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Loans Receivable Held for Investment | 9 Months Ended
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Sep. 30, 2021
Loans Receivable Held for Investment [Abstract] |
Loans Receivable Held for Investment | NOTE (6) – Loans Receivable Held for Investment Loans receivable held for investment were as follows as of the dates indicated:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | (In thousands) |
Real estate: |  |  |  |  |  |
Single family |  | $ | 50,880 |  |  | $ | 48,217 |
Multi-family |  |  | 383,401 |  |  |  | 272,387 |
Commercial real estate |  |  | 98,411 |  |  |  | 24,289 |
Church |  |  | 15,057 |  |  |  | 16,658 |
Construction |  |  | 21,076 |  |  |  | 429 |
Commercial – other |  |  | 47,306 |  |  |  | 57 |
SBA loans (1) |  |  | 28,873 |  |  |  | - |
Consumer |  |  | 12 |  |  |  | 7 |
Gross loans receivable before deferred loan costs and premiums |  |  | 645,016 |  |  |  | 362,044 |
Unamortized net deferred loan costs and premiums |  |  | 843 |  |  |  | 1,300 |
Gross loans receivable |  |  | 645,859 |  |  |  | 363,344 |
Allowance for loan losses |  |  | (3,661 | ) |  |  | (3,215 | )
Loans receivable, net |  | $ | 642,198 |  |  | $ | 360,129 |
(1) Including Paycheck Protection Program (PPP) loans. Purchased Credit Impaired (PCI) Loans As part of the CFBanc Merger, the Company acquired loans for which there was, at acquisition, evidence of credit deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. Prior to the CFBanc Merger, there were no such acquired loans. The carrying amount of those loans as of September 30, 2021, was as follows:
|  | September 30, 2021 |
|  | (In thousands) |
Real estate: |  |  |
Single family |  | $ | 558 |
Commercial real estate |  |  | 221 |
Commercial - other |  |  | 104 |
|  | $ | 883 |
On the acquisition date, the amount by which the undiscounted expected cash flows of the PCI loans exceeded the estimated fair value of the loan is the accretable yield. The accretable yield is measured at each financial reporting date and represents the difference between the remaining undiscounted cash flows and the current carrying value of the PCI loan. At September 30, 2021, none of the Company’s PCI loans were classified as nonaccrual. The following table summarizes the accretable yield on the PCI loans for the three and nine months ended September 30, 2021:
|  | Three Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2021 |
|  | (In thousands) |
Balance at the beginning of the period |  | $ | 327 |  |  | $ | - |
Additions |  |  | - |  |  |  | 346 |
Accretion |  |  | (19 | ) |  |  | (38 | )
Balance at the end of the period |  | $ | 308 |  |  | $ | 308 |
The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:
|  | Three Months Ended September 30, 2021 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  | (In thousands) |  |  |  |  |  |  |
Beginning balance |  | $ | 170 |  |  | $ | 2,606 |  |  | $ | 227 |  |  | $ | 208 |  |  | $ | 81 |  |  | $ | 4 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,296 |
Provision for (recapture of) loan losses |  |  | (10 | ) |  |  | 325 |  |  |  | 32 |  |  |  | (18 | ) |  |  | 35 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 365 |
Recoveries |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 160 |  |  | $ | 2,931 |  |  | $ | 259 |  |  | $ | 190 |  |  | $ | 116 |  |  | $ | 4 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,661 |
|  | Three Months Ended September 30, 2020 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  | (In thousands) |  |  |  |
Beginning balance |  | $ | 312 |  |  | $ | 2,424 |  |  | $ | 169 |  |  | $ | 282 |  |  | $ | 22 |  |  | $ | 6 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,215 |
Provision for (recapture of) loan losses |  |  | 9 |  |  |  | 1 |  |  |  | 17 |  |  |  | (28 | ) |  |  | - |  |  |  | (1 | ) |  |  | - |  |  |  | 2 |  |  |  | - |
Recoveries |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 321 |  |  | $ | 2,425 |  |  | $ | 186 |  |  | $ | 254 |  |  | $ | 22 |  |  | $ | 5 |  |  | $ | - |  |  | $ | 2 |  |  | $ | 3,215 |
|  | Nine Months Ended September 30, 2021 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi-family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  |  |  |  | (In thousands) |
Beginning balance |  | $ | 296 |  |  | $ | 2,433 |  |  | $ | 222 |  |  | $ | 237 |  |  | $ | 22 |  |  | $ | 4 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,215 |
Provision for (recapture of) loan losses |  |  | (136 | ) |  |  | 498 |  |  |  | 37 |  |  |  | (47 | ) |  |  | 94 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 446 |
