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Note 4 - Loans Receivable

6 Months Ended

Jun. 30, 2023

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

NOTE 4 - LOANS RECEIVABLE

The summary of loans receivable by class of loans is as follows:

	*June 30, 2023*			*December 31, 2022*
One-to-four family residential real estate	$	20,448		$	23,133
Multi-family mortgage		542,165			537,394
Nonresidential real estate		120,505			119,705
Commercial loans and leases		495,520			553,056
Consumer		1,355			1,584
		1,179,993			1,234,872
Allowance for credit losses		(9,226	)		(8,129	)
Loans, net	$	1,170,767		$	1,226,743

Net deferred loan origination costs included in the table above were $1.7 million as of June 30, 2023 and $1.6 million as of December 31, 2022.

Allowance for Credit Losses - Loans

The following table represents the activity in the ACL by class of loans:

	*One-to-four family residential real estate*			*Multi-family mortgage*			*Nonresidential real estate*			*Commercial loans and leases*			*Consumer*			*Total*
For the three months ended

June 30, 2023
Beginning balance	$	354		$	4,714		$	1,347		$	3,576		$	41		$	10,032
Recovery of credit losses		(35	)		(41	)		(102	)		(1	)		(1	)		(180	)
Loans charged off		—			—			—			(638	)		(7	)		(645	)
Recoveries		7			6			—			6			—			19
	$	326		$	4,679		$	1,245		$	2,943		$	33		$	9,226

June 30, 2022
Beginning balance	$	315		$	3,390		$	957		$	2,078		$	46		$	6,786
Provision for (recovery of) credit losses		(31	)		238			134			122			(4	)		459
Loans charged off		(1	)		—			—			(51	)		(15	)		(67	)
Recoveries		3			4			2			—			15			24
	$	286		$	3,632		$	1,093		$	2,149		$	42		$	7,202

	*One-to-four family residential real estate*			*Multi-family mortgage*		*Nonresidential real estate*			*Commercial loans and leases*			*Consumer*			*Total*
For the six months ended

June 30, 2023
Beginning balance, prior to adoption of ASC 326	$	281		$	4,017	$	1,234		$	2,548		$	49		$	8,129
Impact of adopting ASC 326		99			630		66			1,122			(10	)		1,907
Beginning balance, after adoption of ASC 326		380			4,647		1,300			3,670			39			10,036
Provision for (recovery of) credit losses		(66	)		21		(55	)		(17	)		22			(95	)
Loans charged off		—			—		—			(717	)		(29	)		(746	)
Recoveries		12			11		—			7			1			31
	$	326		$	4,679	$	1,245		$	2,943		$	33		$	9,226

June 30, 2022
Beginning balance	$	331		$	3,377	$	1,311		$	1,652		$	44		$	6,715
Provision for (recovery of) credit loss		(45	)		246		(28	)		547			15			735
Loans charged off		(5	)		—		(192	)		(51	)		(33	)		(281	)
Recoveries		5			9		2			1			16			33
	$	286		$	3,632	$	1,093		$	2,149		$	42		$	7,202

As of June 30, 2023 we had $372,000 recorded as an unfunded commitment reserve, included in other liabilities on the Consolidated Statements of Financial Condition.

The following tables present the balance in the ACL and loans receivable by class of loans based on evaluation method. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories:

	*One-to-four family residential real estate*		*Multi-family mortgage*		*Nonresidential real estate*		*Commercial loans and leases*		*Consumer*		*Total*
June 30, 2023
Loans:
Loans individually evaluated	$	78	$	148	$	—	$	23,998	$	—	$	24,224
Loans collectively evaluated		20,370		542,017		120,505		471,522		1,355		1,155,769
	$	20,448	$	542,165	$	120,505	$	495,520	$	1,355	$	1,179,993
ACL:
Loans individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated		326		4,679		1,245		2,943		33		9,226
	$	326	$	4,679	$	1,245	$	2,943	$	33	$	9,226

	*One-to-four family residential real estate*		*Multi-family mortgage*		*Nonresidential real estate*		*Commercial loans and leases*		*Consumer*		*Total*
December 31, 2022
Loans:
Loans individually evaluated	$	752	$	473	$	—	$	1,487	$	—	$	2,712
Loans collectively evaluated		22,381		536,921		119,705		551,569		1,584		1,232,160
	$	23,133	$	537,394	$	119,705	$	553,056	$	1,584	$	1,234,872
ACL:
Loans individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated		281		4,017		1,234		2,548		49		8,129
	$	281	$	4,017	$	1,234	$	2,548	$	49	$	8,129

