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Note 4 - Loans Receivable

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

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, 2024*				*December 31, 2023*
One-to-four family residential real estate		$	17,707			$	18,945
Multi-family residential real estate			527,542				527,460
Nonresidential real estate			109,635				118,016
Commercial loans and leases			339,216				393,321
Consumer			1,787				1,364
			995,887				1,059,106
Allowance for credit losses			(8,142	)			(8,345	)
Loans, net		$	987,745			$	1,050,761

Net deferred loan origination costs included in the table above were $1.5 million and $1.7 million as of June 30, 2024 and December 31, 2023, respectively.

Allowance for Credit Losses - Loans

The following table represents the activity in the Allowance for Credit Losses (“ACL”) by class of loans:

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

June 30, 2024
Beginning balance		$	331			$	4,819			$	1,444			$	1,621			$	34			$	8,249
Provision for (recovery of) credit losses			(9	)			20				(47	)			(94	)			32				(98	)
Loans charged off			—				—				—				(10	)			(12	)			(22	)
Recoveries			2				4				—				7				—				13
		$	324			$	4,843			$	1,397			$	1,524			$	54			$	8,142

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

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

June 30, 2024
Beginning balance		$	295			$	4,549			$	1,166			$	2,303			$	32			$	8,345
Provision for (recovery of) credit losses			24				284				231				(623	)			47				(37	)
Loans charged off			—				—				—				(168	)			(25	)			(193	)
Recoveries			5				10				—				12				—				27
		$	324			$	4,843			$	1,397			$	1,524			$	54			$	8,142

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

As of June 30, 2024 and December 31, 2023 we had $262,000 and $335,000, respectively, 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 residential real estate*				*Nonresidential real estate*				*Commercial loans and leases*				*Consumer*				*Total*
June 30, 2024
Loans:
Loans individually evaluated		$	57			$	—			$	380			$	20,541			$	—			$	20,978
Loans collectively evaluated			17,650				527,542				109,255				318,675				1,787				974,909
		$	17,707			$	527,542			$	109,635			$	339,216			$	1,787			$	995,887
ACL:
Loans individually evaluated		$	—			$	—			$	—			$	—			$	—			$	—
Loans collectively evaluated			324				4,843				1,397				1,524				54				8,142
		$	324			$	4,843			$	1,397			$	1,524			$	54			$	8,142

		*One-to-four family residential real estate*				*Multi-family residential real estate*				*Nonresidential real estate*				*Commercial loans and leases*				*Consumer*				*Total*
December 31, 2023
Loans:
Loans individually evaluated		$	67			$	—			$	—			$	21,982			$	—			$	22,049
Loans collectively evaluated			18,878				527,460				118,016				371,339				1,364				1,037,057
		$	18,945			$	527,460			$	118,016			$	393,321			$	1,364			$	1,059,106
ACL:
Loans individually evaluated		$	—			$	—			$	—			$	—			$	—			$	—
Loans collectively evaluated			295				4,549				1,166				2,303				32				8,345
		$	295			$	4,549			$	1,166			$	2,303			$	32			$	8,345

Collateral Dependent Loans

Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of the underlying collateral, less estimated costs to sell. The Company had $2.1 million and $3.2 million of collateral dependent loans secured by real estate or business assets as of June 30, 2024 and December 31, 2023, respectively.

Individually Evaluated Loans

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

																		*Three Months Ended*								*Six Months Ended*
																		*June 30, 2024*								*June 30, 2024*
		*Loan Balance*				*Recorded Investment*				*Partial Charge-off*				*Allowance for Credit Losses Allocated*				*Average Investment*				*Interest Income Recognized*				*Average Investment*				*Interest Income Recognized*
June 30, 2024
With no related allowance recorded:
One-to-four family residential real estate		$	56			$	57			$	—			$	—			$	58			$	1			$	60			$	1
Nonresidential real estate			366				380				—				—				127				—				63				3
Commercial loans and leases			21,293				20,541				537				—				20,583				1				20,830				15
		$	21,715			$	20,978			$	537			$	—			$	20,768			$	2			$	20,953			$	19

																		*Year ended*
																		*December 31, 2023*
		*Loan Balance*				*Recorded Investment*				*Partial Charge-off*				*Allowance for Credit Losses Allocated*				*Average Investment*				*Interest Income Recognized*
December 31, 2023
With no related allowance recorded:
One-to-four family residential real estate		$	66			$	67			$	—			$	—			$	76			$	4
Commercial loans and leases			23,954				21,982				450				—				16,542				35
		$	24,020			$	22,049			$	450			$	—			$	16,618			$	39

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, 2024
One-to-four family residential real estate		$	39			$	—
Nonresidential real estate			380				—
Commercial loans and leases			20,395				—
		$	20,814			$	—
December 31, 2023
One-to-four family residential real estate		$	37			$	—
Commercial loans and leases			21,294				1,007
		$	21,331			$	1,007