Recoveries |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 160 |  |  | $ | 2,931 |  |  | $ | 259 |  |  | $ | 190 |  |  | $ | 116 |  |  | $ | 4 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,661 |
|  | Nine Months Ended September 30, 2020 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi-family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  |  |  |  | (In thousands) |
Beginning balance |  | $ | 312 |  |  | $ | 2,319 |  |  | $ | 133 |  |  | $ | 362 |  |  | $ | 48 |  |  | $ | 7 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,182 |
Provision for (recapture of) loan losses |  |  | 5 |  |  |  | 106 |  |  |  | 53 |  |  |  | (108 | ) |  |  | (26 | ) |  |  | (2 | ) |  |  | - |  |  |  | 1 |  |  |  | 29 |
Recoveries |  |  | 4 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4 |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 321 |  |  | $ | 2,425 |  |  | $ | 186 |  |  | $ | 254 |  |  | $ | 22 |  |  | $ | 5 |  |  | $ | - |  |  | $ | 2 |  |  | $ | 3,215 |
The following tables present the balance in the allowance for loan losses and the recorded investment (unpaid contractual principal balance less charge-offs, less interest applied to principal, plus unamortized deferred costs and premiums) by loan type and based on impairment method as of the dates indicated:
|  | September 30, 2021 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3 |  |  | $ | - |  |  | $ | - |  |  | $ | 27 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 30 |
Collectively evaluated for impairment |  |  | 157 |  |  |  | 2,931 |  |  |  | 259 |  |  |  | 163 |  |  |  | 116 |  |  |  | 4 |  |  |  | - |  |  |  | 1 |  |  |  | 3,631 |
Total ending allowance balance |  | $ | 160 |  |  | $ | 2,931 |  |  | $ | 259 |  |  | $ | 190 |  |  | $ | 116 |  |  | $ | 4 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,661 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 65 |  |  | $ | 286 |  |  | $ | - |  |  | $ | 3,357 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 3,708 |
Loans collectively evaluated for impairment |  |  | 50,922 |  |  |  | 384,959 |  |  |  | 98,384 |  |  |  | 11,371 |  |  |  | 20,907 |  |  |  | 47,306 |  |  |  | 28,290 |  |  |  | 12 |  |  |  | 642,151 |
Total ending loans balance |  | $ | 50,987 |  |  | $ | 385,245 |  |  | $ | 98,384 |  |  | $ | 14,728 |  |  | $ | 20,907 |  |  | $ | 47,306 |  |  | $ | 28,290 |  |  | $ | 12 |  |  | $ | 645,859 |
|  | December 31, 2020 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  |  | SBA Loans |  |  | Consumer |  |  | Total |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 89 |  |  | $ | - |  |  | $ | - |  |  | $ | 52 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 141 |
Collectively evaluated for impairment |  |  | 207 |  |  |  | 2,433 |  |  |  | 222 |  |  |  | 185 |  |  |  | 22 |  |  |  | 4 |  |  |  | - |  |  |  | 1 |  |  |  | 3,074 |
Total ending allowance balance |  | $ | 296 |  |  | $ | 2,433 |  |  | $ | 222 |  |  | $ | 237 |  |  | $ | 22 |  |  | $ | 4 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 3,215 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 573 |  |  | $ | 298 |  |  | $ | - |  |  | $ | 3,813 |  |  | $ | - |  |  | $ | 47 |  |  | $ | - |  |  | $ | - |  |  | $ | 4,731 |
Loans collectively evaluated for impairment |  |  | 47,784 |  |  |  | 273,566 |  |  |  | 24,322 |  |  |  | 12,495 |  |  |  | 430 |  |  |  | 9 |  |  |  | - |  |  |  | 7 |  |  |  | 358,613 |
Total ending loans balance |  | $ | 48,357 |  |  | $ | 273,864 |  |  | $ | 24,322 |  |  | $ | 16,308 |  |  | $ | 430 |  |  | $ | 56 |  |  | $ | - |  |  | $ | 7 |  |  | $ | 363,344 |
The following table presents information related to loans individually evaluated for impairment by loan type as of the dates indicated:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |  |  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |
|  | (In thousands) |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2 |  |  | $ | 1 |  |  | $ | - |
Multi-family |  |  | 286 |  |  |  | 286 |  |  |  | - |  |  |  | 298 |  |  |  | 298 |  |  |  | - |
Church |  |  | 2,468 |  |  |  | 1,879 |  |  |  | - |  |  |  | 2,527 |  |  |  | 1,970 |  |  |  | - |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  |  | 65 |  |  |  | 65 |  |  |  | 3 |  |  |  | 573 |  |  |  | 573 |  |  |  | 88 |
Church |  |  | 1,478 |  |  |  | 1,478 |  |  |  | 27 |  |  |  | 1,842 |  |  |  | 1,842 |  |  |  | 52 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 47 |  |  |  | 47 |  |  |  | 1 |
Total |  | $ | 4,297 |  |  | $ | 3,708 |  |  | $ | 30 |  |  | $ | 5,289 |  |  | $ | 4,731 |  |  | $ | 141 |
