Loans held for investment, net of fair value adjustments, consisted of the following:

The following table sets forth information at March 31, 2022 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans. Fixed-rate loans comprised nine percent of loans held for investment at March 31, 2022 as compared to four percent at June 30, 2021, respectively. Adjustable rate loans having no stated repricing dates that reprice when the index they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year. The table

does not include any estimate of prepayments which may cause the Corporation’s actual repricing experience to differ materially from that shown.

The Corporation has developed an internal loan grading system to evaluate and quantify the Bank’s loans held for investment portfolio with respect to quality and risk. Management continually evaluates the credit quality of the Corporation’s loan portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using quantitative and qualitative methods. The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss. The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances. Quantitative loan loss factors are developed by determining the historical loss experience, expected future cash flows, discount rates and collateral fair values, among others. Qualitative loan loss factors are developed by assessing general economic indicators such as gross domestic product, retail sales, unemployment rates, employment growth, California home sales and median California home prices as well as the forecasted economic impact of the novel coronavirus of 2019 (“COVID-19”). The Corporation assigns individual factors for the quantitative and qualitative methods for each loan category and each internal risk rating.

The Corporation categorizes all of the loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:

The following tables summarize gross loans held for investment, net of fair value adjustments, by loan types and risk category at the dates indicated:

The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management’s continuing analysis of the factors underlying the quality of the loans held for investment. These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans. The provision (recovery) for (from) the allowance for loan losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the allowance at appropriate levels. Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Corporation’s loans held for investment, will not request a significant increase in its allowance for loan losses. Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control. In response to the COVID-19 pandemic, which has negatively impacted the economic environment, the qualitative component was increased in the allowance for loan losses methodology reflecting the uncertain economic environment upon the onset of the pandemic. However, an improved economic outlook has developed in the last few quarters which reduced the qualitative component as the forecasted impact of the pandemic on the credit quality of the loan portfolio in future quarters has diminished.

Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans. For loans that were modified from their original terms, were re-underwritten and identified in the Corporation’s asset quality reports as troubled debt restructurings (“restructured loans”), the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent. The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the allowance for loan losses. The allowance for loan losses for non-performing loans is determined by applying ASC 310, “Receivables.” For restructured loans that are less than 90 days delinquent, the allowance for loan losses are segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their restructuring period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method. For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for restructured loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required.

The following table is provided to disclose additional details for the periods indicated on the Corporation’s allowance for loan losses:

The following tables denote the past due status of the Corporation's gross loans held for investment, net of fair value adjustments, at the dates indicated.

The following tables summarize the Corporation’s allowance for loan losses and recorded investment in gross loans, by portfolio type, at the dates and for the periods indicated.


	Quarter Ended March 31, 2022
	Single-			Multi-			Commercial									Commercial
(In Thousands)	family			family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	1,396		$	4,219		$	915		$	55		$	3		$	15		$	5		$	6,608
(Recovery) provision for loan losses		(64)			(544)			(45)			4			—			5			(1)			(645)
Recoveries		6			—			—			—			—			—			—			6
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,338		$	3,675		$	870		$	59		$	3		$	20		$	4		$	5,969

Allowance for loan losses:
Individually evaluated for impairment	$	51		$	—		$	—		$	—		$	—		$	—		$	—		$	51
Collectively evaluated for impairment		1,287			3,675			870			59			3			20			4			5,918
Allowance for loan losses, end of period	$	1,338		$	3,675		$	870		$	59		$	3		$	20		$	4		$	5,969

Loans held for investment:
Individually evaluated for impairment	$	1,549		$	—		$	—		$	—		$	—		$	—		$	—		$	1,549
Collectively evaluated for impairment		326,112			468,656			91,344			4,127			131			459			73			890,902
Total loans held for investment, gross	$	327,661		$	468,656		$	91,344		$	4,127		$	131		$	459		$	73		$	892,451
Allowance for loan losses as a percentage of gross loans held for investment		0.41	%		0.78	%		0.95	%		1.43	%		2.29	%		4.36	%		5.48	%		0.66	%


	Quarter Ended March 31, 2021
	Single-			Multi-			Commercial									Commercial
(In Thousands)	family			family			Real Estate			Construction				Other		Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,706		$	4,540		$	1,132		$	110		$	3		$	41		$	6		$	8,538
Provision (recovery) for loan losses		(311)			202			(30)			(57)			—			(5)			1			(200)
Recoveries		9			—			—			—			—			—			—			9
Charge-offs		—			—			—			—			—			—			(1)			(1)
Allowance for loan losses, end of period	$	2,404		$	4,742		$	1,102		$	53		$	3		$	36		$	6		$	8,346

