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Note 4 - Loans Receivable

9 Months Ended

Sep. 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:

	*September 30, 2023*			*December 31, 2022*
One-to-four family residential real estate	$	19,233		$	23,133
Multi-family mortgage		528,251			537,394
Nonresidential real estate		117,641			119,705
Commercial loans and leases		447,687			553,056
Consumer		1,351			1,584
		1,114,163			1,234,872
Allowance for credit losses		(8,559	)		(8,129	)
Loans, net	$	1,105,604		$	1,226,743

Net deferred loan origination costs included in the table above were $1.7 million as of September 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

September 30, 2023
Beginning balance	$	326		$	4,679		$	1,245		$	2,943		$	33		$	9,226
Provision for (recovery of) credit losses		(62	)		(136	)		(95	)		461			12			180
Loans charged off		—			—			—			(889	)		(14	)		(903	)
Recoveries		32			4			—			20			—			56
	$	296		$	4,547		$	1,150		$	2,535		$	31		$	8,559

September 30, 2022
Beginning balance	$	286		$	3,632		$	1,093		$	2,149		$	42		$	7,202
Provision for (recovery of) credit losses		98			(72	)		67			171			86			350
Loans charged off		(71	)		—			—			(104	)		(16	)		(191	)
Recoveries		2			6			2			15			—			25
	$	315		$	3,566		$	1,162		$	2,231		$	112		$	7,386

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

September 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		(128	)		(115	)		(150	)		444			34			85
Loans charged off		—			—			—			(1,606	)		(43	)		(1,649	)
Recoveries		44			15			—			27			1			87
	$	296		$	4,547		$	1,150		$	2,535		$	31		$	8,559

September 30, 2022
Beginning balance	$	331		$	3,377		$	1,311		$	1,652		$	44		$	6,715
Provision for credit losses		53			174			39			718			101			1,085
Loans charged off		(76	)		—			(192	)		(155	)		(49	)		(472	)
Recoveries		7			15			4			16			16			58
	$	315		$	3,566		$	1,162		$	2,231		$	112		$	7,386

As of September 30, 2023 we had $327,000 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*
September 30, 2023
Loans:
Loans individually evaluated	$	72	$	—	$	—	$	25,638	$	—	$	25,710
Loans collectively evaluated		19,161		528,251		117,641		422,049		1,351		1,088,453
	$	19,233	$	528,251	$	117,641	$	447,687	$	1,351	$	1,114,163
ACL:
Loans individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated		296		4,547		1,150		2,535		31		8,559
	$	296	$	4,547	$	1,150	$	2,535	$	31	$	8,559

	*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*				*Nine Months Ended*
									*September 30, 2023*				*September 30, 2023*
	*Loan Balance*		*Recorded Investment*		*Partial Charge-off*		*Allowance for Credit Losses Allocated*		*Average Investment*		*Interest Income Recognized*		*Average Investment*		*Interest Income Recognized*
September 30, 2023
With no related allowance recorded:
One-to-four family residential real estate	$	70	$	72	$	—	$	—	$	73	$	1	$	78	$	3
Commercial loans and leases		27,222		25,638		1,538		—		24,544		5		14,053		30
	$	27,292	$	25,710	$	1,538	$	—	$	24,617	$	6	$	14,131	$	33

									*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*
September 30, 2023
One-to-four family residential real estate	$	40	$	—
Commercial loans and leases		23,468		6,245
	$	23,508	$	6,245
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 $1.2 million and $38,000 at September 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*
September 30, 2023
One-to-four family residential real estate loans	$	—	$	2	$	—	$	2	$	40	$	19,191	$	19,233
Multi-family mortgage:
Senior notes		—		2,091		—		2,091		—		483,858		485,949
Junior notes		—		—		—		—		—		42,302		42,302
Nonresidential real estate:
Owner occupied		—		—		—		—		—		21,423		21,423
Non-owner occupied		—		—		—		—		—		96,218		96,218
Commercial loans and leases:
Commercial		187		31		2,144		2,362		4,512		224,815		231,689
Equipment finance - Government		2,001		13,529		4,101		19,631		18,889		123,568		162,088
Equipment finance - Corporate Investment-grade		—		213		—		213		67		53,630		53,910
Consumer		4		3		—		7		—		1,344		1,351
	$	2,192	$	15,869	$	6,245	$	24,306	$	23,508	$	1,066,349	$	1,114,163

