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Note 4 - Loans Receivable

9 Months Ended

Sep. 30, 2021

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 - LOANS RECEIVABLE

Loans receivable are as follows:

	*September 30, 2021*			*December 31, 2020*
One-to-four family residential real estate	$	31,829		$	41,691
Multi-family mortgage		435,634			452,241
Nonresidential real estate		100,469			108,658
Construction and land		499			499
Commercial loans and leases		483,705			405,057
Consumer		1,760			1,812
		1,053,896			1,009,958
Net deferred loan origination costs		55			371
Allowance for loan losses		(6,895	)		(7,751	)
Loans, net	$	1,047,056		$	1,002,578

The following tables present the balance in the allowance for loan losses and loans receivable by portfolio segment and based on impairment method:

	*Allowance for loan losses*						*Loan Balances*
	*Individually evaluated for impairment*		*Collectively evaluated for impairment*		*Total*		*Individually evaluated for impairment*		*Collectively evaluated for impairment*		*Total*
September 30, 2021
One-to-four family residential real estate	$	—	$	401	$	401	$	1,354	$	30,475	$	31,829
Multi-family mortgage		—		3,579		3,579		503		435,131		435,634
Nonresidential real estate		28		1,278		1,306		296		100,173		100,469
Construction and land		—		12		12		—		499		499
Commercial loans and leases		—		1,554		1,554		9		483,696		483,705
Consumer		—		43		43		—		1,760		1,760
	$	28	$	6,867	$	6,895	$	2,162	$	1,051,734		1,053,896
Net deferred loan origination costs												55
Allowance for loan losses												(6,895	)
Loans, net											$	1,047,056

	*Allowance for loan losses*						*Loan Balances*
	*Individually evaluated for impairment*		*Collectively evaluated for impairment*		*Total*		*Individually evaluated for impairment*		*Collectively evaluated for impairment*		*Total*
December 31, 2020
One-to-four family residential real estate	$	—	$	518	$	518	$	1,718	$	39,973	$	41,691
Multi-family mortgage		—		4,062		4,062		520		451,721		452,241
Nonresidential real estate		28		1,541		1,569		296		108,362		108,658
Construction and land		—		12		12		—		499		499
Commercial loans and leases		—		1,536		1,536		—		405,057		405,057
Consumer		—		54		54		—		1,812		1,812
	$	28	$	7,723	$	7,751	$	2,534	$	1,007,424		1,009,958
Net deferred loan origination costs												371
Allowance for loan losses												(7,751	)
Loans, net											$	1,002,578

The following table represents the activity in the allowance for loan losses by portfolio segment:

	*Beginning balance*		*Provision for (recovery of) loan losses*			*Loans charged off*			*Recoveries*		*Ending balance*
For the three months ended

September 30, 2021
One-to-four family residential real estate	$	396	$	(33	)	$	—		$	38	$	401
Multi-family mortgage		3,690		(118	)		—			7		3,579
Nonresidential real estate		1,336		(30	)		—			—		1,306
Construction and land		11		1			—			—		12
Commercial loans and leases		1,377		176			—			1		1,554
Consumer		47		(2	)		(2	)		—		43
	$	6,857	$	(6	)	$	(2	)	$	46	$	6,895

September 30, 2020
One-to-four family residential real estate	$	665	$	(42	)	$	(2	)	$	2	$	623
Multi-family mortgage		4,185		(98	)		—			56		4,143
Nonresidential real estate		1,602		115			—			—		1,717
Commercial loans and leases		1,658		(178	)		—			—		1,480
Consumer		46		16			(14	)		—		48
	$	8,156	$	(187	)	$	(16	)	$	58	$	8,011

	*Beginning balance*		*Provision for (recovery of) loan losses*			*Loans charged off*			*Recoveries*		*Ending balance*
For the nine months ended

September 30, 2021
One-to-four family residential real estate	$	518	$	(264	)	$	—		$	147	$	401
Multi-family mortgage		4,062		(511	)		—			28		3,579
Nonresidential real estate		1,569		(263	)		—			—		1,306
Construction and land		12		—			—			—		12
Commercial loans and leases		1,536		15			(86	)		89		1,554
Consumer		54		4			(17	)		2		43
	$	7,751	$	(1,019	)	$	(103	)	$	266	$	6,895

