Loans Receivable Held for Investment

3 Months Ended

Mar. 31, 2025

Loans Receivable Held for Investment [Abstract]

NOTE 4 – Loans Receivable Held for Investment

Loans receivable held for investment were as follows as of the periods indicated:

	March 31, 2025			December 31, 2024
	(In thousands)
Real estate:
Single-family	$	23,056		$	23,566
Multi-family		627,303			633,306
Commercial real estate		161,056			156,155
Church		9,286			9,470
Construction		84,076			80,948
Commercial – other		72,107			70,596
SBA loans		1,127			1,142
Consumer		125			13
Gross loans receivable before deferred loan costs and premiums		978,136			975,196
Unamortized net deferred loan costs and premiums		2,114			2,116
Gross loans receivable		980,250			977,312
Credit and interest marks on purchased loans, net		(245	)		(348	)
Allowance for credit losses		(8,774	)		(8,103	)
Loans receivable, net	$	971,231		$	968,861

The Company accounts for credit losses on loans in accordance with ASC 326 – Financial Instruments-Credit Losses, to determine the ACL. ASC 326 requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition. The recognition of losses at origination or acquisition represents the Company’s best estimate of the lifetime expected credit loss associated with a loan given the facts and circumstances associated with the particular loan, and involves the use of significant management judgment and estimates, which are subject to change based on management’s on-going assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model. The Company uses the WARM method when determining estimates for the ACL for each of its portfolio segments. The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis. The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter.

The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Qualitative adjustments may be related to and include, but are not limited to, factors such as: (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge offs, and recovery practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326.

The following tables summarize the activity in the allowance for credit losses on loans for the periods indicated:

	March 31, 2025
	Beginning Balance		Charge-offs		Recoveries		Provision (recapture)			Ending Balance
	(In thousands)
Loans receivable held for investment:
Single-family	$	196	$	–	$	–	$	(8	)	$	188
Multi-family		4,568		–		–		15			4,583
Commercial real estate		1,129		–		–		55			1,184
Church		54		–		–		(3	)		51
Construction		1,475		–		–		(64	)		1,411
Commercial - other		670		–		–		609			1,279
SBA loans		11		–		–		67			78
Total	$	8,103	$	–	$	–	$	671		$	8,774

	March 31, 2024
	Beginning Balance		Charge-offs		Recoveries		Provision (recapture)			Ending Balance
	(In thousands)
Loans receivable held for investment:
Single-family	$	260	$	–	$	–	$	38		$	298
Multi-family		4,413		–		–		(88	)		4,325
Commercial real estate		1,094		–		–		15			1,109
Church		72		–		–		18			90
Construction		932		–		–		24			956
Commercial - other		529		–		–		193			722
SBA loans		48		–		–		4			52
Total	$	7,348	$	–	$	–	$	204		$	7,552

The Company also recorded a provision for off-balance sheet loan commitments of $18 thousand and $56 thousand for the quarters ended March 31, 2025 and 2024, respectively.

The ACL increased from March 31, 2024 to March 31, 2025, primarily due to one new non-accrual loan. The loan was individually evaluated and a provision was taken for the full balance as there was no collateral.

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio. These loans are typically identified from those that have exhibited deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, downgraded to substandard or worse, 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 no longer possess risk characteristics similar to other loans in the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses the remaining life approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs. The Company may increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral.

The following table presents collateral dependent loans by collateral type as of the date indicated:

	March 31, 2025
	Single-Family		Multi-Family Residential		Church		Business Assets		Total
	(In thousands)
Commercial - other	$	–	$	–	$	–	$	262	$	262
SBA Loans		–		–		–		338		338
Total	$	–	$	–	$	–	$	600	$	600

December 31, 2024

Single-Family

Multi-Family

Residential

Church

Business

Assets

Total

(In thousands)

SBA Loans

–

264

Total

–

264

At March 31, 2025, $600 thousand of individually evaluated loans were evaluated based on the estimated fair value of the underlying collateral and one $522 thousand loan was individually evaluated using the remaining life approach. These loans had an associated ACL of $720 thousand as of March 31, 2025. The Company had three individually evaluated loans totaling $860 thousand on nonaccrual status at March 31, 2025.

At December 31, 2024, one $264 thousand individually evaluated loan was evaluated based on the estimated fair value of the underlying collateral. This loan had no associated ACL and was on nonaccrual status as of December 31, 2024.