Individually Evaluated Loans

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

									*Three Months Ended*				*Six Months Ended*
									*June 30, 2023*				*June 30, 2023*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Credit Losses Allocated*		*Average Investment*		*Interest Income Recognized*		*Average Investment*		*Interest Income Recognized*
June 30, 2023
With no related allowance recorded:
One-to-four family residential real estate	$	80	$	78	$	—	$	—	$	82	$	—	$	80	$	2
Multi-family mortgage		133		148		—		—		148		—		99		—
Commercial loans and leases		24,693		23,998		650		—		13,900		5		8,807		25
	$	24,906	$	24,224	$	650	$	—	$	14,130	$	5	$	8,986	$	27

									*Year ended*
									*December 31, 2022*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Credit Losses Allocated*		*Average Investment*		*Interest Income Recognized*
December 31, 2022
With no related allowance recorded:
One-to-four family residential real estate	$	752	$	752	$	—	$	—	$	1,143	$	29
Multi-family mortgage		473		473		—		—		590		27
Commercial loans and leases		1,606		1,487		49		—		445		47
	$	2,831	$	2,712	$	49	$	—	$	2,178	$	103

Nonaccrual Loans

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

	*Nonaccrual*		*Loans Past Due Over 90 Days Still Accruing*
June 30, 2023
One-to-four family residential real estate	$	45	$	—
Multi-family mortgage		148		—
Commercial loans and leases		23,965		—
	$	24,158	$	—
December 31, 2022
One-to-four family residential real estate	$	92	$	—
Commercial loans and leases		1,310		238
Consumer		5		—
	$	1,407	$	238

Nonaccrual loans and individually evaluated 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 and loans individually evaluated.

The Company’s reserve for uncollected loan interest was $939,000 and $38,000 at June 30, 2023 and December 31, 2022, respectively. When a loan is on nonaccrual status and the ultimate collectability of the total principal of a 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. In all cases, the average balances are calculated based on the month–end balances of the financing receivables within the period reported.

Past Due Loans

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

	*30-59 Days Past Due*		*60-89 Days Past Due*		*Greater Than 89 Days Past Due*		*Total Past Due*		*Nonaccrual*		*Current*		*Total*
June 30, 2023
One-to-four family residential real estate loans	$	21	$	2	$	—	$	23	$	45	$	20,380	$	20,448
Multi-family mortgage:
Senior notes		—		—		—		—		148		498,099		498,247
Junior notes		—		—		—		—		—		43,918		43,918
Nonresidential real estate:
Owner occupied		—		—		—		—		—		21,648		21,648
Non-owner occupied		—		—		—		—		—		98,857		98,857
Commercial loans and leases:
Commercial		210		2,209		—		2,419		4,983		246,951		254,353
Equipment finance - Government		—		4,866		—		4,866		18,889		165,319		189,074
Equipment finance - Corporate Investment-grade		—		428		—		428		93		51,572		52,093
Consumer		5		5		—		10		—		1,345		1,355
	$	236	$	7,510	$	—	$	7,746	$	24,158	$	1,148,089	$	1,179,993

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Nonaccrual		Current		Total
December 31, 2022
One-to-four family residential real estate loans	$	411	$	19	$	—	$	430	$	92	$	22,611	$	23,133
Multi-family mortgage:
Senior notes		31		—		—		31		—		494,957		494,988
Junior notes		—		—		—		—		—		42,406		42,406
Nonresidential real estate:
Owner occupied		—		—		—		—		—		22,617		22,617
Non-owner occupied		—		—		—		—		—		97,088		97,088
Commercial loans and leases:
Commercial		2,424		336		111		2,871		1,310		279,272		283,453
Equipment finance - Government		2,034		5,106		—		7,140		—		204,443		211,583
Equipment finance - Corporate Investment-grade		—		81		127		208		—		57,812		58,020
Consumer		12		4		—		16		5		1,563		1,584
	$	4,912	$	5,546	$	238	$	10,696	$	1,407	$	1,222,769	$	1,234,872

At June 30, 2023, the Company had no loan modifications that meet the definition described in ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures for additional reporting.

At December 31, 2022, the Company evaluated 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 Troubled Debt Restructuring (“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 December 31, 2022.

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 as to credit risk. Risk ratings are updated any time the situation warrants. The Company uses the following definitions for risk ratings:

Pass. This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards.

Watch. A “Watch List” loan is a loan that requires elevated monitoring because it does not conform to the applicable published loan policy or loan product underwriting standards, evidences intermittent past due payments or because of other matters of possible concern.

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.