September 30, 2020
One-to-four family residential real estate	$	675	$	(63	)	$	(7	)	$	18	$	623
Multi-family mortgage		3,676		384			—			83		4,143
Nonresidential real estate		1,176		541			—			—		1,717
Commercial loans and leases		2,065		(588	)		—			3		1,480
Consumer		40		52			(44	)		—		48
	$	7,632	$	326		$	(51	)	$	104	$	8,011

Impaired loans

The following tables present loans individually evaluated for impairment by class of loans:

									*Three Months Ended*				*Nine Months Ended*
									*September 30, 2021*				*September 30, 2021*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Loan Losses Allocated*		*Average Investment in Impaired Loans*		*Interest Income Recognized*		*Average Investment in Impaired Loans*		*Interest Income Recognized*
September 30, 2021
With no related allowance recorded:
One-to-four family residential real estate	$	1,465	$	1,354	$	111	$	—	$	1,428	$	7	$	1,524	$	23
Multi-family mortgage - Illinois		503		503		—		—		506		7		512		22
Equipment finance - investment - rated		9		9		—		—		2		—		1		—
		1,977		1,866		111		—		1,936		14		2,037		45

With an allowance recorded - nonresidential real estate		280		296		—		28		296		—		296		—
	$	2,257	$	2,162	$	111	$	28	$	2,232	$	14	$	2,333	$	45

									*Year ended*
									*December 31, 2020*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Loan Losses Allocated*		*Average Investment in Impaired Loans*		*Interest Income Recognized*
December 31, 2020
With no related allowance recorded:
One-to-four family residential real estate	$	2,069	$	1,718	$	363	$	—	$	1,782	$	42
Multi-family mortgage - Illinois		520		520		—		—		594		31
		2,589		2,238		363		—		2,376		73

With an allowance recorded - nonresidential real estate		280		296		—		28		289		—
	$	2,869	$	2,534	$	363	$	28	$	2,665	$	73

Nonaccrual Loans

The following tables present the recorded investment in nonaccrual and loans 90 days or more past due still on accrual by class of loans:

	*Loan Balance*		*Recorded Investment*		*Loans Past Due Over 90 Days, Still Accruing*
September 30, 2021
One-to-four family residential real estate	$	373	$	341	$	—
Nonresidential real estate		280		296		—
Equipment finance - investment - rated		9		9		—
	$	662	$	646	$	—
December 31, 2020
One-to-four family residential real estate	$	946	$	925	$	—
Nonresidential real estate		280		296		—
	$	1,226	$	1,221	$	—

Nonaccrual loans and impaired loans are defined differently. Some loans may be included in both categories, and some loans may only be included in one category. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The Company’s reserve for uncollected loan interest was $132,000 and $133,000 at September 30, 2021 and December 31, 2020, respectively. When a loan is on nonaccrual status and the ultimate collectability of the total principal of an impaired loan is in doubt, all payments are applied to principal under the cost recovery method. Alternatively, when a loan is on nonaccrual status but there is doubt concerning only the ultimate collectability of interest, contractual interest is credited to interest income only when received, under the cash basis method pursuant to the provisions of FASB ASC 310–10, as applicable. In all cases, the average balances are calculated based on the month–end balances of the financing receivables within the period reported pursuant to the provisions of FASB ASC 310–10, as applicable.

Past Due Loans

The following tables present the aging of the recorded investment of loans by class of loans:

	*30-59 Days Past Due*		*60-89 Days Past Due*		*90 Days or Greater Past Due*		*Total Past Due*		*Loans Not Past Due*		*Total*
September 30, 2021
One-to-four family residential real estate loans:
Owner occupied	$	32	$	251	$	341	$	624	$	24,476	$	25,100
Non-owner occupied		5		9		—		14		6,715		6,729
Multi-family mortgage:
Illinois		—		—		—		—		232,181		232,181
Other		—		—		—		—		203,453		203,453
Nonresidential real estate		—		—		296		296		100,173		100,469
Construction and land		—		—		—		—		499		499
Commercial loans and leases:
Commercial		—		—		—		—		79,873		79,873
Asset-based		—		—		—		—		14,716		14,716
Equipment finance:
Government		—		1,190		—		1,190		157,989		159,179
Investment-rated		748		—		9		757		78,065		78,822
Other		1,112		476		—		1,588		108,095		109,683
Middle market		—		—		—		—		33,125		33,125
Small ticket		—		—		—		—		8,307		8,307
Consumer		7		21		—		28		1,732		1,760
	$	1,904	$	1,947	$	646	$	4,497	$	1,049,399	$	1,053,896

