginning of period |  | $ | 18,334 |  | $ | 3,475 |  | $ | 1,313 |  | $ | 487 |  | $ | 23,609
Provisions charged to operations |  |  | 1,272 |  |  | 177 |  |  | 25 |  |  | 76 |  |  | 1,550
Loans charged off |  |  | (1,558) |  |  | (108) |  |  | (51) |  |  | (84) |  |  | (1,801)
Recoveries on loans charged off |  |  | 26 |  |  | — |  |  | — |  |  | 9 |  |  | 35
Allowance for loan losses at end of period |  | $ | 18,074 |  | $ | 3,544 |  | $ | 1,287 |  | $ | 488 |  | $ | 23,393
|  | For the Three Months Ended December 31, 2019
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses at beginning of period |  | $ | 11,408 |  | $ | 2,379 |  | $ | 850 |  | $ | 362 |  | $ | 14,999
Provisions charged to operations |  |  | 1,353 |  |  | 73 |  |  | 18 |  |  | 76 |  |  | 1,520
Loans charged off |  |  | (1) |  |  | — |  |  | — |  |  | (33) |  |  | (34)
Recoveries on loans charged off |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | 8
Allowance for loan losses at end of period |  | $ | 12,760 |  | $ | 2,452 |  | $ | 868 |  | $ | 413 |  | $ | 16,493
|  | For the Six Months Ended December 31, 2020
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses at beginning of period |  | $ | 17,570 |  | $ | 3,484 |  | $ | 1,303 |  | $ | 494 |  | $ | 22,851
Provisions charged to operations |  |  | 2,003 |  |  | 168 |  |  | 35 |  |  | 94 |  |  | 2,300
Loans charged off |  |  | (1,558) |  |  | (108) |  |  | (51) |  |  | (110) |  |  | (1,827)
Recoveries on loans charged off |  |  | 59 |  |  | — |  |  | — |  |  | 10 |  |  | 69
Allowance for loan losses at end of period |  | $ | 18,074 |  | $ | 3,544 |  | $ | 1,287 |  | $ | 488 |  | $ | 23,393
|  | For the Six Months Ended December 31, 2019
|  | (As Restated)
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses at beginning of period |  | $ | 11,057 |  | $ | 2,360 |  | $ | 813 |  | $ | 269 |  | $ | 14,499
Provisions charged to operations |  |  | 1,708 |  |  | 111 |  |  | 54 |  |  | 217 |  |  | 2,090
Loans charged off |  |  | (5) |  |  | (19) |  |  | — |  |  | (90) |  |  | (114)
Recoveries on loans charged off |  |  | — |  |  | — |  |  | 1 |  |  | 17 |  |  | 18
Allowance for loan losses at end of period |  | $ | 12,760 |  | $ | 2,452 |  | $ | 868 |  | $ | 413 |  | $ | 16,493
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method (dollars in thousands):
|  | December 31, 2020
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Related to loans individually evaluated for impairment |  | $ | 1,679 |  | $ | — |  | $ | — |  | $ | — |  | $ | 1,679
Related to loans collectively evaluated for impairment |  |  | 16,395 |  |  | 3,544 |  | $ | 1,287 |  | $ | 488 |  |  | 21,714
Ending balance |  | $ | 18,074 |  | $ | 3,544 |  | $ | 1,287 |  | $ | 488 |  | $ | 23,393
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 8,260 |  | $ | — |  | $ | — |  | $ | — |  | $ | 8,260
Loans collectively evaluated for impairment |  |  | 731,418 |  |  | 287,176 |  |  | 77,068 |  |  | 29,222 |  |  | 1,124,884
Ending balance |  | $ | 739,678 |  | $ | 287,176 |  | $ | 77,068 |  | $ | 29,222 |  | $ | 1,133,144
|  | June 30, 2020
|  |  |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  | Mortgages |  |  | Home Equity |  | Consumer |  | Total
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Related to loans individually evaluated for impairment |  | $ | 929 |  | $ | — |  | $ | — |  | $ | — |  | $ | 929
Related to loans collectively evaluated for impairment |  |  | 16,641 |  |  | 3,484 |  |  | 1,303 |  |  | 494 |  |  | 21,922
Ending balance |  | $ | 17,570 |  | $ | 3,484 |  | $ | 1,303 |  | $ | 494 |  | $ | 22,851
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 8,407 |  | $ | — |  | $ | — |  | $ | — |  | $ | 8,407
Loans collectively evaluated for impairment |  |  | 771,073 |  |  | 279,960 |  |  | 80,345 |  |  | 30,860 |  |  | 1,162,238
Ending balance |  | $ | 779,480 |  | $ | 279,960 |  | $ | 80,345 |  | $ | 30,860 |  | $ | 1,170,645
The following tables present information related to impaired loans by class as of (dollars in thousands):
|  |  |  | For the Six Months Ended
|  | December 31, 2020 |  | December 31, 2020
|  | Unpaid |  |  |  |  | Allowance for |  | Average |  | Interest
|  | Principal |  | Recorded |  | Loan Losses |  | Recorded |  | Income
|  | Balance |  | Investment |  | Allocated |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 5,387 |  | $ | 5,271 |  | $ | — |  | $ | 5,387 |  | $ | 50
Commercial and industrial |  |  | 46 |  |  | 42 |  |  | — |  |  | 46 |  |  | —
