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Loans Receivable and Allowance for Credit Losses
 6 Months Ended
Sep. 30, 2024
Loans and Leases Receivable Disclosure [Abstract]  
Loans Receivable and Allowance for Credit Losses LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
The loans receivable portfolio is segmented into one-to-four family, multifamily, commercial real estate, construction, business (including Small Business Administration loans), and consumer loans.

    The ACL reflects management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. Management uses a disciplined process and methodology to calculate the ACL each quarter. To determine the total ACL, management estimates the reserves needed for each segment of the loan portfolio, including loans analyzed individually and loans analyzed on a pooled basis.

    The following is a summary of loans receivable, net of allowance for credit losses at September 30, 2024 and March 31, 2024:
September 30, 2024
March 31, 2024
$ in thousandsAmountPercentAmountPercent
Loans receivable:    
One-to-four family$77,847 12.6 %$82,787 13.3 %
Multifamily173,366 28.0 %177,203 28.4 %
Commercial real estate179,108 28.9 %175,384 28.2 %
Construction3,760 0.6 %2,203 0.4 %
Business (1)
169,138 27.3 %169,602 27.2 %
Consumer (2)
15,995 2.6 %15,699 2.5 %
Total loans receivable$619,214 100.0 %$622,878 100.0 %
Allowance for credit losses(6,242)(5,871)
Total loans receivable, net$612,972 $617,007 
(1) Includes PPP loans and business overdrafts
(2) Includes personal loans and consumer overdrafts

The totals above are shown net of deferred loan fees and costs. Net deferred loan fees totaled $2.5 million and $2.9 million at September 30, 2024 and March 31, 2024, respectively. The Bank purchased $2.5 million consumer loans during the six months ended September 30, 2024.

The Bank participated as a lender in the PPP, which opened on April 3, 2020. As part of the CARES Act, the SBA was authorized to temporarily guarantee loans under this new 7(a) loan program. Under the PPP, small businesses and other entities and individuals could apply for loans from existing SBA lenders and other approved regulated lenders that enrolled in the program, subject to numerous limitations and eligibility criteria. Since the PPP loans are fully guaranteed by the SBA, there are no additional ACL reserves required. As of September 30, 2024, the Bank had approved and funded approximately 420 applications totaling $57.1 million of loans under the PPP. Outstanding business loans under the PPP totaled $230 thousand as of September 30, 2024.
The following is an analysis of the allowance for credit losses based upon the method of evaluating loan reserves under the expected loss methodology for the three and six months ended September 30, 2024 and 2023, and the fiscal year ended March 31, 2024.

Three months ended September 30, 2024
$ in thousandsOne-to-four
family		MultifamilyCommercial Real EstateConstructionBusinessConsumer UnallocatedTotal
Allowance for credit losses:      
Beginning Balance$2,050 $762 $1,234 $3 $1,295 $553 $58 $5,955 
Charge-offs— — — — (100)(77)— (177)
Recoveries— — — — 2 1 — 3 
Provision for (recovery of) Credit Losses(37)(3)13 1 342 130 15 461 
Ending Balance$2,013 $759 $1,247 $4 $1,539 $607 $73 $6,242 

Six months ended September 30, 2024
$ in thousandsOne-to-four
family		MultifamilyCommercial Real EstateConstructionBusinessConsumer UnallocatedTotal
Allowance for credit losses:      
Beginning Balance$2,005 $720 $1,222 $1 $1,415 $450 $58 $5,871 
Charge-offs— — — — (228)(127)— (355)
Recoveries— — — — 4 1 — 5 
Provision for (recovery of) Credit Losses8 39 25 3 348 283 15 721 
Ending Balance$2,013 $759 $1,247 $4 $1,539 $607 $73 $6,242 
Allowance for Credit Losses Ending Balance: collectively evaluated for impairment$2,013 $759 $1,247 $4 $1,269 $528 $73 $5,893 
Allowance for Credit Losses Ending Balance: individually evaluated for impairment— — — — 270 79 — 349 
Loan Receivables Ending Balance:$77,847 $173,366 $179,108 $3,760 $169,138 $15,995 $— $619,214 
Ending Balance: collectively evaluated for impairment75,967 170,187 174,586 3,760 156,475 15,861 — 596,836 
Ending Balance: individually evaluated for impairment1,880 3,179 4,522 — 12,663 134 — 22,378 
At March 31, 2024
$ in thousandsOne-to-four familyMultifamilyCommercial Real EstateConstructionBusinessConsumerUnallocatedTotal
Allowance for Credit Losses Ending Balance:$2,005 $720 $1,222 $1 $1,415 $450 $58 $5,871 
Allowance for Credit Losses Ending Balance: collectively evaluated for impairment2,005 720 1,222 1 1,408 449 58 5,863 
Allowance for Credit Losses Ending Balance: individually evaluated for impairment— — — — 7 1 — 8 
Loan Receivables Ending Balance:$82,787 $177,203 $175,384 $2,203 $169,602 $15,699 $— $622,878 
Ending Balance: collectively evaluated for impairment78,636 174,718 170,862 2,203 156,340 15,654 — 598,413 
Ending Balance: individually evaluated for impairment4,151 2,485 4,522 — 13,262 45 — 24,465 

