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Loans Held for Investment

3 Months Ended

Sep. 30, 2024

Note 5: Loans Held for Investment

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


	September 30,		June 30,
(In Thousands)	2024		2024
Mortgage loans:
Single-family	$	524,235	$	518,091
Multi-family		435,782		445,182
Commercial real estate		81,169		83,349
Construction		2,816		2,692
Other		92		95
Commercial business loans		1,510		1,372
Consumer loans		63		65
Total loans held for investment, gross		1,045,667		1,050,846

Advance payments of escrows		127		102
Deferred loan costs, net		9,168		9,096
ACL on loans		(6,329)		(7,065)
Total loans held for investment, net	$	1,048,633	$	1,052,979

The following table sets forth information at September 30, 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 September 30, 2024 and June 30, 2024, fixed rate loans comprised 11 percent and 10 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	$	49,597	$	32,129	$	122,075	$	210,289	$	110,145	$	524,235
Multi-family		180,273		153,535		100,760		1,121		93		435,782
Commercial real estate		33,528		26,248		21,009		—		384		81,169
Construction		2,816		—		—		—		—		2,816
Other		—		—		—		—		92		92
Commercial business loans		1,362		—		—		—		148		1,510
Consumer loans		63		—		—		—		—		63
Total loans held for investment, gross	$	267,639	$	211,912	$	243,844	$	211,410	$	110,862	$	1,045,667

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


		Owner		Non-Owner			% of Total			Weighted
September 30, 2024		Occupied Loan		Occupied Loan		Total		Commercial		Average
(Dollars in Thousands)	Balance			Balance		Balance	Real Estate			LTV ⁽¹⁾
Office	$	5,818	$	20,931	$	26,749		33	%	42	%
Mixed use⁽²⁾		289		15,673		15,962		20		35	%
Retail		—		11,108		11,108		14		31	%
Warehouse		2,063		9,649		11,712		14		29	%
Medical/dental office		2,426		4,576		7,002		9		46	%
Mobile home park		—		6,873		6,873		8		38	%
Restaurant/fast food		688		498		1,186		1		40	%
Automotive - non gasoline		—		577		577		1		26	%
Total commercial real estate	$	11,284	$	69,885	$	81,169		100	%	37	%

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

(2)	Mixed use includes $6.9 million in Office/Retail, $4.7 million in Multi-family/Retail, $3.0 million in Other Mixed Use, $750,000 in Multi-family/Commercial and $679,000 in Multi-family/Office.


		Owner		Non-Owner			% of Total			Weighted
June 30, 2024		Occupied Loan		Occupied Loan		Total		Commercial		Average
(Dollars in Thousands)	Balance			Balance		Balance	Real Estate			LTV ⁽¹⁾
Office	$	6,690	$	20,084	$	26,774		32	%	43	%
Mixed use⁽²⁾		293		15,797		16,090		19		35	%
Retail		—		12,501		12,501		15		30	%
Warehouse		2,076		9,848		11,924		14		31	%
Mobile home park		—		6,909		6,909		8		38	%
Medical/dental office		2,439		4,645		7,084		9		44	%
Restaurant/fast food		690		500		1,190		2		46	%
Automotive - non gasoline		—		578		578		1		26	%
Live/work		—		299		299		—		13	%
Total commercial real estate	$	12,188	$	71,161	$	83,349		100	%	37	%

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

(2)	Mixed use includes $6.9 million in Office/Retail, $4.7 million in Multi-family/Retail, $3.0 million in Other Mixed Use, $754,000 in Multi-family/Commercial and $685,000 in Multi-family/Office..

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


	Inland				Southern				Other
September 30, 2024	Empire⁽¹⁾				California⁽²⁾				California				Total
(Dollars in Thousands)	Balance		%		Balance		%		Balance		%		Balance		%
Owner occupied:
Office	$	696	12	%	$	4,933	85	%	$	189	3	%	$	5,818	100	%
Mixed use		—	—	%		—	—	%		289	100	%		289	100	%
Warehouse		—	—	%		1,679	81	%		384	19	%		2,063	100	%
Medical/dental office		275	11	%		1,782	74	%		369	15	%		2,426	100	%
Restaurant/fast food		—	—	%		688	100	%		—	—	%		688	100	%
Total owner occupied		971	9	%		9,082	80	%		1,231	11	%		11,284	100	%