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 $1.9 million and $1.4 million at June 30, 2024 and December 31, 2023, 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, 2024
One-to-four family residential real estate loans		$	13			$	—			$	—			$	13			$	39			$	17,655			$	17,707
Multi-family residential real estate:
Senior notes			—				107				—				107				—				487,966				488,073
Junior notes			—				—				—				—				—				39,469				39,469
Nonresidential real estate:
Owner occupied			—				—				—				—				—				15,549				15,549
Non-owner occupied			—				—				—				—				380				93,706				94,086
Commercial loans and leases:
Commercial			1,159				151				—				1,310				1,506				187,161				189,977
Equipment finance - Government			2,649				3,272				—				5,921				18,889				83,344				108,154
Equipment finance - Corporate Investment-grade			—				—				—				—				—				41,085				41,085
Consumer			6				3				—				9				—				1,778				1,787
		$	3,827			$	3,533			$	—			$	7,360			$	20,814			$	967,713			$	995,887

		*30-59 Days Past Due*				*60-89 Days Past Due*				*Greater Than 89 Days Past Due*				*Total Past Due*				*Nonaccrual*				*Current*				*Total*
December 31, 2023
One-to-four family residential real estate loans		$	12			$	18			$	—			$	30			$	37			$	18,878			$	18,945
Multi-family residential real estate:
Senior notes			—				—				—				—				—				485,281				485,281
Junior notes			—				—				—				—				—				42,179				42,179
Nonresidential real estate:
Owner occupied			—				—				—				—				—				20,901				20,901
Non-owner occupied			—				—				—				—				—				97,115				97,115
Commercial loans and leases:
Commercial			234				26				666				926				2,285				208,770				211,981
Equipment finance - Government			3,147				5,028				—				8,175				18,956				105,134				132,265
Equipment finance - Corporate Investment-grade			7				—				341				348				53				48,674				49,075
Consumer			8				5				—				13				—				1,351				1,364
		$	3,408			$	5,077			$	1,007			$	9,492			$	21,331			$	1,028,283			$	1,059,106

At June 30, 2024 and December 31, 2023 the Company had no loan modifications that meet the definition described in Accounting Standards Update (“ASU”) 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” for additional reporting.

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, 2024
One-to-four family residential real estate		$	17,434			$	67			$	—			$	167			$	39			$	17,707
Multi-family residential real estate			522,856				3,265				—				1,421				—				527,542
Nonresidential real estate			105,106				3,259				433				457				380				109,635
Commercial loans and leases			291,274				13,033				11,360				3,154				20,395				339,216
Consumer			1,775				6				3				3				—				1,787
		$	938,445			$	19,630			$	11,796			$	5,202			$	20,814			$	995,887

		*Pass*				*Watch*				*Special Mention*				*Substandard*				*Substandard Nonaccrual*				*Total*
December 31, 2023
One-to-four family residential real estate		$	18,492			$	144			$	—			$	272			$	37			$	18,945
Multi-family residential real estate			518,538				7,589				1,333				—				—				527,460
Nonresidential real estate			114,155				3,861				—				—				—				118,016
Commercial loans and leases			340,623				16,761				10,587				4,056				21,294				393,321
Consumer			1,349				7				5				3				—				1,364
		$	993,157			$	28,362			$	11,925			$	4,331			$	21,331			$	1,059,106

		*Term Loans Amortized Cost Basis by Origination Year*
		*2024*				*2023*				*2022*				*2021*				*2020*				*Prior*				*Revolving loans*				*Total*
June 30, 2024

