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Note 3 - Loans Receivable

3 Months Ended

Mar. 31, 2026

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 - Loans Receivable

The Company has identified three segments of its loan portfolio that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: Real Estate Loans, Consumer Loans and Commercial Business Loans. These segments are further disaggregated into classes based on similar attributes and risk characteristics.

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and unamortized purchase premiums of $22.1 million as of March 31, 2026 and $21.5 million as of December 31, 2025. The amortized cost reflected in total loans receivable does not include accrued interest receivable. Accrued interest receivable on loans was $5.3 million as of March 31, 2026 and $5.0 million as of December 31, 2025, and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

The amortized cost of loans receivable, net of the allowance for credit losses on loans ("ACLL"), consisted of the following at the dates indicated:

(dollars in thousands)	March 31, 2026			December 31, 2025
Real Estate:
One-to-four family	$	362,984		$	376,731
Multi-family		270,979			288,529
Commercial real estate		403,243			402,683
Construction and land		62,347			61,268
Total real estate loans		1,099,553			1,129,211
Consumer:
Home equity		86,292			85,088
Auto and other consumer		290,960			283,502
Total consumer loans		377,252			368,590
Commercial business loans		152,591			130,311
Total loans receivable		1,629,396			1,628,112
Less:
Derivative basis adjustment		(406	)		(903	)
Allowance for credit losses on loans		16,823			16,987
Total loans receivable, net	$	1,612,979		$	1,612,028

Nonaccrual Loans. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on either the cash basis or cost recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For those loans placed on nonaccrual status due to payment delinquency, return to accrual status will generally not occur until the borrower demonstrates repayment ability over a period of not less than six months.

The following table presents the amortized cost of nonaccrual loans by class of loan at the dates indicated:

	March 31, 2026						December 31, 2025
(dollars in thousands)	Nonaccrual Loans with ACLL		Nonaccrual Loans with No ACLL		Total Nonaccrual Loans		Nonaccrual Loans with ACLL		Nonaccrual Loans with No ACLL		Total Nonaccrual Loans
One-to-four family	$	88	$	2,433	$	2,521	$	91	$	2,181	$	2,272
Commercial real estate		26		9,593		9,619		5		9,740		9,745
Construction and land		4		4,160		4,164		7		5,139		5,146
Home equity		53		—		53		53		—		53
Auto and other consumer		24		1,256		1,280		25		1,061		1,086
Commercial business		384		3,678		4,062		303		3,990		4,293
Total nonaccrual loans	$	579	$	21,120	$	21,699	$	484	$	22,111	$	22,595

Interest income recognized on a cash basis on nonaccrual loans for the three months ended March 31, 2026 and 2025, was $133,000 and $8,000, respectively.

Past due loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. There were no loans past due 90 days or more and still accruing interest at March 31, 2026 and December 31, 2025.

The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of March 31, 2026.

	30-59 Days		60-89 Days		90 Days or More		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
Real Estate:
One-to-four family	$	894	$	457	$	1,326	$	2,677	$	360,307	$	362,984
Multi-family		—		—		—		—		270,979		270,979
Commercial real estate		232		—		3,435		3,667		399,576		403,243
Construction and land		—		—		4,160		4,160		58,187		62,347
Total real estate loans		1,126		457		8,921		10,504		1,089,049		1,099,553
Consumer:
Home equity		107		—		—		107		86,185		86,292
Auto and other consumer		3,119		866		1,256		5,241		285,719		290,960
Total consumer loans		3,226		866		1,256		5,348		371,904		377,252
Commercial business loans		400		—		2,823		3,223		149,368		152,591
Total loans	$	4,752	$	1,323	$	13,000	$	19,075	$	1,610,321	$	1,629,396

The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of December 31, 2025.

	30-59 Days		60-89 Days		90 Days or More		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
Real Estate:
One-to-four family	$	867	$	1,288	$	523	$	2,678	$	374,053	$	376,731
Multi-family		—		—		—		—		288,529		288,529
Commercial real estate		3,435		—		—		3,435		399,248		402,683
Construction and land		1		—		5,146		5,147		56,121		61,268
Total real estate loans		4,303		1,288		5,669		11,260		1,117,951		1,129,211
Consumer:
Home equity		—		—		53		53		85,035		85,088
Auto and other consumer		3,565		528		1,062		5,155		278,347		283,502
Total consumer loans		3,565		528		1,115		5,208		363,382		368,590
Commercial business loans		19		2,686		270		2,975		127,336		130,311
Total loans	$	7,887	$	4,502	$	7,054	$	19,443	$	1,608,669	$	1,628,112

Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings 6, 7, and 8 in our 8-point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.