Non-owner occupied:
Office		3,914	19	%		13,753	66	%		3,264	15	%		20,931	100	%
Mixed use		473	3	%		6,209	40	%		8,991	57	%		15,673	100	%
Retail		1,043	9	%		6,503	59	%		3,562	32	%		11,108	100	%
Warehouse		600	6	%		4,749	49	%		4,300	45	%		9,649	100	%
Mobile home park		4,834	70	%		356	5	%		1,683	25	%		6,873	100	%
Medical/dental office		1,765	39	%		2,126	46	%		685	15	%		4,576	100	%
Restaurant/fast food		—	—	%		498	100	%		—	—	%		498	100	%
Automotive - non gasoline		—	—	%		577	100	%		—	—	%		577	100	%
Total non-owner occupied		12,629	18	%		34,771	50	%		22,485	32	%		69,885	100	%

Total commercial real estate	$	13,600	17	%	$	43,853	54	%	$	23,716	29	%	$	81,169	100	%

(1)Inland Empire comprised of San Bernardino and Riverside counties.

(2)Other than the Inland Empire.


	Inland				Southern				Other
June 30, 2024	Empire⁽¹⁾				California⁽²⁾				California				Total
(Dollars in Thousands)	Balance		%		Balance		%		Balance		%		Balance		%
Owner occupied:
Office	$	1,540	23	%	$	4,959	74	%	$	191	3	%	$	6,690	100	%
Mixed use		—	—	%		—	—	%		293	100	%		293	100	%
Warehouse		—	—	%		1,689	81	%		387	19	%		2,076	100	%
Medical/dental office		276	11	%		1,791	74	%		372	15	%		2,439	100	%
Restaurant/fast food		—	—			690	100	%		—	—	%		690	100	%
Total owner occupied		1,816	15	%		9,129	75	%		1,243	10	%		12,188	100	%

Non-owner occupied:
Office		2,951	15	%		13,837	69	%		3,296	16	%		20,084	100	%
Mixed use		505	3	%		6,243	40	%		9,049	57	%		15,797	100	%
Retail		1,050	8	%		6,996	56	%		4,455	36	%		12,501	100	%
Warehouse		605	6	%		4,774	49	%		4,469	45	%		9,848	100	%
Mobile home park		4,859	70	%		358	5	%		1,692	25	%		6,909	100	%
Medical/dental office		1,797	39	%		2,159	46	%		689	15	%		4,645	100	%
Restaurant/fast food		—	—	%		500	100	%		—	—	%		500	100	%
Automotive - non gasoline		—	—	%		578	100	%		—	—	%		578	100	%
Live/work		—	—	%		—	—	%		299	100	%		299	100	%
Total non-owner occupied		11,767	16	%		35,445	50	%		23,949	34	%		71,161	100	%

Total commercial real estate	$	13,583	16	%	$	44,574	54	%	$	25,192	30	%	$	83,349	100	%

(1)	Inland Empire comprised of San Bernardino and Riverside counties.

(2)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 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 – A pass loan ranges 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 Corporation 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 September 30, 2024:


September 30, 2024	Term Loans by Year of Origination												Revolving
(In Thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
Mortgage loans:
Single-family:
Pass	$	41,843	$	57,053	$	203,838	$	146,983	$	17,315	$	55,137	$	11	$	522,180
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		2,055		-		2,055
Total single-family		41,843		57,053		203,838		146,983		17,315		57,192		11		524,235
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Multi-family:
Pass		15,539		28,819		75,389		85,494		59,775		168,609		-		433,625
Special Mention		-		-		-		-		-		635		-		635
Substandard		-		-		-		475		-		1,047		-		1,522
Total multi-family		15,539		28,819		75,389		85,969		59,775		170,291		-		435,782
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial real estate:
Pass		4,853		13,234		23,165		3,984		5,414		30,101		-		80,751
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		418		-		-		-		-		-		418
Total commercial real estate		4,853		13,652		23,165		3,984		5,414		30,101		-		81,169
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction:
Pass		1,480		236		1,100		-		-		-		-		2,816
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction		1,480		236		1,100		-		-		-		-		2,816
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other:
Pass		-		-		-		-		92		-		-		92
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other		-		-		-		-		92		-		-		92
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial business loans:
Pass		-		-		124		-		-		-		1,386		1,510
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial business loans		-		-		124		-		-		-		1,386		1,510
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer loans:
Not graded		22		-		-		-		-		-		-		22
Pass		-		-		-		-		-		-		41		41
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer loans		22		-		-		-		-		-		41		63
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total loans held for investment, gross	$	63,737	$	99,760	$	303,616	$	236,936	$	82,596	$	257,584	$	1,438	$	1,045,667
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, 2024:


June 30, 2024	Term Loans by Year of Origination												Revolving
(In Thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
Mortgage loans:
Single-family:
Pass	$	19,476	$	60,688	$	205,817	$	149,084	$	19,606	$	59,702	$	14	$	514,387
Special Mention		-		-		-		-		-		1,111		-		1,111
Substandard		-		-		-		-		-		2,593		-		2,593
Total single-family		19,476		60,688		205,817		149,084		19,606		63,406		14		518,091
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Multi-family:
Pass		10,374		28,892		75,876		86,916		60,938		180,119		-		443,115
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		478		-		1,589		-		2,067
Total multi-family		10,374		28,892		75,876		87,394		60,938		181,708		-		445,182
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial real estate:
Pass		3,874		13,763		23,298		4,018		5,450		32,946		-		83,349
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial real estate		3,874		13,763		23,298		4,018		5,450		32,946		-		83,349
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction:
Pass		1,480		228		984		-		-		-		-		2,692
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction		1,480		228		984		-		-		-		-		2,692
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other:
Pass		-		-		-		-		95		-		-		95
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other		-		-		-		-		95		-		-		95
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial business loans:
Pass		-		-		133		-		-		-		1,239		1,372
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial business loans		-		-		133		-		-		-		1,239		1,372
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer loans:
Not graded		23		-		-		-		-		-		-		23
Pass		-		-		-		-		-		-		42		42
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer loans		23		-		-		-		-		-		42		65
Current period gross charge-off	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total loans held for investment, gross	$	35,227	$	103,571	$	306,108	$	240,496	$	86,089	$	278,060	$	1,295	$	1,050,846
Total current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The ACL is a valuation account that is deducted from the related loans’ 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 changes in the ACL recorded through an entry to the provision for (recovery of) 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 the Office of Comptroller of the Currency’s 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 relies 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 the 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”) are considered by management and 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, volume and terms of loans in the portfolio.

●

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 judgment, 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 judgment.

Loans that do not share similar risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable or 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 accrued interest receivable in the 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. 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 quarters ended September 30, 2024 and 2023, 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 previously 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. A non-performing loan can be restored to accrual status when a borrower is current in payments for six consecutive months.

The following table discloses additional details for the periods indicated on the Corporation’s ACL on loans held for investment:


	For the Quarter Ended
	September 30,
(Dollars in Thousands)	2024			2023

ACL, beginning of period	$	7,065		$	5,946

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

(Recovery of) provision for credit losses		(736)			536

Total recoveries		—			—

Total charge-offs		—			—

Net recoveries (charge-offs)		—			—
ACL, end of period	$	6,329		$	7,679

ACL on loans as a percentage of gross loans held for investment		0.61	%		0.72	%
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		297.00	%		545.38	%

(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.


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

Mortgage loans:
Single-family	$	522,180	$	—	$	2,055	$	524,235
Multi-family		435,782		—		—		435,782
Commercial real estate		81,169		—		—		81,169
Construction		2,816		—		—		2,816
Other		92		—		—		92
Commercial business loans		1,510		—		—		1,510
Consumer loans		61		2		—		63
Total loans held for investment, gross	$	1,043,610	$	2	$	2,055	$	1,045,667


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

Mortgage loans:
Single-family	$	515,498	$	—	$	2,593	$	518,091
Multi-family		445,182		—		—		445,182
Commercial real estate		83,349		—		—		83,349
Construction		2,692		—		—		2,692
Other		95		—		—		95
Commercial business loans		1,372		—		—		1,372
Consumer loans		64		1		—		65
Total loans held for investment, gross	$	1,048,252	$	1	$	2,593	$	1,050,846

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 September 30, 2024
	Single-			Multi-			Commercial									Commercial
(Dollars In Thousands)	family			family			Real Estate			Construction			Other			Business			Consumer			Total
ACL:
ACL, beginning of period	$	6,295		$	595		$	66		$	97		$	1		$	11		$	—		$	7,065
Recovery of credit losses		(616)			(92)			(8)			(19)			—			(1)			—			(736)
Recoveries		—			—			—			—			—			—			—			—
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	5,679		$	503		$	58		$	78		$	1		$	10		$	—		$	6,329

