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Loans

12 Months Ended

Jun. 30, 2024

Loans

Loans

Note 4 - Loans

On July 1, 2023, the Company adopted ASC 326. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. All loan information presented as of June 30, 2024 is in accordance with ASC 326. All loan information presented as of June 30, 2023 or a prior date is presented in accordance with previously applicable GAAP (incurred loss method).

The Company’s loans are stated at their face amount, net of deferred fees and costs and discounts, and consist of the classes of loans included in the table below. The Company has elected to exclude accrued interest receivable, totaling $513,782 at June 30, 2024, from the amortized cost basis of loans.

A summary of loans by major category follows (in thousands):


		June 30, 2024			June 30, 2023
Commercial real estate		$	74,316		$	84,581
Commercial and industrial			5,158			6,878
Construction			1,313			1,905
One-to-four-family residential			57,808			59,563
Multi-family real estate			45,088			44,184
Consumer			1,609			2,825
Total loans			185,292			199,936
Deferred loan fees			(47)			(63)
Allowance for loan losses			(1,797)			(2,159)
Loans, net		$	183,448		$	197,714

The following table summarizes the activity in the allowance for credit losses - loans by loan class for the year ended June 30, 2024:


		Allowance for Credit Losses-Loans
		(Dollars in thousands)

														Provision for
														(Recovery of)
		Beginning			Impact of									Credit			Ending
		Balance			Adoption of									Losses-			Balance
		July 1, 2023			ASC 326			Charge-offs			Recoveries			Loans			June 30, 2024
Commercial real estate		$	1,196		$	(818)		$	—		$	—		$	(119)		$	259
Commercial and industrial			18			5			—			—			(7)			16
Construction			6			2			—			—			20			28
One-to-four-family residential			207			1,137			—			—			(30)			1,314
Multi-family real estate			365			(147)			—			—			(43)			175
Consumer			2			11			—			3			(11)			5
Unallocated			365			(365)			—			—			—			—
Total loans		$	2,159		$	(175)		$	—		$	3		$	(190)		$	1,797

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, 2023, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2023:


		Commercial			Commercial						One-to-Four			Multi-Family
		Real Estate			and Industrial			Construction			Residential			Real Estate			Consumer			Unallocated			Total
June 30, 2023
Allowance for credit losses
Balance at beginning of year		$	1,591,644		$	32,701		$	55,029		$	263,951		$	233,371		$	601		$	17,753		$	2,195,050
Charge-offs			(136,753)			—			—			—			—			—			—			(136,753)
Recoveries			98,084			—			—			—			—			2,209			—			100,293
Provisions			(356,496)			(14,990)			(48,727)			(57,180)			132,030			(2,157)			347,520			—
Balance at June 30, 2023		$	1,196,479		$	17,711		$	6,302		$	206,771		$	365,401		$	653		$	365,273		$	2,158,590

Individually evaluated for impairment		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated for impairment			1,196,479			17,711			6,302			206,771			365,401			653			365,273			2,158,590
Balance at end of period		$	1,196,479		$	17,711		$	6,302		$	206,771		$	365,401		$	653		$	365,273		$	2,158,590
Loans
Individually evaluated for impairment		$	—		$	—		$	—		$	117,103		$	—		$	—		$	—		$	117,103
Collectively evaluated for impairment			84,580,946			6,878,209			1,905,255			59,445,715			44,183,871			2,824,747			—			199,818,743
Balance at end of period		$	84,580,946		$	6,878,209		$	1,905,255		$	59,562,818		$	44,183,871		$	2,824,747		$	—		$	199,935,846

The following table presents a breakdown of the provision for (recovery of) credit losses for the years ended June 30, 2024 and 2023:


		2024			2023
Provision for (recovery of) credit losses:
Provision for (recovery of) loans		$	(190,000)		$	—
Provision for unfunded commitments			—			—
Total provision for (recovery of) credit losses		$	(190,000)		$	—

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, collateral adequacy, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as commercial and commercial real estate loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass – Loans classified as pass represent loans that are evaluated and are performing under the stated terms. Pass rated assets are analyzed by the paying capacity, the current net worth, and the value of the loan collateral of the obligor.

