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Loans Held for Investment

9 Months Ended

Mar. 31, 2024

Note 5: Loans Held for Investment

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


	March 31,		June 30,
(In Thousands)	2024		2023
Mortgage loans:
Single-family	$	517,039	$	518,821
Multi-family		457,401		461,113
Commercial real estate		83,136		90,558
Construction		2,745		1,936
Other		99		106
Commercial business loans		2,835		1,565
Consumer loans		60		65
Total loans held for investment, gross		1,063,315		1,074,164

Advance payments of escrows		371		148
Deferred loan costs, net		9,183		9,263
ACL on loans		(7,108)		(5,946)
Total loans held for investment, net	$	1,065,761	$	1,077,629

The following table sets forth information at March 31, 2024 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. At March 31, 2024 and June 30, 2023, fixed rate loans comprised 10 percent and 11 percent of loans held for investment, respectively. Adjustable rate loans 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.


	Adjustable Rate
			After		After		After
		Within	One Year		3 Years		5 Years
(In Thousands)	One Year		Through 3 Years		Through 5 Years		Through 10 Years		Fixed Rate		Total
Mortgage loans:
Single-family	$	53,321	$	27,759	$	96,177	$	230,399	$	109,383	$	517,039
Multi-family		179,447		149,111		114,911		13,831		101		457,401
Commercial real estate		35,078		17,925		28,892		—		1,241		83,136
Construction		2,745		—		—		—		—		2,745
Other		—		—		—		—		99		99
Commercial business loans		2,720		—		—		—		115		2,835
Consumer loans		60		—		—		—		—		60
Total loans held for investment, gross	$	273,371	$	194,795	$	239,980	$	244,230	$	110,939	$	1,063,315

The following tables present the Corporation’s commercial real estate loans by property types and LTVs as of March 31, 2024 and June 30, 2023:


		Owner		Non-Owner			% of Total			Weighted
March 31, 2024		Occupied Loan		Occupied Loan		Total		Commercial		Average
(Dollars In Thousands)	Balance			Balance		Balance	Real Estate			LTV ⁽¹⁾
Office	$	6,733	$	20,216	$	26,949		32	%	43	%
Mixed use⁽²⁾		296		15,918		16,214		20		35	%
Retail		—		12,254		12,254		15		31	%
Warehouse		2,089		9,939		12,028		14		33	%
Medical/dental office		2,453		4,712		7,165		9		44	%
Mobile home park		—		6,945		6,945		8		38	%
Restaurant/fast food		692		—		692		1		44	%
Automotive - non gasoline		—		580		580		1		26	%
Live/work		—		309		309		—		14	%
Total commercial real estate	$	12,263	$	70,873	$	83,136		100	%	38	%

(1)Current loan balance as a percentage of the original appraised value.

(2)	Mixed use includes $7.0 million in Office/Retail, $4.8 million in Multi-family/Retail, $3.0 million in Other Mixed Use, $757,000 in Multi-family/Commercial and $688,000 in Multi-family/Office..


		Owner		Non-Owner			% of Total			Weighted
June 30, 2023		Occupied Loan		Occupied Loan		Total		Commercial		Average
(Dollars In Thousands)	Balance			Balance		Balance	Real Estate			LTV ⁽¹⁾
Office	$	9,283	$	23,915	$	33,198		37	%	44	%
Mixed use⁽²⁾		306		17,614		17,920		20		36	%
Retail		—		12,991		12,991		14		32	%
Warehouse		2,133		8,511		10,644		12		31	%
Mobile home park		—		7,057		7,057		8		39	%
Medical/dental office		1,117		5,524		6,641		7		50	%
Restaurant/fast food		—		1,014		1,014		1		24	%
Automotive - non gasoline		—		485		485		1		19	%
Live/work		—		337		337		—		15	%
Light industrial/manufacturing		—		271		271		—		8	%
Total commercial real estate	$	12,839	$	77,719	$	90,558		100	%	38	%

(1)	Current loan balance as a percentage of the original appraised value.

(2)	Mixed use includes $8.2 million in Office/Retail, $5.6 million in Multi-family/Retail, $3.4 million in Other Mixed Use and $700,000 in Multi-family/Office..