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

	*Pass*		*Watch*		*Special Mention*		*Substandard*		*Substandard Nonaccrual*		*Total*
June 30, 2023
One-to-four family residential real estate	$	19,988	$	143	$	—	$	272	$	45	$	20,448
Multi-family mortgage		539,400		2,617		—		—		148		542,165
Nonresidential real estate		117,558		2,947		—		—		—		120,505
Commercial loans and leases		452,002		13,651		2,143		3,759		23,965		495,520
Consumer		1,341		4		5		5		—		1,355
	$	1,130,289	$	19,362	$	2,148	$	4,036	$	24,158	$	1,179,993

	*Pass*		*Watch*		*Special Mention*		*Substandard*		*Substandard Nonaccrual*		*Total*
December 31, 2022
One-to-four family residential real estate	$	22,648	$	62	$	4	$	327	$	92	$	23,133
Multi-family mortgage		534,253		3,141		—		—		—		537,394
Nonresidential real estate		116,635		3,070		—		—		—		119,705
Commercial loans and leases		523,889		22,299		1,517		4,041		1,310		553,056
Consumer		1,559		12		4		4		5		1,584
	$	1,198,984	$	28,584	$	1,525	$	4,372	$	1,407	$	1,234,872

	*Term Loans Amortized Cost Basis by Origination Year*
	*2023*		*2022*			*2021*		*2020*		*2019*		*Prior*		*Revolving loans*			*Total*
June 30, 2023

*One-to-four family residential real estate loans:*
Risk-rating
Pass	$	—	$	—		$	—	$	177	$	—	$	15,595	$	4,216		$	19,988
Watch		—		—			—		—		—		143		—			143
Substandard		—		—			—		—		—		121		151			272
Nonaccrual		—		—			—		—		—		19		26			45
	$	—	$	—		$	—	$	177	$	—	$	15,878	$	4,393		$	20,448
*One-to-four family residential real estate loans:*
Current period recoveries	$	—	$	—		$	—	$	—	$	—	$	12	$	—		$	12
	$	—	$	—		$	—	$	—	$	—	$	12	$	—		$	12
Multi-family mortgage:
Risk rating
Pass	$	30,387	$	215,111		$	124,335	$	61,456	$	23,685	$	75,795	$	8,631		$	539,400
Watch		—		—			—		—		—		2,617		—			2,617
Nonaccrual		—		—			—		—		—		148		—			148
	$	30,387	$	215,111		$	124,335	$	61,456	$	23,685	$	78,560	$	8,631		$	542,165
Multi-family mortgage:
Current period recoveries	$	—	$	—		$	—	$	—	$	—	$	11	$	—		$	11
	$	—	$	—		$	—	$	—	$	—	$	11	$	—		$	11
Nonresidential real estate:
Risk rating
Pass	$	9,525	$	54,207		$	20,822	$	8,542	$	9,868	$	14,340	$	254		$	117,558
Watch		—		1,015			1,590		—		—		342		—			2,947
	$	9,525	$	55,222		$	22,412	$	8,542	$	9,868	$	14,682	$	254		$	120,505
Commercial loans and leases :
Risk rating
Pass	$	30,242	$	187,329		$	91,671	$	59,239	$	6,888	$	3,871	$	72,762		$	452,002
Watch		—		527			26		402		26		—		12,670			13,651
Special mention		—		2,143			—		—		—		—		—			2,143
Substandard		—		—			—		33		—		—		3,726			3,759
Nonaccrual		—		22,484			547		934		—		—		—			23,965
	$	30,242	$	212,483		$	92,244	$	60,608	$	6,914	$	3,871	$	89,158		$	495,520
Commercial loans and leases :
Current period gross charge-offs	$	—	$	(717	)	$	—	$	—	$	—	$	—	$	—		$	(717	)
Current period recoveries		—		—			7		—		—		—		—			7
	$	—	$	(717	)	$	7	$	—	$	—	$	—	$	—		$	(710	)
Consumer:
Risk rating
Pass	$	134	$	18		$	172	$	159	$	306	$	3	$	549		$	1,341
Watch		—		—			—		—		—		—		4			4
Special mention		—		—			—		—		—		—		5			5
Substandard		—		—			—		—		—		—		5			5
	$	134	$	18		$	172	$	159	$	306	$	3	$	563		$	1,355
Consumer:
Current period gross charge-offs	$	—	$	—		$	—	$	—	$	—	$	—	$	(29	)	$	(29	)
Current period recoveries		—		—			—		—		—		—		1			1
	$	—	$	—		$	—	$	—	$	—	$	—	$	(28	)	$	(28	)