	*30-59 Days Past Due*		*60-89 Days Past Due*		*90 Days or Greater Past Due*		*Total Past Due*		*Loans Not Past Due*		*Total*
December 31, 2020
One-to-four family residential real estate loans:
Owner occupied	$	252	$	211	$	834	$	1,297	$	32,078	$	33,375
Non-owner occupied		3		132		91		226		8,090		8,316
Multi-family mortgage:
Illinois		86		—		—		86		221,943		222,029
Other		—		—		—		—		230,212		230,212
Nonresidential real estate		—		—		296		296		108,362		108,658
Construction and land		—		—		—		—		499		499
Commercial loans and leases:
Commercial		4,886		—		—		4,886		72,809		77,695
Asset-based		—		—		—		—		1,740		1,740
Equipment finance:
Government		2,468		—		—		2,468		100,272		102,740
Investment-rated		618		225		—		843		87,751		88,594
Other		853		2,487		—		3,340		122,677		126,017
Middle market		—		—		—		—		6,988		6,988
Small ticket		—		—		—		—		1,283		1,283
Consumer		6		5		—		11		1,801		1,812
	$	9,172	$	3,060	$	1,221	$	13,453	$	996,505	$	1,009,958

U.S. Small Business Administration Paycheck Protection Program ("PPP")

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was passed by Congress and signed into law on March 27, 2020. The CARES Act established the Paycheck Protection Program loan, designed to provide a direct incentive for small businesses to keep their workers on the payroll. Under the most recently published guidance, the U.S. Small Business Administration ("SBA") will forgive PPP loans if all employee retention criteria are met, and the funds are used for eligible expenses.

The following table presents the PPP activity:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
	*2021*		*2020*		*2021*		*2020*
Paycheck protection program:
Number of loans originated		—		10		238		315
Loan balance originations	$	—	$	136	$	10,135	$	11,160
Loan balance forgiven	$	4,801	$	—	$	14,538	$	117

	*September 30, 2021*		*December 31, 2020*
Paycheck protection program loans
Number of loans		116		290
Loan balance	$	5,777	$	10,180

COVID-19 Loan Forbearance Programs

Section 4013 of the CARES Act provides that a qualified loan modification is exempt by law from classification as a Troubled Debt Restructuring ("TDR") pursuant to US GAAP. In addition, the Revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (“OCC Bulletin 2020-50”) provides more limited circumstances in which a loan modification is not subject to classification as a TDR and also defines the circumstances where the borrower’s loan is reported as current on loan payments. Pursuant to these new capabilities, we developed several loan forbearance programs to assist borrowers with managing cash flows disrupted due to COVID-19.

Our Apartment and Commercial Real Estate COVID-19 Qualified Limited Forbearance Agreement permitted borrowers who qualified under Section 4013 of the CARES Act to make an election to pay only scheduled interest and escrow payments (if applicable) for a four-month period beginning in April 2020, and to pay all deferred principal payments by December 2020.

Our Small Investment Property COVID-19 Qualified Limited Forbearance Agreement permitted borrowers with loan balances under $750,000 who qualified under Section 4013 of the CARES Act to make an election to pay only scheduled interest and escrow payments (if applicable) for a four-month period beginning in April 2020, and to pay all deferred principal payments by December 2020. In addition, the borrower could elect to defer the May 2020 loan payment entirely, with all deferred interest amounts due by December 2020 and all deferred principal amounts due by June 30, 2021.

CARES Act Section 4013 and OCC Bulletin 2020-35 forbearance agreements are available to qualified commercial loan and commercial finance borrowers, and to commercial equipment lessees.

For residential mortgage and consumer loans, relief under CARES Act Section 4013 or OCC Bulletin 2020-35 forbearance agreements are available to qualified borrowers with terms consistent with secondary residential mortgage market standards established by Fannie Mae.

Per the terms of the COVID-19 loan forbearance modifications program, all loan deferrals were paid in full as of June 30, 2021.