Allowance for loan losses:
Individually evaluated for impairment	$	572		$	—		$	—		$	—		$	—		$	—		$	—		$	572
Collectively evaluated for impairment		1,832			4,742			1,102			53			3			36			6			7,774
Allowance for loan losses, end of period	$	2,404		$	4,742		$	1,102		$	53		$	3		$	36		$	6		$	8,346

Loans held for investment:
Individually evaluated for impairment	$	9,343		$	—		$	—		$	—		$	—		$	—		$	—		$	9,343
Collectively evaluated for impairment		245,050			483,283			99,722			3,508			140			851			96			832,650
Total loans held for investment, gross	$	254,393		$	483,283		$	99,722		$	3,508		$	140		$	851		$	96		$	841,993
Allowance for loan losses as a percentage of gross loans held for investment		0.94	%		0.98	%		1.11	%		1.51	%		2.14	%		4.23	%		6.25	%		0.98	%


	Nine Months Ended March 31, 2022
							Commercial									Commercial
(In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,000		$	4,485		$	1,006		$	51		$	3		$	36		$	6		$	7,587
(Recovery) provision for loan losses		(1,095)			(810)			(136)			8			—			(16)			(2)			(2,051)
Recoveries		433			—			—			—			—			—			—			433
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,338		$	3,675		$	870		$	59		$	3		$	20		$	4		$	5,969

Allowance for loan losses:
Individually evaluated for impairment	$	51		$	—		$	—		$	—		$	—		$	—		$	—		$	51
Collectively evaluated for impairment		1,287			3,675			870			59			3			20			4			5,918
Allowance for loan losses, end of period	$	1,338		$	3,675		$	870		$	59		$	3		$	20		$	4		$	5,969

Loans held for investment:
Individually evaluated for impairment	$	1,549		$	—		$	—		$	—		$	—		$	—		$	—		$	1,549
Collectively evaluated for impairment		326,112			468,656			91,344			4,127			131			459			73			890,902
Total loans held for investment, gross	$	327,661		$	468,656		$	91,344		$	4,127		$	131		$	459		$	73		$	892,451
Allowance for loan losses as a percentage of gross loans held for investment		0.41	%		0.78	%		0.95	%		1.43	%		2.29	%		4.36	%		5.48	%		0.66	%


	Nine Months Ended March 31, 2021
							Commercial									Commercial
(In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,622		$	4,329		$	1,110		$	171		$	3		$	24		$	6		$	8,265
(Recovery) provision for loan losses		(241)			413			(8)			(118)			—			12			1			59
Recoveries		23			—			—			—			—			—			1			24
Charge-offs		—			—			—			—			—			—			(2)			(2)
Allowance for loan losses, end of period	$	2,404		$	4,742		$	1,102		$	53		$	3		$	36		$	6		$	8,346

Allowance for loan losses:
Individually evaluated for impairment	$	572		$	—		$	—		$	—		$	—		$	—		$	—		$	572
Collectively evaluated for impairment		1,832			4,742			1,102			53			3			36			6			7,774
Allowance for loan losses, end of period	$	2,404		$	4,742		$	1,102		$	53		$	3		$	36		$	6		$	8,346

Loans held for investment:
Individually evaluated for impairment	$	9,343		$	—		$	—		$	—		$	—		$	—		$	—		$	9,343
Collectively evaluated for impairment		245,050			483,283			99,722			3,508			140			851			96			832,650
Total loans held for investment, gross	$	254,393		$	483,283		$	99,722		$	3,508		$	140		$	851		$	96		$	841,993
Allowance for loan losses as a percentage of gross loans held for investment		0.94	%		0.98	%		1.11	%		1.51	%		2.14	%		4.23	%		6.25	%		0.98	%

The following tables identify the Corporation’s total recorded investment in non-performing loans by type at the dates and for the periods indicated. Generally, a loan is placed on non-accrual status when it becomes 90 days past due as to principal or interest or if the loan is deemed impaired, after considering economic and business conditions and collection efforts, where the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. In addition, interest income is not recognized on any loan where management has determined that collection is not reasonably assured. A non-performing loan may be restored to accrual status when delinquent principal and interest payments are brought current, the borrower(s) has demonstrated sustained payment performance and future monthly principal and interest payments are expected to be collected on a timely basis. Loans with a related allowance reserve have been individually evaluated for impairment using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals less costs to sell, to establish realizable value. This analysis may identify a specific impairment amount needed or may conclude that no reserve is needed. Loans that are not individually evaluated for impairment are included in pools of homogeneous loans for evaluation of related allowance reserves.


