The following table presents the recorded investment in loans receivable at December 31, 2023 and December 31, 2022 by segment and class:

The Company occasionally transfers a portion of its originated commercial loans to participating lending partners. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying consolidated statements of financial condition. The Company and its lending partners share proportionally in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans, collects cash payments from the borrowers, remits payments (net of servicing fees), and disburses required escrow funds to relevant parties.

Note 5 - Loans Receivable and Allowance for Credit losses (continued)

At December 31, 2023 and 2022, loans serviced by the Bank for the benefit of others totaled $135.4 million and $159.3 million, respectively.

Related-Party Loans

The Bank grants loans to its officers and directors and to their associates. The activity with respect to loans to directors, officers and associates of such persons, is as follows:



	Years Ended December 31,
		2023		2022
	(In Thousands)
Balance – beginning	$	26,265	$	31,696
Loans originated		2,882		-
Collections of principal		(939)		(5,431)
Balance - ending	$	28,208	$	26,265

Allowance for Credit losses

The Company engages a third-party vendor to assist in the CECL calculation and has established a robust internal governance framework to oversee the quarterly estimation process for the allowance for credit losses (“ACL”). The ACL calculation methodology relies on regression-based discounted cash flow (“DCF”) models that correlate relationships between certain financial metrics and external market and macroeconomic variables. Following are some of the key factors and assumptions that are used in the Company’s CECL calculations:

methods based on probability of default and loss given default which are modeled based on macroeconomic scenarios;

a reasonable and supportable forecast period determined based on management’s current review of macroeconomic environment;

a reversion period after the reasonable and supportable forecast period;

estimated prepayment rates based on the Company’s historical experience and future macroeconomic environment;

estimated credit utilization rates based on the Company’s historical experience and future macroeconomic environment; and

incorporation of qualitative factors not captured within the modeled results. The qualitative factors include but are not limited to changes in lending policies, business conditions, changes in the nature and size of the portfolio, portfolio concentrations, and external factors such as competition.

Allowance for credit losses are aggregated for the major loan segments, with similar risk characteristics, summarized below. However, for the purposes of calculating the reserves, these segments may be further broken down into loan classes by risk characteristics that include but are not limited to regulatory call codes, industry type, geographic location, and collateral type.

Residential one-to-four family real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential real estate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying properties may be adversely affected by higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower.

Commercial and multi-family real estate lending entails additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as general economic conditions.

Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence.

Commercial business lending, including lines of credit, is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In many cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the collateral value securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Bank’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.

Other consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness and personal bankruptcy. In many cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

‎

Note 5- Loans Receivable and Allowance for Credit losses (continued)

The following tables set forth the activity in the Bank’s allowance for credit losses and recorded investment in loans receivable at December 31, 2023 and December 31, 2022. The table also details the amount of total loans receivable, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for credit losses that is allocated to each loan class (In Thousands):


	Residential			Commercial & Multi-family	Construction		Commercial Business (1)		Home Equity (2)		Consumer		Unallocated		Total
Allowance for credit losses:
Ending Balance, December 31, 2022		2,474		21,749		2,094		5,367		485		24		180		32,373
Effect of adopting ASU No. 2016-13 ("CECL")		144		(7,123)		1,387		1,418		182		7		(180)		(4,165)
Beginning Balance, January 1, 2023	$	2,618	$	14,626	$	3,481	$	6,785	$	667	$	31	$	-	$	28,208

Charge-offs:		-		-		-		(805)		-		-		-		(805)
Recoveries:		45		-		-		40		16		-		-		101
Provision (benefit):		(319)		1,675		360		4,333		8		47		-		6,104
Ending Balance, December 31, 2023	$	2,344	$	16,301	$	3,841	$	10,353	$	691	$	78	$	-	$	33,608

Ending Balance attributable to loans:
Individually evaluated	$	-	$	990	$	310	$	2,929	$	-	$	-	$	-	$	4,229
Collectively evaluated		2,344		15,311		3,531		7,424		691		78		-		29,379
Ending Balance, December 31, 2023	$	2,344	$	16,301	$	3,841	$	10,353	$	691	$	78	$	-	$	33,608

Loans Receivables:
Individually evaluated	$	444	$	42,259	$	4,292	$	6,812	$	212	$	-	$	-	$	54,019
Collectively evaluated		247,851		2,391,856		188,524		365,390		66,119		3,643		-		3,263,383
Total Gross Loans	$	248,295	$	2,434,115	$	192,816	$	372,202	$	66,331	$	3,643	$	-	$	3,317,402

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.