When First Fed classifies problem assets as either substandard or doubtful, it may choose to individually evaluate the expected credit loss or may determine that the characteristics are not significantly different from those in pooled loan analysis. The Company evaluates individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that do not currently expose First Fed to sufficient risk to warrant classification as substandard or doubtful but possess identified weaknesses are designated as either watch or special mention assets; risk ratings 4 and 5 in our risk rating system, respectively. Loans not otherwise classified are considered pass graded loans and are rated 1-3 in our risk rating system.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of March 31, 2026, as well as gross charge-off activity for the three months ended March 31, 2026. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination or Most Recent Renewal or Extension ⁽¹⁾												Revolving		Total
(dollars in thousands)	2026		2025		2024		2023		2022		Prior		Loans		Loans
One-to-four family
Pass (Grades 1-3)	$	455	$	6,920	$	3,156	$	7,977	$	124,295	$	213,595	$	—	$	356,398
Watch (Grade 4)		—		—		385		—		291		2,853		—		3,529
Special Mention (Grade 5)		—		—		—		—		457		79		—		536
Substandard (Grade 6)		—		—		—		—		783		1,738		—		2,521
Total one-to-four family		455		6,920		3,541		7,977		125,826		218,265		—		362,984
Gross charge-offs year-to-date		—		—		—		—		—		—		—		—
Multi-family
Pass (Grades 1-3)		7,902		8,063		17,681		22,294		68,620		76,328		—		200,888
Watch (Grade 4)		3,277		5,809		9,694		—		15,084		26,980		—		60,844
Special Mention (Grade 5)		—		4,532		—		—		4,715		—		—		9,247
Total multi-family		11,179		18,404		27,375		22,294		88,419		103,308		—		270,979
Gross charge-offs year-to-date		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass (Grades 1-3)		8,736		58,204		14,022		42,480		49,152		153,275		—		325,869
Watch (Grade 4)		—		3,644		14,591		—		12,033		14,106		—		44,374
Special Mention (Grade 5)		—		—		—		—		5,451		5,149		—		10,600
Substandard (Grade 6)		12,781		9,593		—		—		26		—		—		22,400
Total commercial real estate		21,517		71,441		28,613		42,480		66,662		172,530		—		403,243
Gross charge-offs year-to-date		—		3		—		—		—		—		—		3
Construction and Land
Pass (Grades 1-3)		10,288		26,083		17,969		264		1,371		1,782		—		57,757
Watch (Grade 4)		426		—		—		—		—		—		—		426
Substandard (Grade 6)		—		—		—		4,160		—		4		—		4,164
Total construction and land		10,714		26,083		17,969		4,424		1,371		1,786		—		62,347
Gross charge-offs year-to-date		—		—		—		171		—		—		—		171
Home Equity
Pass (Grades 1-3)		1,463		6,092		4,080		4,158		4,702		9,304		55,507		85,306
Watch (Grade 4)		—		188		116		180		131		116		153		884
Substandard (Grade 6)		—		—		—		—		—		49		53		102
Total home equity		1,463		6,280		4,196		4,338		4,833		9,469		55,713		86,292
Gross charge-offs year-to-date		—		—		—		—		—		—		—		—
Auto and Other Consumer
Pass (Grades 1-3)		21,112		64,843		51,394		29,393		38,904		78,869		859		285,374
Watch (Grade 4)		—		78		936		817		692		940		1		3,464
Special Mention (Grade 5)		—		—		134		509		32		167		—		842
Substandard (Grade 6)		—		—		90		651		367		172		—		1,280
Total auto and other consumer		21,112		64,921		52,554		31,370		39,995		80,148		860		290,960
Gross charge-offs year-to-date		—		—		7		100		102		45		22		276
Commercial business
Pass (Grades 1-3)		2,628		11,325		20,959		10,958		5,210		45,490		41,856		138,426
Watch (Grade 4)		4		3,326		1,518		1		243		12		1,299		6,403
Special Mention (Grade 5)		—		—		1,458		90		866		8		1,187		3,609
Substandard (Grade 6)		—		314		78		165		3,444		152		—		4,153
Total commercial business		2,632		14,965		24,013		11,214		9,763		45,662		44,342		152,591
Gross charge-offs year-to-date		—		4		4		—		11		114		—		133
Total loans
Pass (Grades 1-3)		52,584		181,530		129,261		117,524		292,254		578,643		98,222		1,450,018
Watch (Grade 4)		3,707		13,045		27,240		998		28,474		45,007		1,453		119,924
Special Mention (Grade 5)		—		4,532		1,592		599		11,521		5,403		1,187		24,834
Substandard (Grade 6)		12,781		9,907		168		4,976		4,620		2,115		53		34,620
Total loans	$	69,072	$	209,014	$	158,261	$	124,097	$	336,869	$	631,168	$	100,915	$	1,629,396
Total gross charge-offs year-to-date	$	—	$	7	$	11	$	271	$	113	$	159	$	22	$	583