	At March 31, 2022
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,265	$	—	$	1,265	$	(99)	$	1,166
Without a related allowance⁽²⁾		563		(39)		524		—		524
Total single-family loans		1,828		(39)		1,789		(99)		1,690

Multi-family:
With a related allowance		438		—		438		(132)		306
Total multi-family loans		438		—		438		(132)		306

Total non-performing loans	$	2,266	$	(39)	$	2,227	$	(231)	$	1,996

(1)	Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan, and fair value credit adjustments.

(2)	There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.


	At June 30, 2021
	Unpaid		Related						Net
	Principal		Charge-offs		Recorded				Recorded
(In Thousands)	Balance		Related		Investment		Allowance⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	7,400	$	—	$	7,400	$	(434)	$	6,966
Without a related allowance⁽²⁾		1,335		(436)		899		—		899
Total single-family loans		8,735		(436)		8,299		(434)		7,865

Multi-family:
With a related allowance		1,119		—		1,119		(338)		781
Total multi-family loans		1,119		—		1,119		(338)		781

Total non-performing loans	$	9,854	$	(436)	$	9,418	$	(772)	$	8,646

(1)	Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan, and fair value credit adjustments.

(2)	There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

At March 31, 2022, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

For the quarters ended March 31, 2022 and 2021, the Corporation’s average recorded investment in non-performing loans was $3.0 million and $10.8 million, respectively. The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status. For the quarter ended March 31, 2022, the Bank received $34,000 in interest payments from non-performing loans, of which $28,000 was recognized as interest income and the remaining $6,000 was applied to reduce the loan balances under the cost recovery method. In comparison, for the quarter ended March 31, 2021, the Bank received $47,000 in interest payments from non-performing loans, of which $31,000 was recognized as interest income and the remaining $16,000 was applied to reduce the loan balances under the cost recovery method.

For the nine months ended March 31, 2022 and 2021, the Corporation’s average recorded investment in non-performing loans was $5.0 million and $8.7 million, respectively. For the nine months ended March 31, 2022, the Bank received $384,000 in interest payments from non-performing loans, of which $361,000 was recognized as interest income and the

remaining $23,000 was applied to reduce the loan balances under the cost recovery method. In comparison, for the nine months ended March 31, 2021, the Bank received $140,000 in interest payments from non-performing loans, of which $101,000 was recognized as interest income and the remaining $39,000 was applied to reduce the loan balances under the cost recovery method.

The following tables present the average recorded investment in non-performing loans and the related interest income recognized for the quarters and nine months ended March 31, 2022 and 2021:


		Quarter Ended March 31,
	2022				2021
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related allowances:
Mortgage loans:
Single-family	$	540	$	1	$	1,461	$	—
		540		1		1,461		—

With related allowances:
Mortgage loans:
Single-family		1,267		15		8,975		27
Multi-family		1,172		12		375		4
		2,439		27		9,350		31

Total	$	2,979	$	28	$	10,811	$	31


	Nine Months Ended March 31,
	2022				2021
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related allowances:
Mortgage loans:
Single-family	$	675	$	232	$	1,638	$	—
		675		232		1,638		—

With related allowances:
Mortgage loans:
Single-family		3,126		86		6,923		96
Multi-family		1,179		43		125		4
Commercial business loans		—		—		17		1
		4,305		129		7,065		101

Total	$	4,980	$	361	$	8,703	$	101

The Corporation has modified loans in accordance with the Coronavirus Aid, Relief, and Economic Security Act for 2020, as amended (“CARES Act”) and Revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (“Interagency Statement”). The CARES Act and Interagency Statement provided guidance around the modification of loans as a result of the COVID-19 pandemic, and outlined, among other criteria, that short-term modifications of up to six months made on a good faith basis to borrowers who were current as defined under the CARES Act and Interagency Statement prior to any relief are not restructured loans and if all payments are current in accordance with the revised terms of the loan, the loan would not be reported as past due. The Corporation ended its COVID-19 loan forbearance program on March 31, 2021.

As of March 31, 2022, expired loan forbearance related to COVID-19 hardship requests are described below:


	Forbearance Granted			Forbearance Completed⁽¹⁾			Forbearance Remaining
	Number of			Number of			Number of
(Dollars In Thousands)	Loans	Amount		Loans	Amount		Loans	Amount
Single-family loans	59	$	23,135	59	$	23,135	—	$	—
Multi-family loans	5		2,278	5		2,278	—		—
Commercial real estate loans	3		1,967	3		1,967	—		—
Total loan forbearance	67	$	27,380	67	$	27,380	—	$	—

(1)

Includes 19 single-family loans totaling $6.9 million which were subsequently extended beyond the initial six-month forbearance and classified as restructured non-performing loans, consistent with the Interagency Statement. As of March 31, 2022, of the 19 loans, four loans totaling $2.0 million were paid off, 12 loans totaling $3.7 million were upgraded to the pass category, one loan totaling $208 thousand was upgraded to the special mention category, while two loans totaling $1.0 million remain as non-performing.