	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 September 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*
September 30, 2023
One-to-four family residential real estate	$	18,870	$	41	$	—	$	282	$	40	$	19,233
Multi-family mortgage		523,406		3,510		1,335		—		—		528,251
Nonresidential real estate		113,354		4,287		—		—		—		117,641
Commercial loans and leases		391,602		26,932		—		5,685		23,468		447,687
Consumer		1,340		5		3		3		—		1,351
	$	1,048,572	$	34,775	$	1,338	$	5,970	$	23,508	$	1,114,163

	*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*
September 30, 2023

*One-to-four family residential real estate loans:*
Risk-rating
Pass	$	—		$	—		$	—	$	154	$	—	$	14,799	$	3,917		$	18,870
Watch		—			—			—		—		—		41		—			41
Substandard		—			—			—		—		—		134		148			282
Nonaccrual		—			—			—		—		—		17		23			40
	$	—		$	—		$	—	$	154	$	—	$	14,991	$	4,088		$	19,233
*One-to-four family residential real estate loans:*
Current period recoveries	$	—		$	—		$	—	$	—	$	—	$	44	$	—		$	44
	$	—		$	—		$	—	$	—	$	—	$	44	$	—		$	44
Multi-family mortgage:
Risk rating
Pass	$	38,554		$	211,954		$	113,728	$	59,159	$	22,304	$	69,481	$	8,226		$	523,406
Watch		—			650			—		264		—		2,596		—			3,510
Special mention		—			1,335			—		—		—		—		—			1,335
	$	38,554		$	213,939		$	113,728	$	59,423	$	22,304	$	72,077	$	8,226		$	528,251
Multi-family mortgage:
Current period recoveries	$	—		$	—		$	—	$	—	$	—	$	15	$	—		$	15
	$	—		$	—		$	—	$	—	$	—	$	15	$	—		$	15
Nonresidential real estate:
Risk rating
Pass	$	11,692		$	51,053		$	20,622	$	7,900	$	9,773	$	12,210	$	104		$	113,354
Watch		—			2,567			1,547		—		—		173		—			4,287
	$	11,692		$	53,620		$	22,169	$	7,900	$	9,773	$	12,383	$	104		$	117,641
Commercial loans and leases :
Risk rating
Pass	$	41,000		$	150,387		$	77,204	$	46,837	$	4,618	$	2,319	$	69,237		$	391,602
Watch		4,101			8,114			1,006		353		—		—		13,358			26,932
Substandard		—			2,143			—		27		—		—		3,515			5,685
Nonaccrual		11			22,028			540		889		—		—		—			23,468
	$	45,112		$	182,672		$	78,750	$	48,106	$	4,618	$	2,319	$	86,110		$	447,687
Commercial loans and leases :
Current period gross charge-offs	$	(20	)	$	(1,586	)	$	—	$	—	$	—	$	—	$	—		$	(1,606	)
Current period recoveries		—			—			27		—		—		—		—			27
	$	(20	)	$	(1,586	)	$	27	$	—	$	—	$	—	$	—		$	(1,579	)
Consumer:
Risk rating
Pass	$	167		$	11		$	146	$	159	$	278	$	—	$	579		$	1,340
Watch		—			—			—		—		—		—		5			5
Special mention		—			—			—		—		—		—		3			3
Substandard		—			—			—		—		—		—		3			3
	$	167		$	11		$	146	$	159	$	278	$	—	$	590		$	1,351
Consumer:
Current period gross charge-offs	$	—		$	—		$	—	$	—	$	—	$	—	$	(43	)	$	(43	)
Current period recoveries		—			—			—		—		—		—		1			1
	$	—		$	—		$	—	$	—	$	—	$	—	$	(42	)	$	(42	)