Past Due Loans

The following tables present the aging of the recorded investment in past due loans by loan type as of the dates indicated:

	March 31, 2025
	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	$	–	$	–	$	–	$	–	$	23,077	$	23,077
Multi-family		3,241		–		–		3,241		626,978		630,219
Commercial real estate		758		–		–		758		160,196		160,954
Church		–		–		–		–		9,292		9,292
Construction		–		–		–		–		83,645		83,645
Commercial - other		–		–		–		–		71,811		71,811
SBA loans		–		74		264		338		789		1,127
Consumer		–		–		–		–		125		125
Total	$	3,999	$	74	$	264	$	4,337	$	975,913	$	980,250

	December 31, 2024
	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	$	–	$	6	$	–	$	6	$	23,572	$	23,578
Multi-family		–		–		–		–		636,259		636,259
Commercial real estate		–		–		–		–		156,076		156,076
Church		–		–		–		–		9,475		9,475
Construction		–		–		–		–		80,488		80,488
Commercial - other		–		–		–		–		70,281		70,281
SBA loans		–		264		–		264		878		1,142
Consumer		–		–		–		–		13		13
Total	$	–	$	270	$	–	$	270	$	977,042	$	977,312

The following tables present the recorded investment in non-accrual loans by loan type as of the dates indicated:

			March 31, 2025
	Nonaccrual with no Allowance for Credit Losses		Nonaccrual with an Allowance for Credit Losses		Total Nonaccrual Loans
	(In thousands)
Loans receivable held for investment:
Commercial - other	$	–	$	522	$	522
SBA loans		–		338		338
Total non-accrual loans	$	–	$	860	$	860

			December 31, 2024
	Nonaccrual with no Allowance for Credit Losses		Nonaccrual with an Allowance for Credit Losses		Total Nonaccrual Loans
	(In thousands)
Loans receivable held for investment:
SBA loans	$	264	$	–	$	264
Total non-accrual loans	$	264	$	–	$	264

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2025 or December 31, 2024.

Modified Loans to Troubled Borrowers

GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing. The ACL for loans that were modified in response to a borrower’s financial difficulty 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 ACL for such loans is determined through individual evaluation. The table below shows loan modifications during the quarter.

The following table presents the amortized costs basis as of March 31, 2025 and the financial effect of loans modified to borrowers experiencing financial difficulty during the quarter ended March 31, 2025. There were no loan modifications to borrowers that were experiencing financial difficulty during the quarter ended March 31, 2024.

	March 31, 2025
	Term Extension		Percentage of Total Loan Type			Weighted Average Term Extension
			(In Thousands)
Real estate:
Commercial real estate	$	3,620		2.30	%	8 months
Construction		4,549		5.55	%	17 months
Commercial - other		522		0.74	%	14 months
Total	$	8,691

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 herein. The Company analyzes all other loans individually by classifying the loans as to credit risk. 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 that appears short term in nature. 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 may 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, based on 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 that are not individually analyzed 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.

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination as of the date indicated:

	Term Loans Amortized Cost Basis by Origination Year - As of March 31, 2025
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
	(In thousands)
Single-family:
Pass	$	–	$	–	$	540	$	4,031	$	1,814	$	14,685	$	–	$	21,070
Watch		–		–		–		–		724		1,283		–		2,007
Total	$	–	$	–	$	540	$	4,031	$	2,538	$	15,968	$	–	$	23,077

Multi-family:
Pass	$	–	$	81,228	$	77,490	$	154,549	$	117,983	$	106,323	$	–	$	537,573
Watch		–		–		5,622		29,144		19,691		17,659		–		72,116
Special Mention		–		–		–		608		4,926		282		–		5,816
Substandard		–		–		1,412		5,844		4,427		3,031		–		14,714
Total	$	–	$	81,228	$	84,524	$	190,145	$	147,027	$	127,295	$	–	$	630,219

Commercial real estate:
Pass	$	630	$	49,703	$	8,241	$	21,193	$	28,636	$	37,428	$	–	$	145,831
Watch		–		–		1,371		430		986		5,177		–		7,964
Special Mention		–		–		1,578		–		–		788		–		2,366
Substandard		–		–		3,259		–		1,534		–		–		4,793
Total	$	630	$	49,703	$	14,449	$	21,623	$	31,156	$	43,393	$	–	$	160,954

Church:
Pass	$	–	$	–	$	2,417	$	–	$	2,134	$	3,191	$	–	$	7,742
Watch		–		–		371		–		–		–		–		371
Substandard		–		–		–		–		–		1,179		–		1,179
Total	$	–	$	–	$	2,788	$	–	$	2,134	$	4,370	$	–	$	9,292

Construction:
Pass		–		61		174		1,431		503		–		–		2,169
Watch		–		9,303		31,984		228		–		–		–		41,515
Special Mention		–		–		–		–		–		2,028		–		2,028
Substandard		–		–		4,206		31,213		2,514		–		–		37,933
Total	$	–	$	9,364	$	36,364	$	32,872	$	3,017	$	2,028	$	–	$	83,645

Commercial – other:
Pass	$	–	$	317	$	3	$	7,319	$	–	$	8,866	$	–	$	16,505
Watch		–		17,450		28,167		706		–		1,194		–		47,517
Special Mention		–		–		–		351		–		6,549		–		6,900
Substandard		–		–		–		–		106		783		–		889
Total	$	–	$	17,767	$	28,170	$	8,376	$	106	$	17,392	$	–	$	71,811

SBA:
Pass	$	–	$	585	$	–	$	–	$	–	$	54	$	–	$	639
Substandard		–		–		–		150		–		–		–		150
Doubtful		–		–		–		–		–		338		–		338
Total	$	–	$	585	$	–	$	150	$	–	$	392	$	–	$	1,127