	Residential			Commercial & Multi-family	Construction		Commercial Business (1)		Home Equity (2)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning Balance, December 31, 2021	$	4,094	$	22,065	$	2,231	$	8,000	$	533	$	14	$	182	$	37,119

Charge-offs:		-		-		-		(2,095)		-		-		-		(2,095)
Recoveries:		23		-		-		191		12		198		-		424
Provision (benefit):		(1,643)		(316)		(137)		(729)		(60)		(188)		(2)		(3,075)
Ending Balance, December 31, 2022	$	2,474	$	21,749	$	2,094	$	5,367	$	485	$	24	$	180	$	32,373

Ending Balance attributable to loans:
Individually evaluated for impairment	$	196	$	-	$	518	$	2,066	$	4	$	-	$	-	$	2,784
Collectively evaluated for impairment		2,278		21,749		1,576		3,301		481		24		180		29,589
Ending Balance, December 31, 2022	$	2,474	$	21,749	$	2,094	$	5,367	$	485	$	24	$	180	$	32,373

Loans Receivables:
Individually evaluated for impairment	$	5,147	$	15,397	$	3,180	$	3,821	$	727	$	-	$	-	$	28,272
Collectively evaluated for impairment		244,976		2,329,832		141,751		278,186		56,161		3,240		-		3,054,146
Total Gross Loans	$	250,123	$	2,345,229	$	144,931	$	282,007	$	56,888	$	3,240	$	-	$	3,082,418

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

‎

Note 5- Loans Receivable and Allowance for Credit losses (continued)

The tables below set forth the amounts and types of nonaccrual loans in the Bank’s loan portfolio at December 31 2023 and 2022, respectively. Loans are generally placed on nonaccrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful.

As of December 31, 2023, nonaccrual loans differed from the amount of total loans past due greater than 90 days due to loans 90 days past due but still accruing interest or loans that were previously 90 days past due both of which are maintained on nonaccrual status for a minimum of six months until the borrower has demonstrated their ability to satisfy the terms of the loan.


			As of December 31, 2023
			(in Thousands)
		Nonaccrual loans with Allowance for Credit Losses			Nonaccrual loans without Allowance for Credit Losses		Total Nonaccrual loans		Amortized Cost of Loans Past due 90 and Still Accruing
Residential one-to-four family	$	-		$	270	$	270	$	-
Commercial and multi-family		2,029			6,655		8,684		-
Construction		2,312			1,980		4,292		-
Commercial business ⁽¹⁾		2,599			2,892		5,491		-
Home equity ⁽²⁾		-			46		46		-
Total	$	6,940		$	11,843	$	18,783	$	-

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.



	As of ‎December 31, 2022
	(In Thousands)
Non-Accruing Loans:

Residential one-to-four family	$	243
Commercial and multi-family		346
Construction		3,180
Commercial business⁽¹⁾		1,340
Total	$	5,109

(1) Includes business lines of credit.

Had nonaccrual loans been performing in accordance with their original terms, the interest income recognized for the years ended December 31, 2023 and 2022 would have been approximately $1.9 million and $1.0 million, respectively. Interest income recognized on loans returned to accrual was approximately $314,000 and $1.6 million, respectively. The Bank is not committed to lend additional funds to the borrowers whose loans have been placed on a nonaccrual status. At December 31, 2023 and 2022, there were no loans which were more than ninety days past due and still accruing interest.

The following Table summarizes the recorded investment and unpaid principal balances of individually evaluated loans for the year ended December 31, 2022.

(In Thousands):


		As of December 31, 2022
		Recorded		Unpaid Principal		Related
		Investment		Balance		Allowance
Loans with no related allowance:
Residential one-to-four family	$	3,313	$	3,472	$	-
Commercial and multi-family		15,397		16,355		-
Commercial business⁽¹⁾		691		4,648		-
Home equity⁽²⁾		500		500		-
Total Individually Evaluated Loans with no related allowance recorded:	$	19,901	$	24,975	$	-

Loans with an allowance recorded:
Residential one-to-four family	$	1,834	$	1,856	$	196
Commercial and Multi-family		-		-		-
Construction		3,180		3,180		518
Commercial business⁽¹⁾		3,130		8,276		2,066
Home equity⁽²⁾		227		227		4
Total Individually Evaluated Loans with an allowance recorded:	$	8,371	$	13,539	$	2,784

Total Individually Evaluated Loans:	$	28,272	$	38,514	$	2,784

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

‎

Note 5- Loans Receivable and Allowance for Credit losses (continued)

The following table summarizes the average recorded investment and actual interest income recognized on individually evaluated loans for the year ended December 31, 2022.

(In Thousands)



		2022		2022
		Average		Interest
		Recorded		Income
		Investment		Recognized
Loans with no related allowance recorded:
Residential one-to-four family	$	2,981	$	149
Commercial and multi-family		22,511		1,088
Construction		-		-
Commercial business⁽¹⁾		1,250		73
Home equity⁽²⁾		540		24
Total Individually Evaluated Loans with no allowance recorded:	$	27,282	$	1,334

Loans with an allowance recorded:
Residential one-to-four family	$	1,948	$	63
Commercial and Multi-family		2,841		266
Construction		3,041		41
Commercial business⁽¹⁾		4,924		105
Home equity⁽²⁾		272		5
Total Individually Evaluated Loans with an allowance recorded:	$	13,026	$	480

Total Individually Evaluated Loans:	$	40,308	$	1,814

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

The Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measurement of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty. The Company did not have any loans that were both experiencing financial difficulty and modified during the twelve months ending December 31, 2023.