The following table summarizes the remaining loan forbearance modifications as of December 31, 2020:

	*Number of loans*		*Principal Balance*		*Remaining Amounts Deferred*
Small Investment Property COVID-19 Qualified Limited Forbearance Agreement
Multi-family mortgage		8	$	3,092	$	17
Nonresidential real estate		10		3,363		22
Apartment and Commercial Real Estate COVID-19 Qualified Limited Forbearance Agreement
Nonresidential real estate		2		2,480		6
One-to-four family residential real estate		10		1,402		8

		30	$	10,337	$	53

Troubled Debt Restructurings

The Company evaluates loan extensions or modifications not qualified under Section 4013 of the CARES Act or under OCC Bulletin 2020-35 in accordance with FASB ASC 340-10 with respect to the classification of the loan as a TDR.

Under ASC 340-10, if the Company grants a loan extension or modification to a borrower experiencing financial difficulties for other than an insignificant period of time that includes a below–market interest rate, principal forgiveness, payment forbearance or other concession intended to minimize the economic loss to the Company, the loan extension or loan modification is classified as a TDR. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal then due and payable, management measures any impairment on the restructured loan in the same manner as for impaired loans as noted above.

The Company had no TDRs at September 30, 2021 and December 31, 2020. During the three and nine months ended September 30, 2021 and 2020, there were no loans modified and classified as TDRs. During the three and nine months ended September 30, 2021 and 2020, there were no TDR loans that subsequently defaulted within twelve months of their modification.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

To determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans based on credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings:

Special Mention. A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans categorized as Substandard continue to accrue interest, but exhibit a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt. The loans continue to accrue interest because they are well secured and collection of principal and interest is expected within a reasonable time. The risk rating guidance published by the Office of the Comptroller of the Currency clarifies that a loan with a well-defined weakness does not have to present a probability of default for the loan to be rated Substandard, and that an individual loan’s loss potential does not have to be distinct for the loan to be rated Substandard.

Nonaccrual. An asset classified Nonaccrual has all the weaknesses inherent in one classified 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.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered “Pass” rated loans.

Based on the most recent analysis performed, the risk categories of loans by class of loans are as follows:

	*Pass*		*Special Mention*		*Substandard*		*Nonaccrual*		*Total*
September 30, 2021
One-to-four family residential real estate loans:
Owner occupied	$	24,362	$	—	$	397	$	341	$	25,100
Non-owner occupied		6,617		—		112		—		6,729
Multi-family mortgage:
Illinois		231,855		326		—		—		232,181
Other		203,453		—		—		—		203,453
Nonresidential real estate		100,173		—		—		296		100,469
Construction and land		499		—		—		—		499
Commercial loans and leases:
Commercial		79,873		—		—		—		79,873
Asset-based		14,716		—		—		—		14,716
Equipment finance:
Government		159,179		—		—		—		159,179
Investment-rated		78,813		—		—		9		78,822
Other		108,492		—		1,191		—		109,683
Middle market		33,125		—		—		—		33,125
Small ticket		8,307		—		—		—		8,307
Consumer		1,751		2		7		—		1,760
	$	1,051,215	$	328	$	1,707	$	646	$	1,053,896

	*Pass*		*Special Mention*		*Substandard*		*Nonaccrual*		*Total*
December 31, 2020
One-to-four family residential real estate loans:
Owner occupied	$	32,089	$	—	$	452	$	834	$	33,375
Non-owner occupied		8,164		27		34		91		8,316
Multi-family mortgage:
Illinois		222,029		—		—		—		222,029
Other		230,212		—		—		—		230,212
Nonresidential real estate		106,280		1,998		84		296		108,658
Construction and land		499		—		—		—		499
Commercial loans and leases:
Commercial		72,809		—		4,886		—		77,695
Asset-based		1,740		—		—		—		1,740
Equipment finance:
Government		102,740		—		—		—		102,740
Investment-rated		88,594		—		—		—		88,594
Other		125,012		—		1,005		—		126,017
Middle market		6,988		—		—		—		6,988
Small ticket		1,283		—		—		—		1,283
Consumer		1,802		5		5		—		1,812
	$	1,000,241	$	2,030	$	6,466	$	1,221	$	1,009,958