The following tables present the Corporation’s commercial real estate loans by geographic concentration as of March 31, 2024 and June 30, 2023:


	Inland				Southern				Other
March 31, 2024	Empire				California⁽¹⁾				California				Total
(Dollars in Thousands)	Balance		%		Balance		%		Balance		%		Balance		%
Owner occupied:
Office	$	1,556	23	%	$	4,984	74	%	$	193	3	%	$	6,733	100	%
Mixed use		—	—	%		—	—	%		296	100	%		296	100	%
Warehouse		—	—	%		1,699	81	%		390	19	%		2,089	100	%
Medical/dental office		277	11	%		1,801	74	%		375	15	%		2,453	100	%
Restaurant/fast food		—	—	%		692	100	%		—	—	%		692	100	%
Total owner occupied		1,833	15	%		9,176	75	%		1,254	10	%		12,263	100	%

Non-owner occupied:
Office		2,969	15	%		13,920	69	%		3,327	16	%		20,216	100	%
Mixed use		539	3	%		6,277	40	%		9,102	57	%		15,918	100	%
Retail		1,056	9	%		6,713	55	%		4,485	36	%		12,254	100	%
Warehouse		609	6	%		4,790	48	%		4,540	46	%		9,939	100	%
Mobile home park		4,886	70	%		359	5	%		1,700	25	%		6,945	100	%
Medical/dental office		1,847	39	%		2,172	46	%		693	15	%		4,712	100	%
Automotive - non gasoline		—	—	%		580	100	%		—	—	%		580	100	%
Live/work		—	—	%		—	—	%		309	100	%		309	100	%
Total non-owner occupied		11,906	17	%		34,811	49	%		24,156	34	%		70,873	100	%

Total commercial real estate	$	13,739	16	%	$	43,987	53	%	$	25,410	31	%	$	83,136	100	%

(1)Other than the Inland Empire.


	Inland				Southern				Other
June 30, 2023	Empire				California⁽¹⁾				California				Total
(Dollars in Thousands)	Balance		%		Balance		%		Balance		%		Balance		%
Owner occupied:
Office	$	2,649	29	%	$	6,436	69	%	$	198	2	%	$	9,283	100	%
Mixed use		—	—	%		—	—	%		306	100	%		306	100	%
Warehouse		—	—	%		1,733	81	%		400	19	%		2,133	100	%
Medical/dental office		281	25	%		453	41	%		383	34	%		1,117	100	%
Total owner occupied		2,930	23	%		8,622	67	%		1,287	10	%		12,839	100	%

Non-owner occupied:
Office		4,420	18	%		14,767	62	%		4,728	20	%		23,915	100	%
Mixed use		660	4	%		7,292	41	%		9,662	55	%		17,614	100	%
Retail		1,076	8	%		7,353	57	%		4,562	35	%		12,991	100	%
Warehouse		623	7	%		5,690	67	%		2,198	26	%		8,511	100	%
Mobile home park		4,967	70	%		364	5	%		1,726	25	%		7,057	100	%
Medical/dental office		1,910	35	%		3,325	60	%		289	5	%		5,524	100	%
Restaurant/fast food		—	—	%		1,014	100	%		—	—	%		1,014	100	%
Automotive - non gasoline		—	—	%		485	100	%		—	—	%		485	100	%
Live/work		—	—	%		—	—	%		337	100	%		337	100	%
Light industrial/ manufacturing		—	—	%		271	100	%		—	—	%		271	100	%
Total non-owner occupied		13,656	18	%		40,561	52	%		23,502	30	%		77,719	100	%

Total commercial real estate	$	16,586	18	%	$	49,183	54	%	$	24,789	28	%	$	90,558	100	%

(1)Other than the Inland Empire.

The Corporation has developed an internal loan grading system to evaluate and quantify loans held for investment with respect to quality and risk. Management continually evaluates the credit quality of the loan portfolio and conducts a quarterly review of the adequacy of the ACL. 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. The collectively evaluated allowance is based on a pooling method for groups of homogeneous loans sharing similar loan characteristics to calculate an allowance which reflects an estimate of lifetime expected credit losses using historical experience, current conditions, and reasonable and supportable forecasts. Loans identified to be individually evaluated have an allowance that is based upon the appraised value of the collateral, less selling costs or discounted cash flow with an appropriate default factor.