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2025, as well as gross charge-off activity for the year then ended. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination or Most Recent Renewal or Extension ⁽¹⁾												Revolving		Total
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		Loans		Loans
One-to-four family
Pass (Grades 1-3)	$	7,571	$	4,066	$	8,065	$	128,413	$	109,134	$	113,570	$	—	$	370,819
Watch (Grade 4)		—		387		—		292		—		2,355		—		3,034
Special Mention (Grade 5)		—		—		—		529		—		43		—		572
Substandard (Grade 6)		—		—		—		259		—		2,047		—		2,306
Total one-to-four family		7,571		4,453		8,065		129,493		109,134		118,015		—		376,731
Gross charge-offs for the year		—		—		—		—		—		—		—		—
Multi-family
Pass (Grades 1-3)		8,081		17,738		17,820		80,638		51,091		37,775		—		213,143
Watch (Grade 4)		5,825		9,732		—		22,204		24,889		4,902		—		67,552
Special Mention (Grade 5)		4,531		—		3,303		—		—		—		—		7,834
Total multi-family		18,437		27,470		21,123		102,842		75,980		42,677		—		288,529
Gross charge-offs for the year		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass (Grades 1-3)		61,864		21,177		44,009		50,828		70,765		89,639		—		338,282
Watch (Grade 4)		3,671		7,572		—		12,118		6,204		3,120		—		32,685
Special Mention (Grade 5)		—		—		—		4,251		3,419		1,771		—		9,441
Substandard (Grade 6)		9,740		—		—		5		12,530		—		—		22,275
Total commercial real estate		75,275		28,749		44,009		67,202		92,918		94,530		—		402,683
Gross charge-offs for the year		985		—		—		—		5,586		—		—		6,571
Construction and Land
Pass (Grades 1-3)		26,259		24,510		351		1,571		1,477		422		—		54,590
Watch (Grade 4)		—		1,532		—		—		—		—		—		1,532
Substandard (Grade 6)		—		—		5,139		—		—		7		—		5,146
Total construction and land		26,259		26,042		5,490		1,571		1,477		429		—		61,268
Gross charge-offs for the year		—		—		1,884		—		—		—		—		1,884
Home Equity
Pass (Grades 1-3)		6,552		4,290		4,257		4,841		3,641		6,138		54,422		84,141
Watch (Grade 4)		—		117		182		132		—		23		280		734
Special Mention (Grade 5)		—		—		—		—		—		9		101		110
Substandard (Grade 6)		—		—		—		—		—		50		53		103
Total home equity		6,552		4,407		4,439		4,973		3,641		6,220		54,856		85,088
Gross charge-offs for the year		—		—		—		—		—		—		—		—
Auto and Other Consumer
Pass (Grades 1-3)		65,818		54,755		30,871		41,590		50,744		32,830		822		277,430
Watch (Grade 4)		—		1,023		1,167		1,522		386		146		1		4,245
Special Mention (Grade 5)		79		126		393		43		24		76		—		741
Substandard (Grade 6)		—		85		640		262		—		99		—		1,086
Total auto and other consumer		65,897		55,989		33,071		43,417		51,154		33,151		823		283,502
Gross charge-offs for the year		—		22		228		313		13		32		137		745
Commercial business
Pass (Grades 1-3)		11,921		21,923		12,145		5,452		2,889		19,955		41,274		115,559
Watch (Grade 4)		3,447		1,638		565		251		13		250		1,280		7,444
Special Mention (Grade 5)		—		1,457		99		910		211		112		130		2,919
Substandard (Grade 6)		334		96		169		3,514		276		—		—		4,389
Total commercial business		15,702		25,114		12,978		10,127		3,389		20,317		42,684		130,311
Gross charge-offs for the year		692		434		—		2,478		2,015		686		—		6,305
Total loans
Pass (Grades 1-3)		188,066		148,459		117,518		313,333		289,741		300,329		96,518		1,453,964
Watch (Grade 4)		12,943		22,001		1,914		36,519		31,492		10,796		1,561		117,226
Special Mention (Grade 5)		4,610		1,583		3,795		5,733		3,654		2,011		231		21,617
Substandard (Grade 6)		10,074		181		5,948		4,040		12,806		2,203		53		35,305
Total loans	$	215,693	$	172,224	$	129,175	$	359,625	$	337,693	$	315,339	$	98,363	$	1,628,112
Total Gross charge-offs for the year	$	1,677	$	456	$	2,112	$	2,791	$	7,614	$	718	$	137	$	15,505

