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Loans Receivable Held for Investment (Tables)

9 Months Ended

Sep. 30, 2023

Loans Receivable Held for Investment [Abstract]

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

	September 30, 2023			December 31, 2022
	(In thousands)
Real estate:
Single family	$	25,514		$	30,038
Multi-family		532,689			502,141
Commercial real estate		116,100			114,574
Church		12,896			15,780
Construction		81,813			40,703
Commercial – other		64,943			64,841
SBA loans⁽¹⁾		7,770			3,601
Consumer		20			11
Gross loans receivable before deferred loan costs and premiums		841,745			771,689
Unamortized net deferred loan costs and premiums		1,368			1,755
Gross loans receivable		843,113			773,444
Credit and interest marks on purchased loans, net		(858	)		(1,010	)
Allowance for credit losses ⁽²⁾		(6,899	)		(4,388	)
Loans receivable, net	$	835,356		$	768,046

(1)	Including Paycheck Protection Program (PPP) loans.

(2)

The allowance for credit losses as of December 31, 2022 was accounted for under ASC 450 and ASC 310, which is reflective of probable incurred losses as of the date of the consolidated statement of financial condition. Effective January 1, 2023, the allowance for credit losses is accounted for under ASC 326, which is reflective of estimated expected lifetime credit losses.

Carrying Amount of Purchased Credit Deteriorated Loans

The carrying amount of those loans was as follows:

	September 30, 2023		December 31, 2022
	(In thousands)
Real estate:
Single family	$	–	$	68
Commercial – other		45		57
	$	45	$	125

Accretable yield on Purchased Credit Deteriorated Loans

The following tables summarize the discount on the PCD loans for the periods indicated:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
	(In thousands)
Balance at the beginning of the period	$	7		$	27
Deduction due to payoffs		–			(12	)
Accretion		(2	)		(10	)
Balance at the end of the period	$	5		$	5

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
	(In thousands)
Balance at the beginning of the period	$	160		$	883
Deduction due to payoffs		(71	)		(810	)
Accretion		(4	)		(20	)
Balance at the end of the period	$	93		$	93

Activity in Allowance for Credit Losses on Loans

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

	Three Months Ended September 30, 2023
	Beginning Balance		Charge-offs		Recoveries		Provision (Recapture) ⁽¹⁾			Ending Balance
	(In thousands)
Loans receivable held for investment:
Real estate:
Single family	$	247	$	–	$	–	$	(6	)	$	241
Multi-family		4,255		–		–		(8	)		4,247
Commercial real estate		1,012		–		–		9			1,021
Church		83		–		–		(4	)		79
Construction		788		–		–		59			847
Commercial - other		546		–		–		(121	)		425
SBA loans		39		–		–		–			39
Consumer		–		–		–		–			–
Total	$	6,970	$	–	$	–	$	(71	)	$	6,899

	Nine Months Ended September 30, 2023
	Beginning Balance		Impact of CECL Adoption			Charge-offs		Recoveries		Provision (Recapture) ⁽¹⁾			Ending Balance
	(In thousands)
Loans receivable held for investment:
Real estate:
Single family	$	109	$	214		$	–	$	–	$	(82	)	$	241
Multi-family		3,273		603			–		–		371			4,247
Commercial real estate		449		466			–		–		106			1,021
Church		65		37			–		–		(23	)		79
Construction		313		219			–		–		315			847
Commercial - other		175		254			–		–		(4	)		425
SBA loans		–		20			–		–		19			39
Consumer		4		(4	)		–		–		–			–
Total	$	4,388	$	1,809		$	–	$	–	$	702		$	6,899

(1)	The bank also recorded a provision for off-balance sheet loan commitments of $69 thousand for the three months ended September 30, 2023 and $106 thousand for the nine months ended September 30, 2023.