Special Mention/Watch – Loans classified as special mention/watch possess potential weaknesses that require management attention but do not yet warrant adverse classification. While the status of a loan put on this list may not technically trigger their classification as substandard or doubtful, it is considered a proactive way to identify potential issues and address them before the situation deteriorates further and does result in a loss for the Company.

Substandard – Loans classified as substandard are inadequately protected by the current net worth, paying capacity of the obligor, or by the collateral pledged. Substandard loans must have a well-defined weakness or

weaknesses that jeopardize the repayment of the debt as originally contracted. They are characterized by the distinct possibility that the Company will sustain a loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have the weaknesses of 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. Loans in this category are allocated a specific reserve based on the estimated discounted cash flows from the loan (or collateral value less cost to sell for collateral dependent loans) or are charged-off if deemed uncollectible.

Residential real estate, multi-family real estate and consumer loans are managed on a pool basis due to their homogeneous nature. Loans that are 90 days or more delinquent or are not accruing interest are considered nonperforming.

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of June 30, 2024 based on year of origination:


																											Revolving
																											Loans
																								Revolving			Converted to
						2024			2023			2022			2021			2020			Prior			Loans			Term Loans			Total

					(Dollars in thousands)

Commercial real estate
	Pass				$	4,785		$	5,096		$	25,584		$	23,385		$	8,326		$	6,823		$	317		$	—		$	74,316
	Special Mention/Watch					—			—			—			—			—			—			—			—			—
	Substandard					—			—			—			—			—			—			—			—			—
	Nonaccrual					—			—			—			—			—			—			—			—			—
Total commercial real estate					$	4,785		$	5,096		$	25,584		$	23,385		$	8,326		$	6,823		$	317		$	—		$	74,316

Commercial and industrial
	Pass				$	96		$	807		$	1,598		$	2,162		$	75		$	393		$	27		$	—		$	5,158
	Special Mention/Watch					—			—			—			—			—			—			—			—			—
	Substandard					—			—			—			—			—			—			—			—			—
	Nonaccrual					—			—			—			—			—			—			—			—			—
Total commercial and industrial					$	96		$	807		$	1,598		$	2,162		$	75		$	393		$	27		$	—		$	5,158

Construction
	Pass				$	—		$	1,313		$	—		$	—		$	—		$	—		$	—		$	—		$	1,313
	Special Mention/Watch					—			—			—			—			—			—			—			—			—
	Substandard					—			—			—			—			—			—			—			—			—
	Nonaccrual					—			—			—			—			—			—			—			—			—
Total construction					$	—		$	1,313		$	—		$	—		$	—		$	—		$	—		$	—		$	1,313

One-to-four-family residential
	Performing				$	3,345		$	11,209		$	11,459		$	13,756		$	6,035		$	12,004		$	—		$	—		$	57,808
	Non-performing					—			—			—			—			—			—			—			—			—
Total one-to-four-family					$	3,345		$	11,209		$	11,459		$	13,756		$	6,035		$	12,004		$	—		$	—		$	57,808

Multi-family real estate
	Performing				$	1,829		$	8,735		$	16,666		$	13,344		$	1,857		$	2,604		$	53		$	—		$	45,088
	Non-performing					—			—			—			—			—			—			—			—			—
Total multi-family real estate					$	1,829		$	8,735		$	16,666		$	13,344		$	1,857		$	2,604		$	53		$	—		$	45,088

Consumer
	Performing				$	162		$	87		$	138		$	5		$	53		$	—		$	1,164		$	—		$	1,609
	Non-performing					—			—			—			—			—			—			—			—			—
Total consumer					$	162		$	87		$	138		$	5		$	53		$	—		$	1,164		$	—		$	1,609


Total loans					$	10,217		$	27,247		$	55,445		$	52,652		$	16,346		$	21,824		$	1,561		$	—		$	185,292

Based on the most recent analysis performed, the risk category of loans by class of loans as of June 30, 2023 is as follows:


					Special Mention/
		Pass			Watch			Substandard			Doubtful			Total
June 30, 2023
Commercial real estate		$	84,580,946		$	—		$	—		$	—		$	84,580,946
Commercial and industrial			6,878,209			—			—			—			6,878,209
Construction			1,905,255			—			—			—			1,905,255
		$	93,364,410		$	—		$	—		$	—		$	93,364,410