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:

●

Pass - These loans range from minimal credit risk to average, but still acceptable, credit risk. The likelihood of loss is considered remote.

●

Special Mention - A special mention loan has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the Corporation is currently protected and loss is considered unlikely and not imminent.

●

Substandard - A substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or

weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

●

Doubtful - A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

●

Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted.

The following table presents the Corporation’s recorded investment in loans by risk categories and gross charge-offs by year of origination as of March 31, 2024:


March 31, 2024	Term Loans by Year of Origination												Revolving
(In Thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
Mortgage loans:
Single-family:
Pass	$	8,944	$	63,451	$	208,980	$	150,992	$	19,728	$	61,770	$	17	$	513,882
Special Mention		-		-		-		538		-		386		-		924
Substandard		-		-		-		-		-		2,233		-		2,233
Total single-family		8,944		63,451		208,980		151,530		19,728		64,389		17		517,039
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Multi-family:
Pass		5,864		28,966		76,236		89,392		62,089		192,779		-		455,326
Special Mention		-		-		-		479		-		541		-		1,020
Substandard		-		-		-		-		-		1,055		-		1,055
Total multi-family		5,864		28,966		76,236		89,871		62,089		194,375		-		457,401
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial real estate:
Pass		2,172		13,845		23,428		4,045		5,486		34,160		-		83,136
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial real estate		2,172		13,845		23,428		4,045		5,486		34,160		-		83,136
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction:
Pass		-		226		835		1,684		-		-		-		2,745
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction		-		226		835		1,684		-		-		-		2,745
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other:
Pass		-		-		-		-		99		-		-		99
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other		-		-		-		-		99		-		-		99
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial business loans:
Pass		-		-		142		-		-		-		2,693		2,835
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial business loans		-		-		142		-		-		-		2,693		2,835
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer loans:
Not graded		15		-		-		-		-		-		-		15
Pass		-		-		-		-		-		-		45		45
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer loans		15		-		-		-		-		-		45		60
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total loans held for investment, gross	$	16,995	$	106,488	$	309,621	$	247,130	$	87,402	$	292,924	$	2,755	$	1,063,315
Total current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The following table presents the Corporation’s recorded investment in loans by risk categories by year of origination as of June 30, 2023:


June 30, 2023	Term Loans by Year of Origination												Revolving
(In Thousands)	2023		2022		2021		2020		2019		Prior		Loans		Total
Mortgage loans:
Single-family:
Pass	$	51,378	$	216,989	$	157,015	$	20,741	$	11,793	$	59,451	$	32	$	517,399
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		251		-		1,171		-		1,422
Total single-family		51,378		216,989		157,015		20,992		11,793		60,622		32		518,821
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Multi-family:
Pass		17,429		77,956		90,926		65,127		59,709		149,456		-		460,603
Special Mention		-		-		510		-		-		-		-		510
Substandard		-		-		-		-		-		-		-		-
Total multi-family		17,429		77,956		91,436		65,127		59,709		149,456		-		461,113
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial real estate:
Pass		8,586		23,815		5,527		6,525		9,981		35,577		-		90,011
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		547		-		547
Total commercial real estate		8,586		23,815		5,527		6,525		9,981		36,124		-		90,558
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction:
Pass		94		726		1,116		-		-		-		-		1,936
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction		94		726		1,116		-		-		-		-		1,936
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other:
Pass		-		-		-		106		-		-		-		106
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other		-		-		-		106		-		-		-		106
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial business loans:
Pass		-		171		-		-		-		-		1,394		1,565
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial business loans		-		171		-		-		-		-		1,394		1,565
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer loans:
Not graded		15		-		-		-		-		-		-		15
Pass		-		-		-		-		-		-		50		50
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer loans		15		-		-		-		-		-		50		65
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total loans held for investment, gross	$	77,502	$	319,657	$	255,094	$	92,750	$	81,483	$	246,202	$	1,476	$	1,074,164
Total current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

As required by ASC 326, on July 1, 2023 the Corporation implemented CECL and recognized a $1.2 million one-time increase to its ACL. Under ASC 326, the ACL is a valuation account that is deducted from the related loan’s amortized cost basis to present the net amount expected to be collected on the loans. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Corporation’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL trued-up through an entry to the provision for credit losses. Management calculates the quantitative portion of the collectively evaluated allowance for all loan categories using an average charge-off or loss rate methodology and generally evaluates collectively evaluated loans by Call Report code in order to group and determine portfolio loan segments with similar risk characteristics. The Corporation primarily utilizes historical loss rates for the CECL calculation based on its own specific historical losses and/or with peer loss history where applicable.