Consumer:
Pass	$	125	$	–	$	–	$	–	$	–	$	–	$	–	$	125
Total	$	125	$	–	$	–	$	–	$	–	$	–	$	–	$	125

Total loans:
Pass	$	755	$	131,894	$	88,865	$	188,523	$	151,070	$	170,547	$	–	$	731,654
Watch		–		26,753		67,515		30,508		21,401		25,313		–		171,490
Special Mention		–		–		1,578		959		4,926		9,647		–		17,110
Substandard		–		–		8,877		37,207		8,581		4,993		–		59,658
Doubtful		–		–		–		–		–		338		–		338
Total loans	$	755	$	158,647	$	166,835	$	257,197	$	185,978	$	210,838	$	–	$	980,250

	Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
	(In thousands)
Single-family:
Pass	$	–	$	543	$	4,051	$	1,809	$	1,664	$	13,597	$	–	$	21,664
Watch		–		–		–		729		1,185		–		–		1,914
Total	$	–	$	543	$	4,051	$	2,538	$	2,849	$	13,597	$	–	$	23,578

Multi-family:
Pass	$	81,474	$	77,739	$	171,836	$	126,386	$	26,771	$	89,581	$	–	$	573,787
Watch		–		5,633		15,731		14,761		–		10,480		–		46,605
Special Mention		–		–		3,227		3,150		–		–		–		6,377
Substandard		–		1,446		–		4,457		–		3,587		–		9,490
Total	$	81,474	$	84,818	$	190,794	$	148,754	$	26,771	$	103,648	$	–	$	636,259

Commercial real estate:
Pass	$	49,143	$	9,655	$	20,841	$	28,653	$	21,150	$	19,561	$	–	$	149,003
Watch		–		1,584		432		994		–		792		–		3,802
Substandard		–		3,271		–	$	–	$	–		–	$	–	$	3,271
Total	$	49,143	$	14,510	$	21,273	$	29,647	$	21,150	$	20,353	$	–	$	156,076

Church:
Pass	$	–	$	2,442	$	–	$	2,148	$	1,696	$	1,002	$	–	$	7,288
Watch		–		376		–		–		–		618		–		994
Substandard		–		–		–		–		–		1,193		–		1,193
Total	$	–	$	2,818	$	–	$	2,148	$	1,696	$	2,813	$	–	$	9,475

Construction:
Watch	$	8,876	$	29,390	$	227	$	–	$	–	$	2,038	$	–	$	40,531
Special Mention		–		4,076		31,823		4,058		–		–		–		39,957
Total	$	8,876	$	33,466	$	32,050	$	4,058	$	–	$	2,038	$	–	$	80,488

Commercial – other:
Pass	$	1	$	3	$	7,575	$	–	$	2,768	$	4,590	$	–	$	14,937
Watch		17,444		28,157		706		–		–		1,197		–		47,504
Special Mention		–		–		351		–		–		2,250		–		2,601
Substandard		–		–		–		106		571		4,562		–		5,239
Total	$	17,445	$	28,160	$	8,632	$	106	$	3,339	$	12,599	$	–	$	70,281

SBA:
Pass	$	590	$	–	$	–	$	–	$	–	$	64	$	–	$	654
Special Mention		–		–		150		–		338		–		–		488
Total	$	590	$	–	$	150	$	–	$	338	$	64	$	–	$	1,142

Consumer:
Pass	$	13	$	–	$	–	$	–	$	–	$	–	$	–	$	13
Total	$	13	$	–	$	–	$	–	$	–	$	–	$	–	$	13

Total loans:
Pass	$	131,221	$	90,382	$	204,303	$	158,996	$	54,049	$	128,395	$	–	$	767,346
Watch		26,320		65,140		17,096		16,484		1,185		15,125		–		141,350
Special Mention		–		4,076		35,551		7,208		338		2,250		–		49,423
Substandard		–		4,717		–		4,563		571		9,342		–		19,193
Total loans	$	157,541	$	164,315	$	256,950	$	187,251	$	56,143	$	155,112	$	–	$	977,312

Allowance for Credit Losses for Off-Balance Sheet Commitments

The Company maintains an allowance for credit losses on off-balance sheet commitments related to unfunded loans and lines of credit, which is included in accrued expenses and other liabilities of the consolidated statements of financial condition. Upon the Company’s adoption of ASC 326, the Company applies an expected credit loss estimation methodology for off-balance sheet commitments. This methodology is commensurate with the methodology applied to each respective segment of the loan portfolio in determining the ACL for loans held-for-investment. The loss estimation process includes assumptions for the probability that a loan will fund, as well as the expected amount of funding. These assumptions are based on the Company’s own historical internal loan data.

The allowance for off-balance sheet commitments was $295 thousand and $277 thousand at March 31, 2025 and December 31, 2024, respectively. This amount is included in accrued expenses and other liabilities on the consolidated statements of financial condition. The provision for off-balance sheet commitments was $18 thousand for the quarter-ended March 31, 2025.