Residential real estate, multi-family real estate and consumer loans are managed on a pool basis due to their homogeneous nature. Loans that are 90 days or more delinquent or are not accruing interest are considered nonperforming. The following table presents the recorded investments in residential real estate, multi-family real estate and consumer loans by class based on payment activity as of June 30, 2023:


		Performing			Nonperforming			Total
June 30, 2023
One-to-four-family residential		$	59,562,818		$	—		$	59,562,818
Multi-family real estate			44,183,871			—			44,183,871
Consumer			2,824,747			—			2,824,747
		$	106,571,436		$	—		$	106,571,436

The following table summarizes the aging of the past due loans by loan class within the portfolio segments as of June 30, 2024 and 2023:


		Still Accruing
		30-59 Days			60-89 Days			Over 90 Days			Nonaccrual
		Past Due			Past Due			Past Due			Balance
June 30, 2024
Commercial real estate		$	—		$	—		$	—		$	—
Commercial and industrial			—			—			—			—
Construction			—			—			—			—
One-to-four-family residential			68,031			—			—			—
Multi-family real estate			—			—			—			—
Consumer			—			—			—			—
Total		$	68,031		$	—		$	—		$	—


		Still Accruing
		30-59 Days			60-89 Days			Over 90 Days			Nonaccrual
		Past Due			Past Due			Past Due			Balance
June 30, 2023
Commercial real estate		$	—		$	—		$	—		$	—
Commercial and industrial			16,487			—			—			—
Construction			—			—			—			—
One-to-four-family residential			26,986			—			—			—
Multi-family real estate			—			—			—			—
Consumer			—			—			—			—
Total		$	43,473		$	—		$	—		$	—

Individually Evaluated Loans

Loans that do not share common risk characteristics with other loans are evaluated individually and are not included in the collective analysis in accordance with ASC 326. There were no loans evaluated individually as of June 30, 2024.

Impaired Loans

A loan is considered impaired when based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.

The following table summarizes individually impaired loans by class of loans as of June 30, 2023:


					Unpaid						Average			Interest
		Recorded			Principal			Related			Recorded			Income
		Investment			Balance (1)			Allowance			Investment			Recognized
June 30, 2023
With no related allowance recorded
One-to-four-family residential		$	117,103		$	117,103		$	—		$	123,307		$	6,967
		$	117,103		$	117,103		$	—		$	123,307		$	6,967

Unpaid

Average

Interest

Recorded

Principal

Related

Recorded

Income

Investment

Balance (1)

Allowance

Investment

Recognized

With an allowance recorded

One-to-four-family residential

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

(1)	Represents the borrower's loan obligation, gross of any previously charged-off amounts.

The Company’s July 1, 2023 adoption of ASU 2022-02 eliminates the recognition and measurement of TDRs. Upon adoption of this guidance, the Company will no longer recognize an allowance for credit losses for the economic concession granted to a borrower for changes in the timing and amount of contractual cash flows when a loan is restructured. The adoption of ASU 2022-02 results in a change to reporting for loan modifications to borrowers experiencing financial difficulties. With the adoption of ASU 2022-02 these modifications require enhanced reporting on the type of modifications granted and the financial magnitude of the concessions granted. When the Company modifies a loan with financial difficulty, such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a change in scheduled payment amount; or principal forgiveness.

There were no loans during the year ended June 30, 2024 that were modified to borrowers experiencing financial difficulty since the adoption of ASU 2022-02 effective July 1, 2023.

There were no loans modified as TDRs during the year ended June 30, 2023.

The Company maintains a collateral pledge agreement with the FHLB covering secured advances whereby the Company has agreed to retain, free of all other pledges, liens, and encumbrances, commercial and industrial, commercial real estate, and one-to-four family residential and multi-family real estate loans. The pledged loans are discounted at a factor of 24% to 38% when aggregating the amount of loans required by the pledge agreement. The amount of eligible collateral was $92,177,419 and $95,988,835 as of June 30, 2024 and June 30, 2023, respectively. There was also FHLB stock of $1,329,413 and $770,273 pledged as of June 30, 2024 and June 30, 2023, respectively.