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LOANS RECEIVABLE

6 Months Ended

Jun. 30, 2021

NOTE 4 LOANS RECEIVABLE

Loans receivable at June 30, 2021 and December 31, 2020 are summarized as follows:


	June 30,		December 31,
(Dollars in thousands)	2021		2020
Real Estate
One- to four-family residential	$	91,778	$	99,869
Commercial real estate		28,217		30,304
Construction & land		4,527		5,538
Multi-family residential		4,344		4,801
Farmland		27		53
Total Real Estate		128,893		140,565
Consumer		4,667		4,499
Commercial and industrial		7,039		6,736
		140,599		151,800
Less allowance for loan losses		(2,649)		(3,022)
	$	137,950	$	148,778

The following tables outline the changes in the allowance for loan losses by collateral type for the six months ended June 30, 2021 and June 30, 2020.


	For the Six Months Ended June 30, 2021
			(Reversal)
	Beginning		Provision for loan						Ending
(Dollars in thousands)	Balance		losses		Charge-offs		Recoveries		Balance
Allowance for Loan Losses
One- to four-family residential	$	1,910	$	(199)	$	(117)	$	35	$	1,629
Commercial real estate		744		(31)		—		—		713
Construction & land		81		(26)		—		—		55
Multi-family residential		68		(7)		—		—		61
Farmland		1		(1)		—		—		—
Consumer		78		(12)		(15)		10		61
Commercial and industrial		101		2		—		—		103
Unallocated		39		(12)		—		—		27
Total	$	3,022	$	(286)	$	(132)	$	45	$	2,649


	For the Six Months Ended June 30, 2020
	Beginning		Provision for loan						Ending
(Dollars in thousands)	Balance		losses		Charge-offs		Recoveries		Balance
Allowance for Loan Losses
One- to four-family residential	$	1,162	$	(58)	$	(20)	$	27	$	1,111
Commercial real estate		637		24		—		—		661
Construction & land		56		3		—		—		59
Multi-family residential		76		(3)		—		1		74
Farmland		1		—		—		—		1
Consumer		80		(3)		(16)		5		66
Commercial and industrial		12		91		(15)		—		88
Unallocated		47		11		—		—		58
Total	$	2,071	$	65	$	(51)	$	33	$	2,118

NOTE 4 LOANS RECEIVABLE (Continued)

The following tables outline the changes in the allowance for loan losses individually and collectively evaluated for impairment, and the amount of loans individually and collectively evaluated for impairment at June 30, 2021 and December 31, 2020.


	As of June 30, 2021						As of December 31, 2020
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
(Dollars in thousands)	Impairment		Impairment		Total		Impairment		Impairment		Total
Allowance for Loan Losses Ending Balance
One- to four-family residential	$	556	$	1,073	$	1,629	$	599	$	1,311	$	1,910
Commercial real estate		—		713		713		—		744		744
Construction & land		—		55		55		—		81		81
Multi-family residential		—		61		61		—		68		68
Farmland		—		—		—		—		1		1
Consumer		—		61		61		—		78		78
Commercial and industrial		—		103		103		—		101		101
Unallocated		—		27		27		—		39		39
Total	$	556	$	2,093	$	2,649	$	599	$	2,423	$	3,022
Loans Receivable Ending Balance
One- to four-family residential	$	2,920	$	88,858	$	91,778	$	3,209	$	96,660	$	99,869
Commercial real estate		—		28,217		28,217		—		30,304		30,304
Construction & land		46		4,481		4,527		46		5,492		5,538
Multi-family residential		1,186		3,158		4,344		1,205		3,596		4,801
Farmland		—		27		27		—		53		53
Consumer		—		4,667		4,667		—		4,499		4,499
Commercial and industrial		3		7,036		7,039		4		6,732		6,736
Total	$	4,155	$	136,444	$	140,599	$	4,464	$	147,336	$	151,800

A summary of current, past due and nonaccrual loans as of June 30, 2021 and December 31, 2020 follows:


	As of June 30, 2021
	Past Due		Past Due		Past Due
	30-89 Days		Over 90 Days		Over 30 Days		Total Past		Current and		Current and Non-
(Dollars in thousands)	Accruing		and Accruing		Non-Accruing		Due		Accruing		Accruing		Total Loans
One- to four-family residential	$	1,664	$	132	$	238	$	2,034	$	88,779	$	965	$	91,778
Commercial real estate		54		—		—		54		28,163		—		28,217
Construction and land		26		—		46		72		4,455		—		4,527
Multi-family residential		—		—		—		—		4,344		—		4,344
Farmland		—		—		—		—		27		—		27
Consumer		24		11		—		35		4,632		—		4,667
Commercial & industrial		17		—		—		17		7,019		3		7,039
Total	$	1,785	$	143	$	284	$	2,212	$	137,419	$	968	$	140,599

NOTE 4 LOANS RECEIVABLE (Continued)