Three months ended September 30, 2023
$ in thousandsOne-to-four
family		MultifamilyCommercial Real EstateConstructionBusinessConsumer UnallocatedTotal
Allowance for credit losses:      
Beginning Balance$2,063 $713 $1,264 $— $1,404 $414 $— $5,858 
Charge-offs— — — — — (22)— (22)
Recoveries— — — — 1 2 — 3 
Provision for (recovery of) Credit Losses201 8 (52)— (12)23 — 168 
Ending Balance$2,264 $721 $1,212 $— $1,393 $417 $— $6,007 

Six months ended September 30, 2023
$ in thousandsOne-to-four familyMultifamilyCommercial Real EstateConstructionBusinessConsumerUnallocatedTotal
Allowance for credit losses:
Beginning Balance$716 $1,109 $1,814 $— $1,139 $449 $2 $5,229 
Impact of CECL adoption1,220 (392)(497)505 (166)(2)668 
Charge-offs— — — — — (117)— (117)
Recoveries— — — — 50 3 — 53 
Provision for (recovery of) Credit Losses328 4 (105)— (301)248 — 174 
Ending Balance$2,264 $721 $1,212 $— $1,393 $417 $— $6,007 
The following is a summary of nonaccrual loans, at amortized cost, at September 30, 2024 and March 31, 2024.
September 30, 2024
$ in thousandsNonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal
Nonaccrual Loans
Gross loans receivable: 
One-to-four family$2,244 $— $2,244 
Multifamily1,708 — 1,708 
Commercial real estate4,522 — 4,522 
Business8,367 145 8,512 
Consumer2 137 139 
Total nonaccrual loans$16,843 $282 $17,125 

March 31, 2024
$ in thousandsNonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal
Nonaccrual Loans
Gross loans receivable:
One-to-four family$3,554 $— $3,554 
Multifamily2,238 — 2,238 
Commercial real estate4,522 — 4,522 
Business1,317 100 1,417 
Consumer— 44 44 
Total nonaccrual loans$11,631 $144 $11,775 

    Nonaccrual loans generally consist of loans for which the accrual of interest has been discontinued as a result of such loans becoming 90 days or more delinquent as to principal and/or interest payments.  Accrual of interest on loans is discontinued when the payment of principal or interest is considered to be in doubt, or when a loan becomes contractually past due by 90 days or more with respect to principal or interest, except for loans that are well-secured and in the process of collection. When a loan is placed on nonaccrual status, any accrued but uncollected interest is reversed from current income. Interest income on nonaccrual loans is recorded when received based upon the collectability of the loan. There was no interest income recognized on nonaccrual loans during the three and six months ended September 30, 2024.

    At September 30, 2024 and March 31, 2024, other non-performing assets totaled $52 thousand, respectively, which consisted of other real estate owned comprised of one foreclosed residential property. Other real estate owned is included in other assets in the consolidated statements of financial condition. There were no held-for-sale loans at September 30, 2024 and March 31, 2024.

    Although we believe that substantially all risk elements at September 30, 2024 have been disclosed, it is possible that for a variety of reasons, including economic conditions, certain borrowers may be unable to comply with the contractual repayment terms on certain real estate and commercial loans.

