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Note 4 - Loans Receivable

6 Months Ended

Jun. 30, 2022

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

NOTE 4 - LOANS RECEIVABLE

Loans receivable are as follows:

	*June 30, 2022*			*December 31, 2021*
One-to-four family residential real estate	$	26,247		$	30,133
Multi-family mortgage		485,742			426,136
Nonresidential real estate		115,983			103,172
Construction and land		84			—
Commercial loans and leases		519,662			489,512
Consumer		1,574			1,685
		1,149,292			1,050,638
Net deferred loan origination costs		653			284
Allowance for loan losses		(7,202	)		(6,715	)
Loans, net	$	1,142,743		$	1,044,207

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*
June 30, 2022
One-to-four family residential real estate	$	—	$	286	$	286	$	1,046	$	25,201	$	26,247
Multi-family mortgage		—		3,630		3,630		485		485,257		485,742
Nonresidential real estate		—		1,093		1,093		—		115,983		115,983
Construction and land		—		2		2		—		84		84
Commercial loans and leases		—		2,149		2,149		667		518,995		519,662
Consumer		—		42		42		—		1,574		1,574
	$	—	$	7,202	$	7,202	$	2,198	$	1,147,094		1,149,292
Net deferred loan origination costs												653
Allowance for loan losses												(7,202	)
Loans, net											$	1,142,743

	*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, 2021
One-to-four family residential real estate	$	—	$	331	$	331	$	1,299	$	28,834	$	30,133
Multi-family mortgage		—		3,377		3,377		498		425,638		426,136
Nonresidential real estate		30		1,281		1,311		297		102,875		103,172
Commercial loans and leases		—		1,652		1,652		76		489,436		489,512
Consumer		—		44		44		—		1,685		1,685
	$	30	$	6,685	$	6,715	$	2,170	$	1,048,468		1,050,638
Net deferred loan origination costs												284
Allowance for loan losses												(6,715	)
Loans, net											$	1,044,207

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

June 30, 2022
One-to-four family residential real estate	$	315	$	(31	)	$	(1	)	$	3	$	286
Multi-family mortgage		3,390		236			—			4		3,630
Nonresidential real estate		957		134			—			2		1,093
Construction and land		—		2			—			—		2
Commercial loans and leases		2,078		122			(51	)		—		2,149
Consumer		46		(4	)		(15	)		15		42
	$	6,786	$	459		$	(67	)	$	24	$	7,202

June 30, 2021
One-to-four family residential real estate	$	465	$	(118	)	$	—		$	49	$	396
Multi-family mortgage		3,902		(222	)		—			10		3,690
Nonresidential real estate		1,592		(256	)		—			—		1,336
Construction and land		12		(1	)		—			—		11
Commercial loans and leases		1,377		(87	)		—			87		1,377
Consumer		47		6			(6	)		—		47
	$	7,395	$	(678	)	$	(6	)	$	146	$	6,857

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

June 30, 2022
One-to-four family residential real estate	$	331	$	(45	)	$	(5	)	$	5	$	286
Multi-family mortgage		3,377		244			—			9		3,630
Nonresidential real estate		1,311		(28	)		(192	)		2		1,093
Construction and land		—		2						—		2
Commercial loans and leases		1,652		547			(51	)		1		2,149
Consumer		44		15			(33	)		16		42
	$	6,715	$	735		$	(281	)	$	33	$	7,202

June 30, 2021
One-to-four family residential real estate	$	518	$	(231	)	$	—		$	109	$	396
Multi-family mortgage		4,062		(393	)		—			21		3,690
Nonresidential real estate		1,569		(233	)		—			—		1,336
Construction and land		12		(1	)		—			—		11
Commercial loans and leases		1,536		(161	)		(86	)		88		1,377
Consumer		54		6			(15	)		2		47
	$	7,751	$	(1,013	)	$	(101	)	$	220	$	6,857

Impaired loans

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

									*Three Months Ended*				*Six Months Ended*
									*June 30, 2022*				*June 30, 2022*
	*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*
June 30, 2022
With no related allowance recorded:
One-to-four family residential real estate	$	1,046	$	1,046	$	—	$	—	$	1,057	$	5	$	1,132	$	11
Multi-family mortgage - Illinois		485		485		—		—		748		7		640		14
Commercial loans and leases		689		667		10		—		279		3		195		9
	$	2,220	$	2,198	$	10	$	—	$	2,084	$	15	$	1,967	$	34

									*Year ended*
									*December 31, 2021*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Loan Losses Allocated*		*Average Investment in Impaired Loans*		*Interest Income Recognized*
December 31, 2021
With no related allowance recorded:
One-to-four family residential real estate	$	1,299	$	1,299	$	—	$	—	$	1,473	$	29
Multi-family mortgage - Illinois		498		498		—		—		509		30
Commercial loans and leases		83		76		7		—		7		—
		1,880		1,873		7		—		1,989		59

With an allowance recorded - nonresidential real estate		280		297		7		30		296		—
	$	2,160	$	2,170	$	14	$	30	$	2,285	$	59

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:

	*Nonaccrual Recorded Investment*		*Loans Past Due Over 90 Days Still Accruing*
June 30, 2022
One-to-four family residential real estate	$	323	$	—
Equipment finance		610		753
	$	933	$	753
December 31, 2021
One-to-four family residential real estate	$	367	$	—
Nonresidential real estate		297		—
Asset based & factored receivables		—		10
Equipment finance		76		—
	$	740	$	10

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 $58,000 and $140,000 at June 30, 2022 and December 31, 2021, 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*
June 30, 2022
One-to-four family residential real estate loans:
Owner occupied	$	—	$	224	$	301	$	525	$	21,025	$	21,550
Non-owner occupied		2		81		—		83		4,614		4,697
Multi-family mortgage:
Illinois		—		—		—		—		277,845		277,845
Other		—		—		—		—		207,897		207,897
Nonresidential real estate		—		—		—		—		115,983		115,983
Construction and land		—		—		—		—		84		84
Commercial loans and leases:
Commercial		—		—		—		—		53,772		53,772
Asset based & factored receivables		254		60		—		314		32,546		32,860
Equipment finance:
Government		—		17,090		—		17,090		191,797		208,887
Corporate - Investment-grade		—		566		213		779		64,018		64,797
Corporate - Other		225		280		331		836		74,826		75,662
Middle market		—		538		753		1,291		58,166		59,457
Small ticket		—		—		66		66		24,161		24,227
Consumer		5		11		—		16		1,558		1,574
	$	486	$	18,850	$	1,664	$	21,000	$	1,128,292	$	1,149,292

	*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, 2021
One-to-four family residential real estate loans:
Owner occupied	$	181	$	250	$	367	$	798	$	23,333	$	24,131
Non-owner occupied		2		9		—		11		5,991		6,002
Multi-family mortgage:
Illinois		189		—		—		189		235,681		235,870
Other		—		—		—		—		190,266		190,266
Nonresidential real estate		—		—		297		297		102,875		103,172
Commercial loans and leases:
Commercial		—		—		—		—		67,995		67,995
Asset based & factored receivables		26		6		10		42		19,358		19,400
Equipment finance:
Government		3,160		4,718		—		7,878		170,584		178,462
Corporate - Investment-grade		290		1,201		—		1,491		81,135		82,626
Corporate - Other		3,015		—		76		3,091		85,760		88,851
Middle market		—		—		—		—		40,582		40,582
Small ticket		—		—		—		—		11,596		11,596
Consumer		13		4		—		17		1,668		1,685
	$	6,876	$	6,188	$	750	$	13,814	$	1,036,824	$	1,050,638

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 PPP, 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:

	*Three Months Ended June 30,*				*For the Six Months Ended June 30,*
	*2022*		*2021*		*2022*		*2021*
Paycheck Protection Program:
Number of loans originated		—		45		—		238
Loan balance originations	$	—	$	1,511	$	—	$	10,135
Loan balance forgiven	$	773	$	1,834	$	3,132	$	9,737

	*June 30, 2022*		*December 31, 2021*
Paycheck Protection Program loans
Number of loans		26		76
Loan balance	$	911	$	4,043

Troubled Debt Restructurings (“TDR”)

The Company evaluates loan extensions or modifications 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 June 30, 2022 and December 31, 2021. During the three and six months ended June 30, 2022 and 2021, there were no loans modified and classified as TDRs. During the three and six months ended June 30, 2022 and 2021, 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.

Pass. 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*
June 30, 2022
One-to-four family residential real estate loans:
Owner occupied	$	20,876	$	—	$	351	$	323	$	21,550
Non-owner occupied		4,624		—		73		—		4,697
Multi-family mortgage:
Illinois		277,524		321		—		—		277,845
Other		207,897		—		—		—		207,897
Nonresidential real estate		115,983		—		—		—		115,983
Construction and land		84		—		—		—		84
Commercial loans and leases:
Commercial		53,772		—		—		—		53,772
Asset based & factored receivables		29,044		3,816		—		—		32,860
Equipment finance:
Government		208,887		—		—		—		208,887
Corporate - Investment-grade		64,584		—		—		213		64,797
Corporate - Other		75,275		—		56		331		75,662
Middle market		59,457		—		—		—		59,457
Small ticket		24,161		—		—		66		24,227
Consumer		1,564		5		5		—		1,574
	$	1,143,732	$	4,142	$	485	$	933	$	1,149,292

	*Pass*		*Special Mention*		*Substandard*		*Nonaccrual*		*Total*
December 31, 2021
One-to-four family residential real estate loans:
Owner occupied	$	23,396	$	—	$	368	$	367	$	24,131
Non-owner occupied		5,894		—		108		—		6,002
Multi-family mortgage:
Illinois		235,545		325		—		—		235,870
Other		190,266		—		—		—		190,266
Nonresidential real estate		102,875		—		—		297		103,172
Commercial loans and leases:
Commercial		67,995		—		—		—		67,995
Asset based & factored receivables		19,400		—		—		—		19,400
Equipment finance:
Government		178,427		35		—		—		178,462
Corporate - Investment-grade		82,626		—		—		—		82,626
Corporate - Other		87,685		1,090		—		76		88,851
Middle market		40,582		—		—		—		40,582
Small ticket		11,596		—		—		—		11,596
Consumer		1,675		4		6		—		1,685
	$	1,047,962	$	1,454	$	482	$	740	$	1,050,638