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

Individually Evaluated Loans. The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC 326 by aggregating loans deemed to possess similar risk characteristics and individually evaluates loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to possess unique risk characteristics are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent. Collateral dependent loans are evaluated based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACLL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of March 31, 2026, $37.9 million of loans were individually evaluated with $243,000 of ACLL attributed to such loans. At March 31, 2026, two individually evaluated loans with recorded investments totaling $386,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $37.5 million were evaluated based on the underlying value of the collateral. One $12.8 million commercial real estate loan and one $4.5 million multi-family loan were accruing interest at quarter end, while all other individually evaluated loans were on nonaccrual status at March 31, 2026.

As of December 31, 2025, $25.9 million of loans were individually evaluated with $151,000 of ACLL attributed to such loans. At December 31, 2025, two individually evaluated loans with recorded investments totaling $303,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $25.6 million were evaluated based on the underlying value of the collateral. One $4.5 million multi-family loan was accruing interest at year end, while all other individually evaluated loans were on nonaccrual status at December 31, 2025.

Collateral Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral.

The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of March 31, 2026.

	Collateral Type
(dollars in thousands)	Single Family Residence		Condominium		Multi-family		Office Building		Gas Station		Auto		Business Assets		Total
One-to-four family	$	2,433	$	—	$	—	$	—	$	—	$	—	$	—	$	2,433
Multi-family		—		—		4,533		—		—		—		—		4,533
Commercial real estate		—		12,781		—		6,158		3,435		—		—		22,374
Construction and land		—		4,160		—		—		—		—		—		4,160
Auto and other consumer		—		—		—		—		—		302		—		302
Commercial business		2,871		7		—		—		—		—		799		3,677
Total collateral-dependent loans	$	5,304	$	16,948	$	4,533	$	6,158	$	3,435	$	302	$	799	$	37,479

The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of December 31, 2025.

	Collateral Type
(dollars in thousands)	Single Family Residence		Condominium		Multi-family		Office Building		Gas Station		Business Assets		Total
One-to-four family	$	2,181	$	—	$	—	$	—	$	—	$	—	$	2,181
Multi-family		—		—		4,531		—		—		—		4,531
Commercial real estate		—		—		—		6,306		3,435		—		9,741
Construction and land		—		5,139		—		—		—		—		5,139
Commercial business		2,875		7		—		—		—		1,108		3,990
Total collateral-dependent loans	$	5,056	$	5,146	$	4,531	$	6,306	$	3,435	$	1,108	$	25,582

Modified Loans to Troubled Borrowers. Modified loans to troubled borrowers ("MLTB") refer to modifications of loans to borrowers experiencing financial difficulty. A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension, or any combination of the foregoing. The ACLL for MLTBs is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation.

There were no new MLTB during the three months ended March 31, 2026 or 2025.

Other Real Estate Owned ("OREO"). The Company held $1.4 million at both March 31, 2026, and December 31, 2025, of OREO secured by residential real estate properties included in "prepaid expenses and other assets" on the Consolidated Balance Sheets.