The recorded investment in loans excludes accrued interest receivable due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs. The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated:
|  | Three Months Ended September 30, 2021 |  |  | Three Months Ended September 30, 2020 |
|  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |  |  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |
|  | (In thousands) |
Single family |  | $ | 65 |  |  | $ | 4 |  |  | $ | 589 |  |  | $ | 7 |
Multi-family |  |  | 288 |  |  |  | 5 |  |  |  | 305 |  |  |  | 5 |
Church |  |  | 3,614 |  |  |  | 64 |  |  |  | 3,938 |  |  |  | 67 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | 50 |  |  |  | 1 |
Total |  | $ | 3,967 |  |  | $ | 73 |  |  | $ | 4,882 |  |  | $ | 80 |
|  | Nine Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2020 |
|  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |  |  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |
|  | (In thousands) |
Single family |  | $ | 318 |  |  | $ | 14 |  |  | $ | 596 |  |  | $ | 22 |
Multi-family |  |  | 292 |  |  |  | 15 |  |  |  | 308 |  |  |  | 16 |
Church |  |  | 3,710 |  |  |  | 190 |  |  |  | 4,094 |  |  |  | 376 |
Commercial - other |  |  | 18 |  |  |  | 1 |  |  |  | 57 |  |  |  | 3 |
Total |  | $ | 4,338 |  |  | $ | 220 |  |  | $ | 5,055 |  |  | $ | 417 |
Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non-accrual loans that were paid off. Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible or paid off. When a loan is returned to accrual status, the interest payments that were previously applied to principal are deferred and amortized over the remaining life of the loan. Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $19 thousand and $22 thousand for the three months ended September 30, 2021 and 2020, respectively, and $38 thousand and $67 thousand for the nine months ended September 30, 2021 and 2020, respectively, and were not included in the consolidated results of operations. As of September 30, 2021, the Bank had $249 thousand of loans delinquent 30 to 89 days, and no loans were past due 90 days or more. The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated:
|  | September 30, 2021 |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 50,987 |  |  | $ | 50,987 |
Multi-family |  |  | 249 |  |  |  | - |  |  |  | - |  |  |  | 249 |  |  |  | 384,996 |  |  |  | 385,245 |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 98,384 |  |  |  | 98,384 |
Church |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14,728 |  |  |  | 14,728 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20,907 |  |  |  | 20,907 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 47,306 |  |  |  | 47,306 |
SBA loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28,290 |  |  |  | 28,290 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12 |  |  |  | 12 |
Total |  | $ | 249 |  |  | $ | - |  |  | $ | - |  |  | $ | 249 |  |  | $ | 645,610 |  |  | $ | 645,859 |
|  | December 31, 2020 |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 48,357 |  |  | $ | 48,357 |
Multi-family |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 273,864 |  |  |  | 273,864 |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 24,322 |  |  |  | 24,322 |
Church |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16,308 |  |  |  | 16,308 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 430 |  |  |  | 430 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 56 |  |  |  | 56 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | 7 |
Total |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 363,344 |  |  | $ | 363,344 |
The following table presents the recorded investment in non-accrual loans by loan type as of the periods indicated:
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |
Single-family residence |  | $ | - |  |  | $ | 1 |
Church |  |  | 709 |  |  |  | 786 |
Total non-accrual loans |  | $ | 709 |  |  | $ | 787 |