The Bank utilizes an internal loan classification system as a means of reporting problem loans within its loan categories:

Pass - Loans have demonstrated satisfactory asset quality, earning history, liquidity, and other adequate margins of creditor protection. These loans represent a moderate credit risk and some degree of financial stability, and are considered collectible in full.

Special Mention - Loans have potential weaknesses that deserve management's close attention. If uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank's credit position at some future date.

Substandard - Loans are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. These loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful - Loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that collection or liquidation in full, based on current facts, conditions and values, is highly questionable and improbable.

Loss - Loans are considered uncollectible with insignificant value and are charged off immediately to the allowance for credit losses.

One-to-four family residential loans and consumer loans are rated non-performing if they are delinquent in payments 90 or more days, or past maturity. All other one-to-four family residential loans and consumer loans are performing loans.
The following table presents the amortized cost of loans by year of origination and risk category by class of loans based on the most recent analysis performed in the current quarter as of September 30, 2024:
$ in thousands202420232022202120202019 and earlierRevolving LoansTotal
Credit Risk Profile by Internally Assigned Grade: 
Multifamily
Pass$1,727 $6,545 $53,143 $48,596 $27,383 $33,751 $— $171,145 
Special Mention— — — — — — — — 
Substandard— — — 1,467 754 — — 2,221 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total1,727 6,545 53,143 50,063 28,137 33,751 — 173,366 
Commercial Real Estate
Pass$8,830 $28,960 $31,035 $27,353 $16,729 $61,019 $— $173,926 
Special Mention— — — — — 660 — 660 
Substandard— — — — — 4,522 — 4,522 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total8,830 28,960 31,035 27,353 16,729 66,201 — 179,108 
Construction
Pass$— $3,760 $— $— $— $— $— $3,760 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total— 3,760 — — — — — 3,760 
Business
Pass$19,562 $19,494 $31,108 $47,175 $10,690 $28,764 $— $156,793 
Special Mention— — — — — — — — 
Substandard— — 7,909 3,987 — 449 — 12,345 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total19,562 19,494 39,017 51,162 10,690 29,213 — 169,138 
Gross charge-offs— — 100 — — — 128 — 228 
Credit Risk Profile Based on Payment Activity:
One-to-four Family
Performing$— $21,510 $3,797 $13,326 $1,408 $35,926 $— $75,967 
Non-Performing— — — — — 1,880 — 1,880 
Total— 21,510 3,797 13,326 1,408 37,806 — 77,847 
Consumer
Performing$4,157 $10,102 $448 $1 $2 $1,147 $— $15,857 
Non-Performing48 73 10 2 5 — — 138 
Total4,205 10,175 458 3 7 1,147 — 15,995 
Gross charge-offs— 109 — — — 18 — 127 
Total Loans (excluding gross charge-offs)$34,324 $90,444 $127,450 $141,907 $56,971 $168,118 $— $619,214 
    At March 31, 2024, the risk category by class of loans was as follows:
$ in thousands202420232022202120202019 and earlierRevolving LoansTotal
Credit Risk Profile by Internally Assigned Grade:
Multifamily
Pass$980 $6,587 $53,516 $50,778 $28,483 $34,374 — $174,718 
Special Mention— — — — — — — — 
Substandard— — — 1,451 754 280 — 2,485 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total980 6,587 53,516 52,229 29,237 34,654 — 177,203 
Commercial Real Estate
Pass$2,450 $29,064 $31,313 $27,635 $16,951 $62,775 — 170,188 
Special Mention— — — — — 674 — 674 
Substandard— — — — — 4,522 — 4,522 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total2,450 29,064 31,313 27,635 16,951 67,971 — 175,384 
Construction
Pass$— $2,203 $— $— $— $— $— 2,203 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total— 2,203 — — — — — 2,203 
Business
Pass$7,050 $21,315 $32,675 $52,839 $10,845 $32,587 — 157,311 
Special Mention— — — — — — — — 
Substandard— — 7,939 3,987 — 365 — 12,291 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total7,050 21,315 40,614 56,826 10,845 32,952 — 169,602 
Gross charge-offs— — — — — 10 — 10 
Credit Risk Profile Based on Payment Activity:
One-to-four Family
Performing$— $22,247 $3,830 $13,422 $1,424 $39,002 $— 79,925 
Non-Performing— — — — — 2,862 — 2,862 
Total— 22,247 3,830 13,422 1,424 41,864 — 82,787 
Consumer
Performing$2,003 $— $11,891 $— $570 $— $4 $16 $1,172 $— 15,656 
Non-Performing— 42 1 — — — — 43 
Total2,003 11,933 571 4 16 1,172 — 15,699 
Gross charge-offs— 18 1 — — 141 — 160 
Total Loans (excluding gross charge-offs)$12,483 $93,349 $129,844 $150,116 $58,473 $178,613 $— $622,878 
    Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due. The following tables present an aging analysis of the amortized cost of past due loans receivables at September 30, 2024 and March 31, 2024.
.
September 30, 2024
$ in thousands30-59 Days
Past Due		60-89 Days
Past Due		90 or More Days Past DueTotal Past
Due		CurrentTotal Loans
Receivables
One-to-four family$319 $37 $1,313 $1,669 $76,178 $77,847 
Multifamily— — 1,712 1,712 171,654 173,366 
Commercial real estate1,600 — 4,522 6,122 172,986 179,108 
Construction— — — — 3,760 3,760 
Business1,850 415 12,333 14,598 154,540 169,138 
Consumer194 47 123 364 15,631 15,995 
Total$3,963 $499 $20,003 $24,465 $594,749 $619,214 
March 31, 2024
$ in thousands30-59 Days
Past Due		60-89 Days
Past Due		90 or More Days Past DueTotal Past
Due		CurrentTotal Loans Receivables
One-to-four family$164 $— $2,859 $3,023 $79,764 $82,787 
Multifamily— — 2,205 2,205 174,998 177,203 
Commercial real estate— — 4,660 4,660 170,724 175,384 
Construction— — — — 2,203 2,203 
Business1,959 214 12,071 14,244 155,358 169,602 
Consumer151 54 — 205 15,494 15,699 
Total$2,274 $268 $21,795 $24,337 $598,541 $622,878 