The expected loss rates are applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical and bank-specific experience and the consideration of current and expected conditions and circumstances including the level of interest rates. The prepayment assumptions may be updated by management in the event that changing conditions impact management’s estimate or additional historical data gathered has resulted in the need for a reevaluation.

For its reasonable and supportable forecasting of current expected credit losses, the Corporation utilizes a regression model using forecasted economic metrics and historical loss data. The regression model utilized upon implementation of CECL on July 1, 2023, and as of March 31, 2024, relied upon reasonable and supportable 12-month forecasts of the National Unemployment Rate and change in the Real Gross Domestic Product, after which it reverts to a historical loss rate. Management selected the National Unemployment Rate and the Real Gross Domestic Product as the drivers of the forward look component of the collectively evaluated allowance, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts, including the quarterly Federal Open Market Committee forecast, and the widespread familiarity of these economic metrics.

Management recognizes that there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of allowance on collectively evaluated loans. As current and expected conditions may vary compared with conditions over the historical lookback period, which is utilized in the calculation of the quantitative allowance, management considers whether additional or reduced allowance levels on collectively evaluated loans may be warranted, given the consideration of a variety of qualitative factors. The following qualitative factors (“Q-factors”) considered by management reflect the regulatory guidance on the Q-factors:

●

Changes in the experience, ability, and depth of lending management and other relevant staff.

●

Changes in the value of underlying collateral for collateral-dependent loans.

●

The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

●

Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

●

The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio.

●

Changes in the volume and severity of past due loans, the volume of non-performing loans, and the volume and severity of adversely classified or graded loans.

●

Changes in the quality of the Corporation’s loan review system.

●

Changes in the nature and volume of the portfolio and in the terms of loans.

●

Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

The qualitative portion of the Corporation’s allowance on collectively evaluated loans are calculated using management judgement, to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative allowance is also contingent upon the relative weighting of the Q-factors according to management’s judgement.

Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date, less selling costs.

Accrued interest receivable for loans is included in the accrued interest receivable line item on the Corporation’s Condensed Consolidated Statements of Financial Condition. The Corporation elected not to measure an allowance for accrued interest receivable and instead elected to reverse accrued interest income on loans that are placed on non-performing status. A loan is deemed non-performing when it is 90 days or more delinquent and the Bank has stopped accruing interest income. Any outstanding interest receivable that has not been collected is reversed, disclosed accordingly; and therefore, no allowance is established. The Corporation believes this policy results in the timely reversal of potentially uncollectible interest.

Pursuant to ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures,” the Corporation may agree to different types of modifications, including principal forgiveness, interest rate reductions, term extension, significant payment delay or any combination of modifications noted above. During the quarter and nine months ended March 31, 2024, there were no loan modifications to borrowers experiencing financial difficulties.

Management believes the ACL on loans held for investment is maintained at a level sufficient to provide for expected losses on the Corporation’s loans held for investment based on historical loss experience, current conditions, and reasonable and supportable forecasts. The provision for (recovery of) credit losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the ACL at appropriate levels. Future adjustments to the ACL 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.

