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Loans Receivable Held for Investment
 12 Months Ended
Dec. 31, 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 periods indicated:
 
   
December 31, 2021
    
December 31, 2020
  
   
(In thousands)
  
Real estate:
            
Single family
  
$
45,372
    
$
48,217
  
Multi‑family
    
393,704
      
272,387
  
Commercial real estate
    
93,193
      
24,289
  
Church
    
22,503
      
16,658
  
Construction
    
32,072
      
429
  
Commercial – other
    
46,539
      
57
  
SBA loans
     18,837       -  
Consumer
    
-
      
7
  
Gross loans receivable before deferred loan costs and premiums
    
652,220
      
362,044
  
Unamortized net deferred loan costs and premiums
    
1,526
      
1,300
  
      653,746       363,344  
Credit and interest marks on purchased loans, net
    (1,842 )     -  
Allowance for loan losses
    
(3,391
)
    
(3,215
)
Loans receivable, net
  
$
648,513
    
$
360,129
  
 
As of December 31, 2021, the commercial loan category above included $18.0 million of loans issued under the SBA’s Paycheck Protection Program (“PPP”). PPP loans have terms of two to five years and earn interest at 1%. PPP loans are fully guaranteed by the SBA and have virtually no risk of loss. The Bank expects the vast majority of the PPP loans to be fully forgiven by the SBA.

The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:
 
   
For the year ended December 31, 2021
  
   
Real Estate
                    
   
Single
family
    
Multi‑
family
    
Commercial
real estate
    
Church
    
Construction
    
Commercial
– other
    
Consumer
    
Total
  
   
(In thousands)
  
Beginning balance
  
$
296
    
$
2,433
    
$
222
    
$
237
    
$
22
    
$
4
    
$
1
    
$
3,215
  
Provision for (recapture of) loan losses
    
(151
)
    
224
      
14
      
(134
)
    
190
   
19
   
14
      
176
  
Recoveries
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Loans charged off
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Ending balance (1)
  
$
145
    
$
2,657
    
$
236
    
$
103
    
$
212
    
$
23
    
$
15
    
$
3,391
  
(1)
Loans acquirqed in the City First Merger and PPP loans originated since the merger were not considered in this analysis.

   
For the year ended December 31, 2020
  
   
Real Estate
                    
   
Single
family
    
Multi‑
family
    
Commercial
real estate
    
Church
    
Construction
    
Commercial
– other
    
Consumer
    
Total
  
   
(In thousands)
  
Beginning balance
  
$
312
    
$
2,319
    
$
133
    
$
362
    
$
48
    
$
7
     $
1
    
$
3,182
  
Provision for (recapture of) loan losses
    
(20
)
    
114
      
89
      
(125
)
    
(26
)
    
(3
)
     -      
29
  
Recoveries
    
4
      
-
      
-
      
-
      
-
      
-
      
-
      
4
  
Loans charged off
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Ending balance
  
$
296
    
$
2,433
    
$
222
    
$
237
    
$
22
    
$
4
     $
1
    
$
3,215
  
 
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 December 31, 2021, was as follows:

    (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 December 31, 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 year ended December 31, 2021:

    (In thousands)  
Balance on acquisition date
  
$
-
  
Additions
     346  
Accretion
     (57 )
Balance at the end of the year
   $ 289  

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 and for the periods indicated:
 
   
December 31, 2021
  
   
Real Estate
                    
   
Single
family
    
Multi‑
family
    
Commercial
real estate
    
Church
    
Construction
    
Commercial
– other
    
SBA
    
Total
  
   
(In thousands)
  
Allowance for loan losses:
                                                
Ending allowance balance attributable to loans:
                                
Individually evaluated for impairment
  
$
3
    
$
-
     $
-
    
$
4
     $
-
    
$
-
     $
-
    
$
7
  
Collectively evaluated for impairment
    
142
      
2,657
      
236
      
99
      
212
      
23
      
15
      
3,384
  
Total ending allowance balance
  
$
145
    
$
2,657
     $
236
    
$
103
     $
212
    
$
23
     $
15
    
$
3,391
  
Loans:
                                                                
Loans individually evaluated for impairment
  
$
65
    
$
282
     $
-
    
$
1,954
     $
-
    
$
-
     $
-
    
$
2,301
  
Loans collectively evaluated for impairment
    
32,599
      
353,179
      
25,507
      
9,058
      
24,225
      
3,124
      
-
      
447,692
  
Subtotal
     32,664       353,461       25,507       11,012       24,225       3,124       -       449,993  
Loans acquired in the Merger
     12,708       41,769       67,686       11,491       7,847       43,415       18,837       203,753  
Total ending loans balance
  
$
45,372
    
$
395,230
     $
93,193
    
$
22,503
     $
32,072
    
$
46,539
     $
18,837
    
$
653,746
  

   
December 31, 2020
  
   
Real Estate
                    
   
Single
family
    
Multi‑
family
    
Commercial
real estate
    
Church
    
Construction
    
Commercial
– other
    
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 periods indicated:
 
   
December 31, 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
    
282
      
282
      
-
      
298
      
298
      
-
  
Church
    
-
      
-
      
-
      
2,527
      
1,970
      
-
  
With an allowance recorded:
                                                
Single family
    
65
      
65
      
3
      
573
      
573
      
89
  
Church
    
1,954
      
1,954
      
4
      
1,842
      
1,842
      
52
  
Commercial – other
    
-
      
-
      
-
      
47
      
47
      
-
  
Total
   $
2,301
     $
2,301
     $
7
     $
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:
 
   
For the year ended December 31, 2021
    
For the year ended December 31, 2020
  
   
Average
Recorded
Investment
    
Cash Basis
Interest
Income
Recognized
    
Average
Recorded
Investment
    
Cash Basis
Interest
Income
Recognized
  
   
(In thousands)
  
Single family
  
$
66
    
$
5
    
$
591
    
$
29
  
Multi‑family
    
290
      
19
      
306
      
21
  
Church
    
2,310
      
176
      
4,033
      
442
  
Commercial – other
    
-
      
-
      
55
      
4
  
Total
  
$
2,666
    
$
200
    
$
4,985
    
$
496
  
 
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 $71 thousand and $89 thousand for the years ended December 31, 2021 and 2020, respectively, and were not included in the consolidated results of operations.
 