The following table sets forth the delinquency status of total loans receivable at December 31, 2023:


													Loans Receivable
	30-59 Days		60-90 Days		Greater Than		Total Past				Total Loans		>90 Days
	Past Due		Past Due		90 Days		Due		Current		Receivable		and Accruing
		(In Thousands)
Residential one-to-four family	$	4,701	$	-	$	270	$	4,971	$	243,324	$	248,295	$	-
Commercial and multi-family		1,853		7,876		6,842		16,571		2,417,544		2,434,115		-
Construction		3,641		-		586		4,227		188,589		192,816		-
Commercial business⁽¹⁾		4,236		611		1,131		5,978		366,224		372,202		-
Home equity⁽²⁾		907		-		-		907		65,424		66,331		-
Consumer		-		-		-		-		3,643		3,643		-
Total	$	15,338	$	8,487	$	8,829	$	32,654	$	3,284,748	$	3,317,402	$	-

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

The following table sets forth the delinquency status of total loans receivable at December 31, 2022:


													Loans Receivable
	30-59 Days		60-90 Days		Greater Than		Total Past				Total Loans		>90 Days
	Past Due		Past Due		90 Days		Due		Current		Receivable		and Accruing
		(In Thousands)
Residential one-to-four family	$	253	$	314	$	-	$	567	$	249,556	$	250,123	$	-
Commercial and multi-family		2,163		428		-		2,591		2,342,638		2,345,229		-
Construction		-		-		3,180		3,180		141,751		144,931		-
Commercial business⁽¹⁾		190		1,115		1,086		2,391		279,616		282,007		-
Home equity⁽²⁾		699		-		-		699		56,189		56,888		-
Consumer		-		-		-		-		3,240		3,240		-
Total	$	3,305	$	1,857	$	4,266	$	9,428	$	3,072,990	$	3,082,418	$	-

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

‎

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention, substandard, doubtful, and loss within the Company’s internal risk rating system as of December 31, 2023 and 2022 (In Thousands):


Loans by Year of Origination at December 31, 2023
		2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans to Term Loans		Total
Residential one-to-four family
Pass	$	17,080	$	53,623	$	38,178	$	31,420	$	12,067	$	93,764	$	-	$	-	$	246,132
Special Mention		-		492		91		-		-		-		-		-		583
Substandard		-		-		1,310		-		-		270		-		-		1,580
Total one-to-four family	$	17,080	$	54,115	$	39,579	$	31,420	$	12,067	$	94,034	$	-	$	-	$	248,295

Commercial and multi-family
Pass	$	222,435	$	778,076	$	224,823	$	214,768	$	50,755	$	824,375	$	1,922	$	-	$	2,317,154
Special Mention		9,908		34,375		-		-		529		4,453		140		-		49,405
Substandard		-		14,931		4,023		3,575		-		45,027		-		-		67,556
Total Commercial and multi-family	$	232,343	$	827,382	$	228,846	$	218,343	$	51,284	$	873,855	$	2,062	$	-	$	2,434,115

Construction
Pass	$	21,730	$	74,180	$	59,564	$	21,462	$	-	$	5,878	$	5,710	$	-	$	188,524
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		1,394		-		586		-		2,312		-		-		4,292
Total Construction	$	21,730	$	75,574	$	59,564	$	22,048	$	-	$	8,190	$	5,710	$	-	$	192,816

Commercial business
Pass	$	3,328	$	297	$	2,967	$	4,234	$	7,080	$	33,675	$	302,540	$	-	$	354,121
Special Mention		-		-		-		-		317		830		5,010		-		6,157
Substandard		-		-		-		-		-		4,703		7,221		-		11,924
Total Commercial business	$	3,328	$	297	$	2,967	$	4,234	$	7,397	$	39,208	$	314,771	$	-	$	372,202

Home equity
Pass	$	5,022	$	1,487	$	553	$	769	$	1,280	$	6,181	$	50,111	$	553	$	65,956
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		46		-		-		-		-		117		212		375
Total Home equity	$	5,022	$	1,533	$	553	$	769	$	1,280	$	6,181	$	50,228	$	765	$	66,331

Consumer
Pass	$	1,497	$	471	$	1,521	$	109	$	39	$	-	$	6	$	-	$	3,643
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Total Consumer	$	1,497	$	471	$	1,521	$	109	$	39	$	-	$	6	$	-	$	3,643

Total Loans	$	281,000	$	959,372	$	333,030	$	276,923	$	72,067	$	1,021,468	$	372,777	$	765	$	3,317,402

Gross charge-offs	$	500	$	305	$	-	$	-	$	-	$	-	$	-	$	-	$	805