ACL:
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated for impairment		5,679			503			58			78			1			10			—			6,329
ACL, end of period	$	5,679		$	503		$	58		$	78		$	1		$	10		$	—		$	6,329

Loans held for investment:
Individually evaluated for impairment	$	732		$	—		$	—		$	—		$	—		$	—		$	—		$	732
Collectively evaluated for impairment		523,503			435,782			81,169			2,816			92			1,510			63			1,044,935
Total loans held for investment, gross	$	524,235		$	435,782		$	81,169		$	2,816		$	92		$	1,510		$	63		$	1,045,667
ACL on loans as a percentage of gross loans held for investment		1.08	%		0.12	%		0.07	%		2.77	%		1.09	%		0.66	%		—	%		0.61	%
Net (recoveries) charge-offs to average loans receivable, net during the period		—	%		—	%		—	%		—	%		—	%		—	%		—	%		—	%


	Quarter Ended September 30, 2023
	Single-			Multi-			Commercial									Commercial
(Dollars In Thousands)	family			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		550			3			(6)			(8)			(1)			(2)			—			536
Recoveries		—			—			—			—			—			—			—			—
Charge-offs		—			—			—			—			—			—			—			—
ACL, end of period	$	6,875		$	659		$	76		$	54		$	4		$	11		$	—		$	7,679

ACL:
Individually evaluated for impairment	$	37		$	—		$	—		$	—		$	—		$	—		$	—		$	37
Collectively evaluated for impairment		6,838			659			76			54			4			11			—			7,642
ACL, end of period	$	6,875		$	659		$	76		$	54		$	4		$	11		$	—		$	7,679

Loans held for investment:
Individually evaluated for impairment	$	990		$	—		$	—		$	—		$	—		$	—		$	—		$	990
Collectively evaluated for impairment		520,586			457,351			87,954			2,100			104			1,321			62			1,069,478
Total loans held for investment, gross	$	521,576		$	457,351		$	87,954		$	2,100		$	104		$	1,321		$	62		$	1,070,468
ACL on loans as a percentage of gross loans held for investment		1.32	%		0.14	%		0.09	%		2.57	%		3.85	%		0.83	%		—	%		0.72	%
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 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 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 allowance amount needed or may conclude that no allowance is needed.


	At September 30, 2024
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		ACL⁽¹⁾		Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,399	$	—	$	1,399	$	(25)	$	1,374
Without a related allowance⁽²⁾		757		(25)		732		—		732
Total single-family loans		2,156		(25)		2,131		(25)		2,106

Total non-performing loans	$	2,156	$	(25)	$	2,131	$	(25)	$	2,106

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

Mortgage loans:
Single-family:
With a related allowance	$	2,267	$	—	$	2,267	$	(73)	$	2,194
Without a related allowance⁽²⁾		427		(25)		402		—		402
Total single-family loans		2,694		(25)		2,669		(73)		2,596

Total non-performing loans	$	2,694	$	(25)	$	2,669	$	(73)	$	2,596

(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 September 30, 2024, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

For the quarters ended September 30, 2024 and 2023, the Corporation’s average recorded investment in non-performing loans was $2.4 million and $1.4 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 September 30, 2024, the Bank received $39,000 in interest payments from non-performing loans, of which all $39,000 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 September 30, 2023, the Bank received $18,000 in interest payments from non-performing loans, of which all $18,000 was recognized as interest income and none 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 ended September 30, 2024 and 2023:


		Quarter Ended September 30,
	2024				2023
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related ACL:
Mortgage loans:
Single-family	$	843	$	5	$	250	$	—
		843		5		250		—

With related ACL:
Mortgage loans:
Single-family		1,582		34		1,163		18
		1,582		34		1,163		18

Total	$	2,425	$	39	$	1,413	$	18

During the quarters ended September 30, 2024 and 2023, no properties were acquired in the settlement of loans and no previously foreclosed upon properties were sold. 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 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 of both September 30, 2024 and June 30, 2024, there was no real estate owned property.

The Bank adjusts the reserve for unfunded loan commitments through the provision for (recovery of) credit losses.

The following table provides information regarding the unfunded loan commitment reserve for the quarters ended September 30, 2024 and 2023.


	For the Quarter Ended
	September 30,
(In Thousands)	2024		2023
Balance, beginning of the period	$	57	$	42
Provision for credit losses		39		9
Balance, end of the period	$	96	$	51

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.