The following tables present the activity in the allowance for loan losses by loan type for the periods indicated (in thousands):

	For the Three Months Ended September 30, 2022
	Real Estate
	Single Family			Multi- Family		Commercial Real Estate		Church		Construction		Commercial - Other		Consumer		Total
Beginning balance	$	120		$	2,278	$	153	$	48	$	221	$	138	$	4	$	2,962
Provision for (recapture of) loan losses		(8	)		641		142		6		187		53		–		1,021
Recoveries		–			–		–		–		–		–		–		–
Loans charged off		–			–		–		–		–		–		–		–
Ending balance	$	112		$	2,919	$	295	$	54	$	408	$	191	$	4	$	3,983

	For the Nine Months Ended September 30, 2022
	Real Estate
	Single Family			Multi- Family		Commercial Real Estate		Church			Construction		Commercial - Other		Consumer			Total
Beginning balance	$	145		$	2,657	$	236	$	103		$	212	$	23	$	15		$	3,391
Provision for (recapture of) loan losses		(33	)		262		59		(49	)		196		168		(11	)		592
Recoveries		–			–		–		–			–		–		–			–
Loans charged off		–			–		–		–			–		–		–			–
Ending balance	$	112		$	2,919	$	295	$	54		$	408	$	191	$	4		$	3,983

Collateral Dependent Loans By Collateral Type

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

	September 30, 2023
	Single Family		Multi-Family Residential		Church		Business Assets		Total
Real estate:	(In thousands)
Single family	$	47	$	–	$	–	$	–	$	47
Multi family		–		5,707		–		–		5,707
Commercial real estate		–		–		69		–		69
Church		–		–		395		–		395
Commercial – other		–		–		–		135		135
Total	$	47	$	5,707	$	464	$	135	$	6,353

Allowance for Loan Losses and Recorded Investment in Loans by Type of Loans and Based on Impairment Method

The following table presents 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 the impairment method as of the date indicated:

	December 31, 2022
	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	$	3	$	–	$	–	$	4	$	–	$	–	$	–	$	7
Collectively evaluated for impairment		106		3,273		449		61		313		175		4		4,381
Total ending allowance balance	$	109	$	3,273	$	449	$	65	$	313	$	175	$	4	$	4,388
Loans:
Loans individually evaluated for impairment	$	57	$	–	$	–	$	1,655	$	–	$	–	$	–	$	1,712
Loans collectively evaluated for impairment		20,893		462,539		63,929		9,008		38,530		29,558		11		624,468
Subtotal		20,950		462,539		63,929		10,663		38,530		29,558		11		626,180
Loans acquired in the CFBanc merger		9,088		41,357		50,645		5,117		2,173		38,884		–		147,264
Total ending loans balance	$	30,038	$	503,896	$	114,574	$	15,780	$	40,703	$	68,442	$	11	$	773,444

Loans Individually Evaluated for Impairment by Loan Type

The following table presents information related to loans individually evaluated for impairment by loan type as of the dates indicated:

	December 31, 2022
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Church	$	1,572	$	1,572	$	–
With an allowance recorded:
Single family		57		57		3
Church		83		83		4
Total	$	1,712	$	1,712	$	7

Average of Loans Individually Evaluated for Impairment by Loan Type and Related Interest Income

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:

	Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
Single family	$	60	$	1	$	63	$	3
Multi-family		268		5		274		14
Church		2,172		25		2,197		76
Commercial - other		–		–		–		–
Total	$	2,500	$	31	$	2,534	$	93

Aging of Recorded Investment in Past Due Loans by Loan Type

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

	September 30, 2023
	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	$	–	$	–	$	–	$	–	$	25,514	$	25,514
Multi-family		–		–		–		–		534,057		534,057
Commercial real estate		–		–		–		–		116,100		116,100
Church		–		–		–		–		12,896		12,896
Construction		1,210		–		–		1,210		80,603		81,813
Commercial - other		–		–		–		–		64,943		64,943
SBA loans		–		–		–		–		7,770		7,770
Consumer		–		–		–		–		20		20
Total	$	1,210	$	–	$	–	$	1,210	$	841,903	$	843,113

December 31, 2022

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

–

30,038

Multi-family

–

503,896

Commercial real estate

–

114,574

Church

–

15,780

Construction

–

40,703

Commercial - other

–

64,841

SBA loans

–

3,601

Consumer

–

Total

–

773,444

Recorded Investment in Non-accrual Loans by Loan Type

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

	September 30, 2023		December 31, 2022
	(In thousands)
Loans receivable held for investment:
Church	$	–	$	144
Total non-accrual loans	$	–	$	144

Loans Held for Investment Portfolio By Internal Risk Grading and By Year of Origination

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination as of September 30, 2023:

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
	(In thousands)
Single family:
Pass	$	4	$	–	$	3,743	$	2,688	$	2,271	$	15,179	$	–	$	23,885
Watch		–		–		–		754		–		283		–		1,037
Special Mention		–		–		–		–		–		252		–		252
Substandard		–		–		–		–		–		340		–		340
Total	$	4	$	–	$	3,743	$	3,442	$	2,271	$	16,054	$	–	$	25,514
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Multi-family:
Pass	$	46,126	$	185,387	$	149,777	$	30,245	$	45,639	$	55,476	$	–	$	512,650
Watch		–		3,300		–		–		–		967		–		4,267
Special Mention		–		–		–		904		–		1,352		–		2,256
Substandard		–		–		–		–		–		14,884		–		14,884
Total	$	46,126	$	188,687	$	149,777	$	31,149	$	45,639	$	72,679	$	–	$	534,057
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Commercial real estate:
Pass	$	3,020	$	25,280	$	22,222	$	16,862	$	22,078	$	20,299	$	–	$	109,761
Watch		–		–		–		–		–		1,088		–		1,088
Special Mention		–		–		–		–		–		–		–		–
Substandard		–		–		–	$	–	$	–		5,251		–	$	5,251
Total	$	3,020	$	25,280	$	22,222	$	16,862	$	22,078	$	26,638	$	–	$	116,100
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Church:
Pass	$	1,828	$	–	$	–	$	3,985	$	–	$	5,463	$	–	$	11,276
Watch		–		–		–		–		–		–		–		–
Special Mention		–		–		–		–		640		–		–		640
Substandard		–		–		–		–		–		980		–		980
Total	$	1,828	$	–	$	–	$	3,985	$	640	$	6,443	$	–	$	12,896
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Construction:
Pass	$	–	$	1,115	$	1,210	$	–	$	–	$	2,117	$	–	$	4,442
Watch		33,933		35,665		5,253		–		–		–		–		74,851
Special Mention		–		2,520		–		–		–		–		–		2,520
Substandard		–		–		–		–		–		–		–		–
Total	$	33,933	$	39,300	$	6,463	$	–	$	–	$	2,117	$	–	$	81,813
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Commercial – other:
Pass	$	15,045	$	2,637	$	6,240	$	3,723	$	6,209	$	24,730	$	–	$	58,584
Watch		–		459		746		1,500		2,250		1,232		–		6,187
Special Mention		–		–		172		–		–		–		–		172
Substandard		–		–		–		–		–		–		–		–
Total	$	15,045	$	3,096	$	7,158	$	5,223	$	8,459	$	25,962	$	–	$	64,943
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

SBA:
Pass	$	4,550	$	148	$	2,453	$	–	$	–	$	129	$	–	$	7,280
Watch		–		–		–		–		–		–		–		–
Special Mention		–		–		–		490		–		–		–		490
Substandard		–		–		–		–		–		–		–		–
Total	$	4,550	$	148	$	2,453	$	490	$	–	$	129	$	–	$	7,770
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Consumer:
Pass	$	20	$	–	$	–	$	–	$	–	$	–	$	–	$	20
Watch		–		–		–		–		–		–		–		–
Special Mention		–		–		–		–		–		–		–		–
Substandard		–		–		–		–		–		–		–		–
Total	$	20	$	–	$	–	$	–	$	–	$	–	$	–	$	20
YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

Total loans:
Pass	$	70,593	$	214,567	$	185,645	$	57,503	$	76,197	$	123,393	$	–	$	727,898
Watch		33,933		39,424		5,999		2,254		2,250		3,570		–		87,430
Special Mention		–		2,520		172		1,394		640		1,604		–		6,330
Substandard		–		–		–		–		–		21,455		–		21,455
Total loans	$	104,526	$	256,511	$	191,816	$	61,151	$	79,087	$	150,022	$	–	$	843,113
Total YTD gross charge-offs	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–

The following table stratifies the loan portfolio by the Company’s internal risk rating as of the date indicated:

	December 31, 2022
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss		Total
	(In thousands)
Single family	$	29,022	$	354	$	260	$	402	$	–	$	–	$	30,038
Multi-family		479,182		9,855		14,859		–		–		–		503,896
Commercial real estate		104,066		4,524		1,471		4,513		–		–		114,574
Church		14,505		728		–		547		–		–		15,780
Construction		2,173		38,530		–		–		–		–		40,703
Commercial - other		53,396		11,157		–		288		–		–		64,841
SBA		3,032		569		–		–		–		–		3,601
Consumer		11		–		–		–		–		–		11
Total	$	685,387	$	65,717	$	16,590	$	5,750	$	–	$	–	$	773,444