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the underlying collateral and the borrower is experiencing financial difficulty. All substandard and doubtful loans and any other loans that the Chief Credit Officer deems appropriate for review, are identified and reviewed for individual analysis. The following table presents the amortized cost of collateral dependent loans with the associated allowance amount, if applicable, as of September 30, 2024 and March 31, 2024:
At September 30, 2024
At March 31, 2024
Collateral TypeCollateral Type
$ in thousandsReal EstateOtherAllowance AllocatedReal EstateOtherAllowance Allocated
One-to-four family$1,880 $— $— $4,151 $— $— 
Multifamily3,179 — — 2,485 — — 
Commercial real estate4,522 — — 4,522 — — 
Business12,300 363 270 12,196 1,066 7 
Consumer2 132 79 — 45 1 
$21,883 $495 $349 $23,354 $1,111 $8 

Real estate collateral includes one-to-four family, multifamily and commercial properties. Collateral types securing business loans include accounts receivable. There have been no significant changes to the types of collateral securing the Bank's collateral dependent loans.

In certain circumstances, the Bank will modify the terms of a loan by granting a concession. Situations around these modifications may include extension of maturity date, reduction in the stated interest rate, rescheduling of future cash flows, reduction in the face amount of the debt or reduction of past accrued interest. Loans modified are placed on nonaccrual status until the Company determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six months. There were no loan modifications to borrowers experiencing financial difficulty made during the six months ended September 30, 2024 and 2023. At September 30, 2024, loans modified to borrowers experiencing financial difficulty totaled $6.0 million, $357 thousand of which were non-performing as they were either not consistently performing in accordance with their modified terms or not performing in accordance with their modified terms for at least six months. There were three modified loans totaling $5.7 million that were on accrual status as the Company has determined that future collection of the principal and interest is reasonably assured. These have generally performed according to the restructured terms for a period of at least six months. For the periods ended September 30, 2024 and 2023, there were no modified loans that defaulted within 12 months of
modification.

Transactions With Certain Related Persons

    Federal law requires that all loans or extensions of credit to executive officers and directors must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features. Furthermore, loans above the greater of $25,000, or 5% of Carver Federal’s capital and surplus (up to $500,000), to Carver Federal’s directors and executive officers must be approved in advance by a majority of the disinterested members of Carver Federal’s Board of Directors. There were no loans outstanding to related parties at September 30, 2024.