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 as modified 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 ACL. For modified loans that are less than 90 days delinquent, the ACL is segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their modification 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 modified 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 ACL on loans held for investment:


	For the Quarter Ended						For the Nine Months Ended
	March 31,						March 31,
(Dollars in Thousands)	2024			2023			2024			2023

ACL, beginning of period	$	7,000		$	5,830		$	5,946		$	5,564

Impact of ASC 326 CECL adoption⁽¹⁾		—			—			1,197			—

Provision for (recovery of) credit losses		108			169			(35)			430

Recoveries:
Mortgage loans:
Single-family		—			2			—			7
Total recoveries		—			2			—			7

Total charge-offs		—			—			—			—

Net recoveries (charge-offs)		—			2			—			7
ACL, end of period	$	7,108		$	6,001		$	7,108		$	6,001

ACL on loans as a percentage of gross loans held for investment		0.67	%		0.56	%		0.67	%		0.56	%
Net (recoveries) charge-offs as a percentage of average loans receivable, net, during the period (annualized)		—	%		—	%		—	%		—	%
ACL on loans as a percentage of gross non-performing loans at the end of the period		307.84	%		584.32	%		307.84	%		584.32	%

(1)	Represents the impact of adopting ASC 326 on July 1, 2023. Since that date, as a result of adopting ASC 326, the methodology to compute the ACL has been based on CECL methodology, rather than the previously applied incurred loss methodology.

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.


	March 31, 2024
			30-89 Days Past				Total Loans Held for
(In Thousands)	Current		Due		Non-Performing		Investment, Gross

Mortgage loans:
Single-family	$	514,420	$	386	$	2,233	$	517,039
Multi-family		457,401		—		—		457,401
Commercial real estate		83,136		—		—		83,136
Construction		2,745		—		—		2,745
Other		99		—		—		99
Commercial business loans		2,835		—		—		2,835
Consumer loans		58		2		—		60
Total loans held for investment, gross	$	1,060,694	$	388	$	2,233	$	1,063,315


	June 30, 2023
			30-89 Days Past				Total Loans Held for
(In Thousands)	Current		Due		Non-Performing		Investment, Gross

Mortgage loans:
Single-family	$	517,399	$	—	$	1,422	$	518,821
Multi-family		461,113		—		—		461,113
Commercial real estate		90,558		—		—		90,558
Construction		1,936		—		—		1,936
Other		106		—		—		106
Commercial business loans		1,565		—		—		1,565
Consumer loans		64		1		—		65
Total loans held for investment, gross	$	1,072,741	$	1	$	1,422	$	1,074,164

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


	Quarter Ended March 31, 2024
	Single-			Multi-			Commercial									Commercial
(Dollars In Thousands)	family			family			Real Estate			Construction			Other			Business			Consumer			Total
ACL:
ACL, beginning of period	$	6,235		$	642		$	73		$	36		$	2		$	12		$	—		$	7,000
Provision for (recovery of) credit losses		136			(41)			(8)			8			(1)			14			—			108
Recoveries		—			—			—			—			—			—			—			—
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	6,371		$	601		$	65		$	44		$	1		$	26		$	—		$	7,108

ACL:
Individually evaluated for impairment	$	37		$	—		$	—		$	—		$	—		$	—		$	—		$	37
Collectively evaluated for impairment		6,334			601			65			44			1			26			—			7,071
ACL, end of period	$	6,371		$	601		$	65		$	44		$	1		$	26		$	—		$	7,108

Loans held for investment:
Individually evaluated for impairment	$	1,138		$	—		$	—		$	—		$	—		$	—		$	—		$	1,138
Collectively evaluated for impairment		515,901			457,401			83,136			2,745			99			2,835			60			1,062,177
Total loans held for investment, gross	$	517,039		$	457,401		$	83,136		$	2,745		$	99		$	2,835		$	60		$	1,063,315
ACL on loans as a percentage of gross loans held for investment		1.23	%		0.13	%		0.08	%		1.60	%		1.01	%		0.92	%		—	%		0.67	%
Net (recoveries) charge-offs to average loans receivable, net during the period		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%


	Quarter Ended March 31, 2023
	Single-			Multi-			Commercial									Commercial
(Dollars In Thousands)	family			family			Real Estate			Construction				Other		Business			Consumer			Total
ACL:
ACL, beginning of period	$	1,600		$	3,300		$	847		$	17		$	3		$	58		$	5		$	5,830
Provision for (recovery of) credit losses		127			7			21			4			(1)			12			(1)			169
Recoveries		2			—			—			—			—			—			—			2
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	1,729		$	3,307		$	868		$	21		$	2		$	70		$	4		$	6,001