For additional detail, see the "COVID-19 Impact to the Corporation" section in Management's Discussion and Analysis of Financial Condition and Results of Operation in this Form 10-Q.

For the quarter ended March 31, 2022, no loans were restructured, one loan was downgraded to the special mention category, while two restructured loans were paid off. For the quarter ended March 31, 2021, one loan was restructured (forbearance loans which were downgraded when their monthly payment deferrals were extended beyond six months, consistent with the Interagency Statement), while two restructured loans were upgraded to the pass category. During both quarters ended March 31, 2022 and 2021, no restructured loans were in default within a 12-month period subsequent to their original restructuring.

For the nine months ended March 31, 2022, no loans were restructured, 11 loans were upgraded to the pass category, one loan was upgraded to the special mention category, while six restructured loans paid off. For the nine months ended March 31, 2021, 18 loans were restructured (including 17 COVID-19 related loan forbearance modifications which were downgraded when their monthly payment deferrals were extended beyond six months, consistent with the Interagency Statement), while three restructured loans were upgraded to the pass category, of which one loan was subsequently paid off. During both nine-month periods ended March 31, 2022 and 2021, no restructured loans were in default within a 12-month period subsequent to their original restructuring. At both March 31, 2022 and June 30, 2021, there were no commitments to lend additional funds to those borrowers whose loans were restructured.

As of March 31, 2022, the Corporation held 16 restructured loans with a net outstanding balance of $5.3 million, of which two loans totaling $974,000 were classified as substandard and on non-accrual status. As of June 30, 2021, the Corporation held 23 restructured loans with a net outstanding balance of $7.9 million, of which 20 loans totaling $7.0 million were classified as substandard on non-accrual status. As of March 31, 2022, a total of $4.5 million or 85% of the restructured loans were current with respect to their modified payment terms, as compared to June 30, 2021 when $7.7 million or 97% of the restructured loans were current with respect to their modified payment terms.

The Corporation upgrades restructured single-family loans to the pass category if the borrower has demonstrated satisfactory contractual payments for at least six consecutive months; 12 months for those loans that were restructured more than once; and if the borrower has demonstrated satisfactory contractual payments beyond 12 consecutive months, the loan is no longer categorized as a restructured loan. In addition to the payment history described above, multi-family, commercial real estate, construction and commercial business loans must also demonstrate a combination of the following characteristics to be upgraded: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others.

To qualify for restructuring, a borrower must provide evidence of their creditworthiness such as, current financial statements, their most recent income tax returns, current paystubs, current W-2s, and most recent bank statements, among other documents, which are then verified by the Corporation. The Corporation re-underwrites the loan with the borrower’s updated financial information, new credit report, current loan balance, new interest rate, remaining loan term, updated property value and modified payment schedule, among other considerations, to determine if the borrower qualifies.

The following table summarizes at the dates indicated the restructured loan balances, net of allowance for loan losses, by loan type:


	At		At
(In Thousands)	March 31, 2022		June 30, 2021
Restructured loans on non-accrual status:
Mortgage loans:
Single-family	$	974	$	6,983
Total		974		6,983

Restructured loans on accrual status:
Mortgage loans:
Single-family		4,347		876
Total		4,347		876
Total restructured loans	$	5,321	$	7,859

The following tables identify the Corporation’s total recorded investment in restructured loans by type at the dates and for the periods indicated.


	At March 31, 2022
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,025	$	—	$	1,025	$	(51)	$	974
Without a related allowance⁽²⁾		4,347		—		4,347		—		4,347
Total single-family		5,372		—		5,372		(51)		5,321

Total restructured loans	$	5,372	$	—	$	5,372	$	(51)	$	5,321

(1)	Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2)	There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.


	At June 30, 2021
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	7,151	$	—	$	7,151	$	(384)	$	6,767
Without a related allowance⁽²⁾		1,457		(365)		1,092		—		1,092
Total single-family		8,608		(365)		8,243		(384)		7,859

Total restructured loans	$	8,608	$	(365)	$	8,243	$	(384)	$	7,859

(1)	Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2)	There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

During the quarters and nine months ended March 31, 2022 and 2021, no properties were acquired in the settlement of loans and no previously foreclosed upon properties were sold. As of both March 31, 2022 and June 30, 2021, there was no

real estate owned property. A new appraisal is obtained on each of the properties at the time of foreclosure and fair value is derived by using the lower of the appraised value or the listing price of the property, net of selling costs. Any initial loss is recorded as a charge to the allowance for loan losses before being transferred to real estate owned. Subsequent to transfer to real estate owned, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the condensed consolidated statements of operations. In addition, the Corporation records costs to carry real estate owned as real estate owned operating expenses as incurred.