The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated:
 
    December 31, 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
   $
-
    
$
-
    
$
-
     $
-
    
$
45,372
     $
45,372
  
Multi‑family
    
-
      
-
      
-
       -      
395,230
      
395,230
  
Commercial real estate
    
-
      
2,423
      
-
       2,423      
90,770
      
93,193
  
Church
    
-
      
-
      
-
       -      
22,503
      
22,503
  
Construction
    
-
      
-
      
-
       -      
32,072
      
32,072
  
Commercial – other
    
-
      
-
      
-
       -      
46,539
      
46,539
  
SBA loans
                                     18,837       18,837  
Consumer
    
-
      
-
      
-
       -      
-
      
-
  
Total
   $
-
    
$
2,423
    
$
-
     $
2,423
    
$
651,323
     $
653,746
  

   
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:
 
   
December 31, 2021
    
December 31, 2020
  
Loans receivable held for investment:
  
(In thousands)
  
Single family
  
$
-
    
$
1
  
Church
    
684
      
786
  
Total non-accrual loans
  
$
684
    
$
787
  
 
There were no loans 90 days or more delinquent that were accruing interest as of December 31, 2021 or December 31, 2020.
 
Troubled Debt Restructurings
 
At December 31, 2021, loans classified as troubled debt restructurings (“TDRs”) totaled $1.8 million, of which $188 thousand were included in non‑accrual loans and $1.6 million were on accrual status. At December 31, 2020, loans classified as TDRs totaled $4.5 million, of which $232 thousand were included in non‑accrual loans and $4.3 million were on accrual status. The Company has allocated $7 thousand and $141 thousand of specific reserves for accruing TDRs as of December 31, 2021 and 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 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 December 31, 2021 and 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 years ended December 31, 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 herein. 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, 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 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.

The following table shows the risk categories of loans by type excluding loans acquired in the City First Merger as of  December 31, 2021:
 
    December 31, 2021
  
   
Pass
    
Watch
    
Special Mention
    
Substandard
    
Doubtful
    
Loss
     Total  
    (In thousands)        
Single family
  
$
32,664
     $ -    
$
-
    
$
-
    
$
-
    
$
-
     $
32,664  
Multi‑family
    
353,118
      
-
      
-
      
343
      
-
      
-
       353,461  
Commercial real estate
    
24,049
      
-
      
-
      
1,458
      
-
      
-
       25,507  
Church
    
8,530
      
-
      
-
      
2,482
      
-
      
-
       11,012  
Construction
    
8,275
       15,950      
-
      
-
      
-
      
-
       24,225  
Commercial – other
    
3,124
       -      
-
      
-
      
-
      
-
       3,124  
Consumer
    
-
       -      
-
      
-
      
-
      
-
       -  
Total
  
$
429,760
    
$
15,950
    
$
-
    
$
4,283
    
$
-
    
$
-
     $ 449,993  

The following table shows the risk categories of loans by type for loans acquired in the City First Merger as of December 31, 2021:
    December 31, 2021  
    Pass     Watch     Special Mention     Substandard     Doubtful     Loss     Total  
         
(In thousands)
  
Single family
  
$
9,790
    
$
1,343
    
$
271
    
$
1,304
    
$
-
    
$
-
    
$
12,708
  
Multi‑family
    
25,023
      
7,987
      
575
      
8,184
      
-
      
-
      
41,769
  
Commercial real estate
    
45,208
      
7,034
      
9,847
      
5,597
      
-
      
-
      
67,686
  
Church
     11,491       -       -       -      
-
      
-
       11,491  
Construction
    
2,247
      
5,600
       -       -      
-
      
-
      
7,847
  
Commercial – other
    
30,864
      
12,551
      
-
       -      
-
      
-
      
43,415
  
SBA
     18,665       -       172       -       -       -       18,837  
Total
  $ 143,288     $ 34,515     $ 10,865     $ 15,085     $ -     $ -     $ 203,753  

   
December 31, 2020
  
   
Pass
    
Watch
    
Special Mention
    
Substandard
    
Doubtful
    
Loss
       Total  
   
(In thousands)
  
Single family
  
$
48,357
     $ -    
$
-
    
$
-
    
$
-
    
$
-
     $
48,357  
Multi‑family
    
273,501
      
-
      
-
      
363
      
-
      
-
       273,864  
Commercial real estate
    
22,834
       1,488      
-
      
-
      
-
      
-
       24,322  
Church
    
12,899
      
657
      
-
      
2,752
      
-
      
-
       16,308  
Construction
    
430
       -      
-
      
-
      
-
      
-
       430  
Commercial – other
    
9
       -      
-
      
47
      
-
      
-
       56  
Consumer
    
7
       -      
-
      
-
      
-
      
-
       7  
Total
  
$
358,037
    
$
2,145
    
$
-
    
$
3,162
    
$
-
    
$
-
     $
363,344