ACL:
Individually evaluated for impairment	$	38		$	—		$	—		$	—		$	—		$	—		$	—		$	38
Collectively evaluated for impairment		1,691			3,307			868			21			2			70			4			5,963
ACL, end of period	$	1,729		$	3,307		$	868		$	21		$	2		$	70		$	4		$	6,001

Loans held for investment:
Individually evaluated for impairment	$	804		$	—		$	—		$	—		$	—		$	—		$	—		$	804
Collectively evaluated for impairment		511,828			466,332			90,496			2,891			108			1,640			61			1,073,356
Total loans held for investment, gross	$	512,632		$	466,332		$	90,496		$	2,891		$	108		$	1,640		$	61		$	1,074,160
ACL on loans as a percentage of gross loans held for investment		0.34	%		0.71	%		0.96	%		0.73	%		1.85	%		4.27	%		6.56	%		0.56	%
Net (recoveries) charge-offs to average loans receivable, net during the period		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%


	Nine Months Ended March 31, 2024
							Commercial									Commercial
(Dollars In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
ACL:
ACL, beginning of period	$	1,720		$	3,270		$	868		$	15		$	2		$	67		$	4		$	5,946
Adjustment to allowance for adoption of ASC 326		4,605			(2,614)			(786)			47			3			(54)			(4)			1,197
Provision for (recovery of) credit losses		46			(55)			(17)			(18)			(4)			13			—			(35)
Recoveries		—			—			—			—			—			—			—			—
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	6,371		$	601		$	65		$	44		$	1		$	26		$	—		$	7,108

ACL:
Individually evaluated for impairment	$	37		$	—		$	—		$	—		$	—		$	—		$	—		$	37
Collectively evaluated for impairment		6,334			601			65			44			1			26			—			7,071
ACL, end of period	$	6,371		$	601		$	65		$	44		$	1		$	26		$	—		$	7,108

Loans held for investment:
Individually evaluated for impairment	$	1,138		$	—		$	—		$	—		$	—		$	—		$	—		$	1,138
Collectively evaluated for impairment		515,901			457,401			83,136			2,745			99			2,835			60			1,062,177
Total loans held for investment, gross	$	517,039		$	457,401		$	83,136		$	2,745		$	99		$	2,835		$	60		$	1,063,315
ACL on loans as a percentage of gross loans held for investment		1.23	%		0.13	%		0.08	%		1.60	%		1.01	%		0.92	%		—	%		0.67	%
Net (recoveries) charge-offs to average loans receivable, net during the period		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%


	Nine Months Ended March 31, 2023
							Commercial									Commercial
(Dollars In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
ACL:
ACL, beginning of period	$	1,383		$	3,282		$	816		$	23		$	3		$	52		$	5		$	5,564
Provision for (recovery of) credit losses		339			25			52			(2)			(1)			18			(1)			430
Recoveries		7			—			—			—			—			—			—			7
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	1,729		$	3,307		$	868		$	21		$	2		$	70		$	4		$	6,001

ACL:
Individually evaluated for impairment	$	38		$	—		$	—		$	—		$	—		$	—		$	—		$	38
Collectively evaluated for impairment		1,691			3,307			868			21			2			70			4			5,963
ACL, end of period	$	1,729		$	3,307		$	868		$	21		$	2		$	70		$	4		$	6,001

Loans held for investment:
Individually evaluated for impairment	$	804		$	—		$	—		$	—		$	—		$	—		$	—		$	804
Collectively evaluated for impairment		511,828			466,332			90,496			2,891			108			1,640			61			1,073,356
Total loans held for investment, gross	$	512,632		$	466,332		$	90,496		$	2,891		$	108		$	1,640		$	61		$	1,074,160
ACL on loans as a percentage of gross loans held for investment		0.34	%		0.71	%		0.96	%		0.73	%		1.85	%		4.27	%		6.56	%		0.56	%
Net (recoveries) charge-offs to average loans receivable, net during the period		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%

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-performing 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 have been (a) collectively evaluated using a pooling method analysis or (b) 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 allowance is needed.


	At March 31, 2024
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		ACL⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,903	$	—	$	1,903	$	(63)	$	1,840
Without a related allowance⁽²⁾		431		(25)		406		—		406
Total single-family loans		2,334		(25)		2,309		(63)		2,246

Total non-performing loans	$	2,334	$	(25)	$	2,309	$	(63)	$	2,246

(1)	ACL, specifically assigned to the individual loan.