There were no loans 90 days or more delinquent that were accruing interest as of September 30, 2021 or December 31, 2020. None of the church non-accrual loans were delinquent, but none qualified for accrual status as of the periods indicated. Troubled Debt Restructurings (TDRs) In March 2020, a joint statement was issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications, such as payment deferrals, fee waivers, extensions of repayment terms or other insignificant payment delays, are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, six months or less is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as non-accrual loans during the term of the modification. The Bank has implemented a loan modification program for the effects of COVID-19 on its borrowers. At the date of this filing, no borrowers have requested loan modifications. To date, no modifications have been granted. At September 30, 2021, loans classified as TDRs totaled $3.7 million, of which $405 thousand were included in non-accrual loans and $3.3 million were on accrual status. At December 31, 2020, loans classified as TDRs totaled $4.2 million, of which $232 thousand were included in non-accrual loans and $4.0 million were on accrual status. The Company has allocated $30 thousand and $141 thousand of specific reserves for accruing TDRs as of September 30, 2021 and December 31, 2020, respectively. TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time and for which the Bank anticipates full repayment of both principal and interest. TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified. A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required. As of September 30, 2021 and December 31, 2020, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs. No loans were modified during the three or nine months ended September 30, 2021 and 2020. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance. Information about payment status is disclosed elsewhere within this footnote. The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on a quarterly basis. The Company uses the following definitions for risk ratings:
| ◾ | Watch. Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors. Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists, but correction is anticipated within an acceptable time frame.
| ◾ | Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
| ◾ | Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
| ◾ | Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
| ◾ | Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor and/or by the value of the underlying collateral. Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms. Based on the most recent analysis performed, the risk categories of loans by loan type as of the periods indicated were as follows:
|  | September 30, 2021 |
|  | Pass |  |  | Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |
|  | (In thousands) |
Single family |  | $ | 50,987 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Multi-family |  |  | 384,897 |  |  |  | - |  |  |  | - |  |  |  | 348 |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 96,918 |  |  |  | - |  |  |  | - |  |  |  | 1,466 |  |  |  | - |  |  |  | - |
Church |  |  | 13,045 |  |  |  | 641 |  |  |  | - |  |  |  | 1,042 |  |  |  | - |  |  |  | - |
Construction |  |  | 20,907 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial - other |  |  | 47,306 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA loans |  |  | 28,290 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer |  |  | 12 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 642,362 |  |  | $ | 641 |  |  | $ | - |  |  | $ | 2,856 |  |  | $ | - |  |  | $ | - |
|  | December 31, 2020 |
|  | Pass |  |  | Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |
|  | (In thousands) |
Single family |  | $ | 48,357 |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |  |  | $ | - |  |  | $ | - |
Multi-family |  |  | 273,501 |  |  |  | - |  |  |  | - |  |  |  | 362 |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 22,834 |  |  |  | 1,488 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Church |  |  | 12,899 |  |  |  | 657 |  |  |  | - |  |  |  | 2,752 |  |  |  | - |  |  |  | - |
Construction |  |  | 430 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial - other |  |  | 9 |  |  |  | - |  |  |  | - |  |  |  | 47 |  |  |  | - |  |  |  | - |
Consumer |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 358,037 |  |  | $ | 2,145 |  |  | $ | - |  |  | $ | 3,162 |  |  | $ | - |  |  | $ | - |
In 2015, CFC 45 was formed to, in effect, act as a pass-through entity for a Merrill Lynch NMTC Corp. (“Merrill Lynch”) allocation of funds in connection with the Bank’s participation in the New Markets Tax Credit (“NMTC”) Program totaling $14.0 million. (See Note 9 - Borrowings.) The financial statements for CFC 45 are consolidated with those of the Company, and as such the Company has reflected a $14.0 million loan made by CFC 45 to a Qualified Active Low Income Business in gross loans above as of September 30, 2021, in connection with the NMTC Program.

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