	As of December 31, 2020
	Past Due		Past Due		Past Due
	30-89 Days		Over 90 Days		Over 30 Days		Total Past		Current and		Current and Non-
(Dollars in thousands)	Accruing		and Accruing		Non-Accruing		Due		Accruing		Accruing		Total Loans
One- to four-family residential	$	1,842	$	367	$	235	$	2,444	$	96,419	$	1,006	$	99,869
Commercial real estate		192		—		—		192		30,112		—		30,304
Construction and land		154		—		47		201		5,337		—		5,538
Multi-family residential		—		—		—		—		4,801		—		4,801
Farmland		—		—		—		—		53		—		53
Consumer		38		13		—		51		4,448		—		4,499
Commercial & industrial		94		—		—		94		6,638		4		6,736
Total	$	2,320	$	380	$	282	$	2,982	$	147,808	$	1,010	$	151,800

The Bank was not committed to lend any additional funds on nonaccrual loans at June 30, 2021 or December 31, 2020.

A Troubled Debt Restructuring (“TDR”) is considered such if the lender for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Information pertaining to loans modified during the six months ended June 30, 2021 and the year ended December 31, 2020:


		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Contracts	Investment		Investment
June 30, 2021
One- to four-family residential	2	$	140	$	142
Total	2	$	140	$	142


		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Contracts	Investment		Investment
December 31, 2020
One- to four-family residential	18	$	2,643	$	2,703
Total	18	$	2,643	$	2,703

NOTE 4 LOANS RECEIVABLE (Continued)

Troubled debt restructured loans were modified to defer principal and extend maturity on average for 3 months. There was one payment default as of June 30, 2021 and no payment defaults in 2020 for prior year modified loans. The Bank has no commitments to loan additional funds to the borrowers whose loans have been modified.

Information on impaired loans as of June 30, 2021 and December 31, 2020 follows:


	As of and for the Six Months Ended June 30, 2021
			Unpaid				Average		Interest		Interest
	Recorded		Principal		Related		Recorded		Income		Income
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized		Collected
Real Estate
One- to four-family residential	$	2,920	$	3,270	$	556	$	2,962	$	39	$	38
Commercial real estate		—		—		—		—		—		—
Construction & land		46		46		—		46		—		—
Multi-family residential		1,186		1,186		—		1,195		28		28
Farmland		—		—		—		—		—		—
Total real estate loans		4,152		4,502		556		4,203		67		66
Consumer		—		—		—		—		—		—
Commercial & industrial		3		6		—		4		—		—
	$	4,155	$	4,508	$	556	$	4,207	$	67	$	66


	As of and for the Year Ended December 31, 2020
			Unpaid				Average		Interest		Interest
	Recorded		Principal		Related		Recorded		Income		Income
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized		Collected
Real Estate
One- to four-family residential	$	3,209	$	3,586	$	599	$	3,266	$	86	$	78
Commercial real estate		—		—		—		—		—		—
Construction & land		46		46		—		48		—		—
Multi-family residential		1,205		1,205		—		1,210		47		43
Farmland		—		—		—		—		—		—
Total real estate loans		4,460		4,837		599		4,524		133		121
Consumer		—		—		—		—		—		—
Commercial & industrial		4		7		—		5		—		—
	$	4,464	$	4,844	$	599	$	4,529	$	133	$	121

Principal balances of loans receivable include approximately $101.9 million and $109.6 million of adjustable-rate loans and $38.7 million and $42.2 million of fixed rate loans at June 30, 2021 and December 31, 2020, respectively. Interest only loans amounted to approximately $1.9 million and $2.0 million at June 30, 2021 and December 31, 2020, respectively.

Loans are categorized by credit quality indicators 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. Internally assigned grade:

Pass – Loans in this category have strong asset quality and liquidity along with a multi-year track record of profitability.

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.

NOTE 4 LOANS RECEIVABLE (Continued)

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or 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 have been identified as uncollectible and are generally charged-off in the period identified.

The information for each of the credit quality indicators is updated on a quarterly basis in conjunction with the determination of the adequacy of the allowance for loan losses.


	As of and for the Six Months ended June 30, 2021
			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
One- to four-family residential	$	87,347	$	360	$	4,071	$	—	$	91,778
Commercial real estate		27,172		983		62		—		28,217
Construction & land		4,433		—		94		—		4,527
Multi-family residential		3,157		—		1,187		—		4,344
Farmland		27		—		—		—		27
Consumer		4,658		—		9		—		4,667
Commercial & industrial		7,036		—		3		—		7,039
Total	$	133,830	$	1,343	$	5,426	$	—	$	140,599


	As of and for the Year ended December 31, 2020
			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
One- to four-family residential	$	93,008	$	1,915	$	4,946	$	—	$	99,869
Commercial real estate		28,217		2,022		65		—		30,304
Construction & land		5,310		133		95		—		5,538
Multi-family residential		3,457		—		1,344		—		4,801
Farmland		53		—		—		—		53
Consumer		4,434		33		32		—		4,499
Commercial & industrial		6,542		171		23		—		6,736
Total	$	141,021	$	4,274	$	6,505	$	—	$	151,800