Construction |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Subtotal |  |  | 5,433 |  |  | 5,313 |  |  | — |  |  | 5,433 |  |  | 50
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 235 |  |  | 209 |  |  | 13 |  |  | 235 |  |  | —
Commercial and industrial |  |  | 1,434 |  |  | 1,419 |  |  | 836 |  |  | 1,434 |  |  | 35
Construction |  |  | 1,319 |  |  | 1,319 |  |  | 830 |  |  | 1,319 |  |  | —
Subtotal |  |  | 2,988 |  |  | 2,947 |  |  | 1,679 |  |  | 2,988 |  |  | 35
Total |  | $ | 8,421 |  | $ | 8,260 |  | $ | 1,679 |  | $ | 8,421 |  | $ | 85
|  |  |  | For the Year Ended
|  | June 30, 2020 |  | June 30, 2020
|  | Unpaid |  |  |  |  | Allowance for |  | Average |  | Interest
|  | Principal |  | Recorded |  | Loan Losses |  | Recorded |  | Income
|  | Balance |  | Investment |  | Allocated |  | Investment |  | Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 5,417 |  | $ | 5,342 |  | $ | — |  | $ | 5,203 |  | $ | 265
Commercial and industrial |  |  | 46 |  |  | 42 |  |  | — |  |  | 46 |  |  | —
Construction |  |  | 1,319 |  |  | 1,319 |  |  | — |  |  | 1,320 |  |  | —
Subtotal |  |  | 6,782 |  |  | 6,703 |  |  | — |  |  | 6,569 |  |  | 265
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 233 |  |  | 221 |  |  | 25 |  |  | 234 |  |  | —
Commercial and industrial |  |  | 1,494 |  |  | 1,483 |  |  | 904 |  |  | 1,513 |  |  | 88
Subtotal |  |  | 1,727 |  |  | 1,704 |  |  | 929 |  |  | 1,747 |  |  | 88
Total |  | $ | 8,509 |  | $ | 8,407 |  | $ | 929 |  | $ | 8,316 |  | $ | 353
Interest income on nonaccrual loans is recognized using the cost recovery method. Interest income on impaired loans that were on nonaccrual status and cash-basis interest income for the three and six months ended December 31, 2020, and the year ended June 30, 2020 was nominal. The recorded investment in loans excludes accrued interest receivable and deferred loan fees, net due to immateriality. At various times, certain loan modifications are executed which are considered to be troubled debt restructurings. Substantially all of these modifications include one or a combination of the following: extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; change in scheduled payment amount including interest only; or extensions of additional credit for payment of delinquent real estate taxes or other costs. The Company has implemented customer payment deferral programs to assist both consumer and commercial borrowers that may be experiencing financial hardship due to COVID-19 related challenges, whereby short-term deferrals of payments (generally three to six months) will be provided. Commercial, residential mortgage, home equity loans and lines, and consumer loans in deferment status will continue to accrue interest on the deferred principal during the deferment period unless otherwise classified as nonaccrual. Consistent with the CARES Act and industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period and therefore, not classified as troubled-debt restructured loans. Borrowers that are delinquent in their payments prior to requesting a COVID-19 related financial hardship payment deferral will be reviewed on a case by case basis for troubled debt restructure classification and non-performing loan status. At December 31, 2020, the Company had COVID-19 related financial hardship payment deferrals for consumer borrowers related to nine loans representing $2.6 million of the Company’s residential mortgage, home equity loans and lines of credit, and consumer loan balances, and for commercial borrowers related to 24 loans representing $40.6 million of the Company’s commercial loan balances. There were no loans modified as troubled debt restructurings during the three and six months ended December 31, 2020, and 2019, respectively. There was one loan that had been modified as a troubled debt restructuring during the twelve months prior to December 31, 2020 which subsequently defaulted during the three and six months ended December 31, 2020. There were no loans that had been modified as a troubled debt restructuring during the twelve months prior to December 31,2019 which have subsequently defaulted during the three and six months ended December 31, 2019. Loans subject to a troubled debt restructuring are evaluated as impaired loans for the purpose of determining the specific component of the allowance for loan losses. The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans (dollars in thousands):
|  | December 31, |  | June 30,