*One-to-four family residential real estate loans:*
Risk-rating
Pass		$	—			$	487			$	—			$	—			$	90			$	13,375			$	3,482			$	17,434
Watch			—				—				—				—				—				67				—				67
Substandard			—				—				—				—				—				26				141				167
Nonaccrual			—				—				—				—				—				23				16				39
		$	—			$	487			$	—			$	—			$	90			$	13,491			$	3,639			$	17,707
*One-to-four family residential real estate loans:*
Current period recoveries		$	—			$	—			$	—			$	—			$	—			$	5			$	—			$	5
*Multi-family residential real estate:*
Risk rating
Pass		$	20,299			$	38,046			$	208,081			$	111,048			$	55,219			$	83,106			$	7,057			$	522,856
Watch			—				—				640				—				260				2,365				—				3,265
Substandard			—				216				1,205				—				—				—				—				1,421
		$	20,299			$	38,262			$	209,926			$	111,048			$	55,479			$	85,471			$	7,057			$	527,542
*Multi-family residential real estate:*
Current period recoveries		$	—			$	—			$	—			$	—			$	—			$	10			$	—			$	10
Nonresidential real estate:
Risk rating
Pass		$	13,083			$	15,389			$	46,104			$	13,798			$	7,557			$	9,038			$	137			$	105,106
Watch			—				—				1,845				1,414				—				—				—				3,259
Special mention			—				—				433				—				—				—				—				433
Substandard			457				—				—				—				—				—				—				457
Nonaccrual			—				—				380				—				—				—				—				380
		$	13,540			$	15,389			$	48,762			$	15,212			$	7,557			$	9,038			$	137			$	109,635
Commercial loans and leases:
Risk rating
Pass		$	12,891			$	35,621			$	98,669			$	47,820			$	23,821			$	1,850			$	70,602			$	291,274
Watch			—				5,630				6,443				718				242				—				—				13,033
Special mention			—				—				—				—				—				—				11,360				11,360
Substandard			—				75				146				—				—				—				2,933				3,154
Nonaccrual			—				356				19,624				—				415				—				—				20,395
		$	12,891			$	41,682			$	124,882			$	48,538			$	24,478			$	1,850			$	84,895			$	339,216
Commercial loans and leases:
Current period gross charge-offs		$	—			$	(4	)		$	(116	)		$	(43	)		$	(5	)		$	—			$	—			$	(168	)
Current period recoveries			—				—				—				5				7				—				—				12
		$	—			$	(4	)		$	(116	)		$	(38	)		$	2			$	—			$	—			$	(156	)
Consumer:
Risk rating
Pass		$	726			$	208			$	7			$	55			$	50			$	98			$	631			$	1,775
Watch			—				—				—				—				—				—				6				6
Special mention			—				—				—				—				—				—				3				3
Substandard			—				—				—				—				—				—				3				3
		$	726			$	208			$	7			$	55			$	50			$	98			$	643			$	1,787
Consumer:
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	(25	)		$	(25	)

		*Term Loans Amortized Cost Basis by Origination Year*
		*2023*				*2022*				*2021*				*2020*				*2019*				*Prior*				*Revolving loans*				*Total*
December 31, 2023

*One-to-four family residential real estate loans:*
Risk-rating
Pass		$	489			$	—			$	—			$	130			$	—			$	14,069			$	3,804			$	18,492
Watch			—				—				—				—				—				144				—				144
Substandard			—				—				—				—				—				127				145				272
Nonaccrual			—				—				—				—				—				16				21				37
		$	489			$	—			$	—			$	130			$	—			$	14,356			$	3,970			$	18,945
*One-to-four family residential real estate loans:*
Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	(1	)		$	—			$	(1	)
Current period recoveries			—				—				—				—				—				45				—				45
		$	—			$	—			$	—			$	—			$	—			$	44			$	—			$	44
*Multi-family residential real estate:*
Risk rating
Pass		$	43,386			$	210,878			$	108,563			$	57,480			$	22,064			$	67,432			$	8,735			$	518,538
Watch			—				647				4,104				263				—				2,575				—				7,589
Special mention			118				1,215				—				—				—				—				—				1,333
		$	43,504			$	212,740			$	112,667			$	57,743			$	22,064			$	70,007			$	8,735			$	527,460
*Multi-family residential real estate:*
Current period recoveries		$	—			$	—			$	—			$	—			$	—			$	20			$	—			$	20
Nonresidential real estate:
Risk rating
Pass		$	17,618			$	50,898			$	20,436			$	7,787			$	9,024			$	8,288			$	104			$	114,155
Watch			—				2,358				1,503				—				—				—				—				3,861
		$	17,618			$	53,256			$	21,939			$	7,787			$	9,024			$	8,288			$	104			$	118,016
Commercial loans and leases:
Risk rating
Pass		$	43,972			$	130,444			$	62,280			$	32,633			$	3,028			$	1,379			$	66,887			$	340,623
Watch			6,043				7,171				748				371				—				—				2,428				16,761
Special mention			—				—				—				—				—				—				10,587				10,587
Substandard			—				666				—				22				—				—				3,368				4,056
Nonaccrual			11				20,204				524				555				—				—				—				21,294
		$	50,026			$	158,485			$	63,552			$	33,581			$	3,028			$	1,379			$	83,270			$	393,321
Commercial loans and leases:
Current period gross charge-offs		$	(20	)		$	(1,850	)		$	—			$	(306	)		$	—			$	—			$	—			$	(2,176	)
Current period recoveries			—				—				37				40				—				—				—				77
		$	(20	)		$	(1,850	)		$	37			$	(266	)		$	—			$	—			$	—			$	(2,099	)
Consumer:
Risk rating
Pass		$	336			$	8			$	140			$	80			$	247			$	—			$	538			$	1,349
Watch			—				—				—				—				—				—				7				7
Special mention			—				—				—				—				—				—				5				5
Substandard			—				—				—				—				—				—				3				3
		$	336			$	8			$	140			$	80			$	247			$	—			$	553			$	1,364
Consumer:
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	(52	)		$	(52	)
Current period recoveries			—				—				—				—				—				—				1				1
		$	—			$	—			$	—			$	—			$	—			$	—			$	(51	)		$	(51	)