(2)	There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance.


	At June 30, 2023
	Unpaid		Related						Net
	Principal		Charge-offs		Recorded				Recorded
(In Thousands)	Balance		Related		Investment		ACL⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,171	$	—	$	1,171	$	(122)	$	1,049
Without a related allowance⁽²⁾		276		(25)		251		—		251
Total single-family loans		1,447		(25)		1,422		(122)		1,300

Total non-performing loans	$	1,447	$	(25)	$	1,422	$	(122)	$	1,300

(1)	ACL, specifically assigned to the individual loan.

(2)	There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance.

At March 31, 2024, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

For the quarters ended March 31, 2024 and 2023, the Corporation’s average recorded investment in non-performing loans was $2.1 million and $1.0 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, 2024, the Bank received $41,000 in interest payments from non-performing loans, of which $41,000 was recognized as interest income and none was applied to reduce the loan balances under the cost recovery method. In comparison, for the quarter ended March 31, 2023, the Bank received $15,000 in interest payments from non-performing loans, of which $13,000 was recognized as interest income and the remaining $2,000 was applied to reduce the loan balances under the cost recovery method.

For the nine months ended March 31, 2024 and 2023, the Corporation’s average recorded investment in non-performing loans was $1.7 million and $1.1 million, respectively. For the nine months ended March 31, 2024, the Bank received $80,000 in interest payments from non-performing loans, of which $80,000 was recognized as interest income and none was applied to reduce the loan balances under the cost recovery method. In comparison, for the nine months ended March 31, 2023, the Bank received $38,000 in interest payments from non-performing loans, of which $33,000 was recognized as interest income and the remaining $5,000 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, 2024 and 2023:


		Quarter Ended March 31,
	2024				2023
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related ACL:
Mortgage loans:
Single-family	$	296	$	8	$	57	$	—
		296		8		57		—

With related ACL:
Mortgage loans:
Single-family		1,852		33		973		13
		1,852		33		973		13

Total	$	2,148	$	41	$	1,030	$	13


	Nine Months Ended March 31,
	2024				2023
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related ACL:
Mortgage loans:
Single-family	$	206	$	16	$	87	$	—
		206		16		87		—

With related ACL:
Mortgage loans:
Single-family		1,454		64		983		33
		1,454		64		983		33

Total	$	1,660	$	80	$	1,070	$	33

During the quarters ended March 31, 2024 and 2023, no properties were acquired in the settlement of loans and no previously foreclosed upon properties were sold. For the nine months ended March 31, 2024 and 2023, no properties were acquired in the settlement of loans and no previously foreclosed upon properties were sold, except for one foreclosed property that was immediately sold with no losses in the second quarter of fiscal 2024. 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. As of both March 31, 2024 and June 30, 2023, there was no real estate owned property. Any initial loss upon repossession is recorded as a charge to the ACL 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.

As outlined in the implementation of ASC 326, the Bank includes the off-balance sheet reserve for unfunded loan commitments within the provision for (recovery of) credit losses.

The following table provides information regarding the unfunded loan commitment reserve for the quarters and nine months ended March 31, 2024 and 2023.


	For the Quarter Ended				For the Nine Months Ended
	March 31,				March 31,
(In Thousands)	2024		2023		2024		2023
Balance, beginning of the period	$	10	$	71	$	42	$	130
Impact of ASC 326 CECL adoption		—		—		—		—
Provision for (recovery of) credit losses		16		3		(16)		(56)
Balance, end of the period	$	26	$	74	$	26	$	74

The method for calculating the unfunded commitment reserve is based on a historical funding rate applied to the undisbursed loan amount to estimate an average outstanding amount during the life of the loan commitment. The Corporation applies the same assumptions and methodologies by loan groupings to these unfunded loan commitments as it does for its funded loans held for investment to determine the reserve rate and the allowance. Assumptions are evaluated by management periodically as part of the CECL procedures. The unfunded loan commitment reserve is recorded in Accounts payable, accrued interest and other liabilities on the Condensed Consolidated Statements of Financial Condition.