|  | 2020 |  | 2020
|  |  |  |  | Past Due |  |  |  |  | Past Due
|  |  |  |  | 90 Days |  |  |  |  | 90 Days
|  |  |  |  | Still on |  |  |  |  | Still on
|  | Nonaccrual |  | Accrual |  | Nonaccrual |  | Accrual
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 3,281 |  | $ | 632 |  | $ | 3,364 |  | $ | 143
Commercial and industrial |  |  | 1,261 |  |  | 30 |  |  | 95 |  |  | 1,455
Construction |  |  | 1,319 |  |  | — |  |  | 1,319 |  |  | —
Residential mortgages |  |  | 5,104 |  |  | — |  |  | 4,807 |  |  | —
Home equity loans and lines |  |  | 2,177 |  |  | 14 |  |  | 1,865 |  |  | —
Consumer |  |  | 199 |  |  | 45 |  |  | 210 |  |  | 12
|  | $ | 13,341 |  | $ | 721 |  | $ | 11,660 |  | $ | 1,610
Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans. The following tables present the aging of the recorded investment in loans by class of loans as of (dollars in thousands):
|  | December 31, 2020
|  | 30 - 59 |  | 60 - 89 |  | 90 or more |  |  |  |  |  |  |  |  |
|  | Days |  | Days |  | Days |  | Total |  | Loans Not |  |  |
|  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 2,941 |  | $ | 2,306 |  | $ | 2,778 |  | $ | 8,025 |  | $ | 444,443 |  | $ | 452,468
Commercial and industrial |  |  | 5,818 |  |  | 1,649 |  |  | 72 |  |  | 7,539 |  |  | 184,854 |  |  | 192,393
Construction |  |  | 169 |  |  | 617 |  |  | 1,319 |  |  | 2,105 |  |  | 92,712 |  |  | 94,817
Residential mortgages |  |  | 989 |  |  | 522 |  |  | 2,531 |  |  | 4,042 |  |  | 283,134 |  |  | 287,176
Home equity loans and lines |  |  | 892 |  |  | 337 |  |  | 1,691 |  |  | 2,920 |  |  | 74,148 |  |  | 77,068
Consumer |  |  | 217 |  |  | 6 |  |  | 45 |  |  | 268 |  |  | 28,954 |  |  | 29,222
Total |  | $ | 11,026 |  | $ | 5,437 |  | $ | 8,436 |  | $ | 24,899 |  | $ | 1,108,245 |  | $ | 1,133,144
|  | June 30, 2020
|  | 30 - 59 |  | 60 - 89 |  | 90 or more |  |  |  |  |  |  |  |  |
|  | Days |  | Days |  | Days |  | Total |  | Loans Not |  |  |
|  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 23 |  | $ | 211 |  | $ | 2,270 |  | $ | 2,504 |  | $ | 447,948 |  | $ | 450,452
Commercial and industrial |  |  | — |  |  | 26 |  |  | 1,551 |  |  | 1,577 |  |  | 235,646 |  |  | 237,223
Construction |  |  | — |  |  | — |  |  | 1,319 |  |  | 1,319 |  |  | 90,486 |  |  | 91,805
Residential mortgages |  |  | 2,666 |  |  | 1,272 |  |  | 3,505 |  |  | 7,443 |  |  | 272,517 |  |  | 279,960
Home equity loans and lines |  |  | 1,217 |  |  | 1,259 |  |  | 1,383 |  |  | 3,859 |  |  | 76,486 |  |  | 80,345
Consumer |  |  | 39 |  |  | 4 |  |  | 12 |  |  | 55 |  |  | 30,805 |  |  | 30,860
Total |  | $ | 3,945 |  | $ | 2,772 |  | $ | 10,040 |  | $ | 16,757 |  | $ | 1,153,888 |  | $ | 1,170,645
The Company categorizes commercial loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. The Company uses the following definitions for risk ratings: Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Commercial loans not meeting the criteria above are considered to be pass rated loans. The following tables present commercial loans summarized by class of loans and the risk category (dollars in thousands):
|  | December 31, 2020
|  |  |  |  | Special |  |  |  |  |  |  |  |  |
|  | Pass |  | Mention |  | Substandard |  | Doubtful |  | Total
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 406,840 |  | $ | 29,213 |  | $ | 16,415 |  | $ | — |  | $ | 452,468
Commercial and industrial |  |  | 174,798 |  |  | 6,258 |  |  | 11,337 |  |  | — |  |  | 192,393
Construction |  |  | 92,881 |  |  | — |  |  | 1,936 |  |  | — |  |  | 94,817
|  | $ | 674,519 |  | $ | 35,471 |  | $ | 29,688 |  | $ | — |  | $ | 739,678
|  | June 30, 2020
|  |  |  |  | Special |  |  |  |  |  |  |  |  |
|  | Pass |  | Mention |  | Substandard |  | Doubtful |  | Total
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 433,948 |  | $ | 106 |  | $ | 16,398 |  | $ | — |  | $ | 450,452
Commercial and industrial |  |  | 222,777 |  |  | 6,393 |  |  | 8,000 |  |  | 53 |  |  | 237,223
Construction |  |  | 89,869 |  |  | — |  |  | 1,936 |  |  | — |  |  | 91,805
|  | $ | 746,594 |  | $ | 6,499 |  | $ | 26,334 |  | $ | 53 |  | $ | 779,480
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. As of December 31, 2020 and June 30, 2020, the Company had pledged $435.7 million and $449.5 million respectively, of residential mortgage, home equity and commercial loans as collateral for FHLBNY borrowings and stand-by letters of credit.

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