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Loans Receivable and Allowance for Credit Losses
 6 Months Ended
Sep. 30, 2023
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, 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 at September 30, 2023 and March 31, 2023:
September 30, 2023
March 31, 2023
$ in thousandsAmountPercentAmountPercent
Loans receivable:    
One-to-four family$85,081 13.9 %$65,808 11.0 %
Multifamily179,039 29.3 %179,117 30.0 %
Commercial real estate171,112 28.0 %178,424 29.8 %
Construction491 0.1 %— — %
Business (1)
162,460 26.6 %166,908 27.9 %
Consumer (2)
12,919 2.1 %7,639 1.3 %
Total loans receivable$611,102 100.0 %$597,896 100.0 %
Allowance for credit losses(6,007)(5,229)
Total loans receivable, net$605,095 $592,667 
(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 $3.0 million and $2.8 million at September 30, 2023 and March 31, 2023, respectively. The Bank purchased $20.0 million one-to-four family loans, $6.7 million consumer loans and $0.3 million business loans during the six months ended September 30, 2023.

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, 2023, the Bank had approved and funded approximately 420 applications totaling $57.1 million of loans under the PPP. Business loans included PPP loans outstanding totaling $268 thousand as of September 30, 2023.
The following is an analysis of the allowance for credit losses based upon the method of evaluating loan reserves for the three and six months ended September 30, 2023 under the expected loss methodology.
Three months ended September 30, 2023
$ in thousandsOne-to-four
family		MultifamilyCommercial Real EstateConstructionBusinessConsumerUnallocatedTotal
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
family		MultifamilyCommercial Real EstateConstructionBusinessConsumer UnallocatedTotal
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 
Allowance for Credit Losses Ending Balance: collectively evaluated for impairment$2,241 $721 $1,212 $— $1,383 $417 $— $5,974 
Allowance for Credit Losses Ending Balance: individually evaluated for impairment23 — — — 10 — — 33 
Loan Receivables Ending Balance:$85,081 $179,039 $171,112 $491 $162,460 $12,919 $— $611,102 
Ending Balance: collectively evaluated for impairment80,791 176,439 166,590 491 156,307 12,915 — 593,533 
Ending Balance: individually evaluated for impairment4,290 2,600 4,522 — 6,153 4 — 17,569 

The following is an analysis of the allowance for loan losses as of the fiscal year ended March 31, 2023 and for the three and six months ended September 30, 2022 based upon the incurred loss impairment model.
At March 31, 2023
$ in thousandsOne-to-four familyMultifamilyCommercial Real EstateBusinessConsumerUnallocatedTotal
Allowance for Loan Losses Ending Balance:$716 $1,109 $1,814 $1,139 $449 $2 $5,229 
Allowance for Loan Losses Ending Balance: collectively evaluated for impairment607 1,109 1,814 937 449 2 4,918 
Allowance for Loan Losses Ending Balance: individually evaluated for impairment109 — — 202 — — 311 
Loan Receivables Ending Balance:$65,808 $179,117 $178,424 $166,908 $7,639 $— $597,896 
Ending Balance: collectively evaluated for impairment60,805 179,046 171,234 160,985 7,638 — 579,708 
Ending Balance: individually evaluated for impairment5,003 71 7,190 5,923 1 — 18,188 
Three months ended September 30, 2022
$ in thousandsOne-to-four familyMultifamilyCommercial Real EstateBusinessConsumerUnallocatedTotal
Allowance for loan losses:
Beginning Balance$649 $1,053 $1,108 $2,321 $113 $360 $5,604 
Charge-offs— — — — (11)— (11)
Recoveries90 — 10 4 1 — 105 
Provision for (recovery of) Loan Losses(35)2 490 (511)(21)(114)(189)
Ending Balance$704 $1,055 $1,608 $1,814 $82 $246 $5,509 

Six months ended September 30, 2022
$ in thousandsOne-to-four familyMultifamilyCommercial Real EstateBusinessConsumerUnallocatedTotal
Allowance for loan losses:
Beginning Balance$731 $1,114 $1,157 $2,497 $123 $2 $5,624 
Charge-offs— — — — (24)— (24)
Recoveries90 — 10 23 2 — 125 
Provision for (recovery of) Loan Losses(117)(59)441 (706)(19)244 (216)
Ending Balance$704 $1,055 $1,608 $1,814 $82 $246 $5,509 

The following is a summary of nonaccrual loans, at amortized cost, at September 30, 2023 and March 31, 2023.
September 30, 2023
March 31, 2023
$ in thousandsNonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal
Nonaccrual Loans		Nonaccrual Loans
Gross loans receivable: 
One-to-four family$3,919 $23 $3,942 $4,001 
Multifamily1,131 — $1,131 71 
Commercial real estate4,522 — $4,522 7,190 
Business6,188 10 $6,198 998 
Consumer30 — $30 1 
Total nonaccrual loans$15,790 $33 $15,823 $12,261 

    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, 2023.

    At September 30, 2023 and March 31, 2023, other non-performing assets totaled $60 thousand, 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, 2023 and March 31, 2023.

    Although we believe that substantially all risk elements at September 30, 2023 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 ninety 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, 2023:
$ in thousands202320222021202020192018 and earlierRevolving LoansTotal
Credit Risk Profile by Internally Assigned Grade: 
Multifamily
Pass$6,622 $53,871 $51,293 $28,942 $17,736 $17,975 $— $176,439 
Special Mention— — — — — — — — 
Substandard— — 1,476 754 — 370 — 2,600 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total6,622 53,871 52,769 29,696 17,736 18,345 — 179,039 
Commercial Real Estate
Pass17,587 31,536 27,878 17,178 21,008 50,716 — 165,903 
Special Mention— — — — — 687 — 687 
Substandard— — — — — 4,522 — 4,522 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total17,587 31,536 27,878 17,178 21,008 55,925 — 171,112 
Construction
Pass491 — — — — — — 491 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total491 — — — — — — 491 
Business
Pass8,383 40,970 50,282 10,968 387 43,276 — 154,266 
Special Mention— — 4,234 — — 11 — 4,245 
Substandard— — 2,993 — 193 763 — 3,949 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total8,383 40,970 57,509 10,968 580 44,050 — 162,460 
Credit Risk Profile Based on Payment Activity:
One-to-four Family
Performing22,419 3,860 13,517 1,440 9,059 31,504 — 81,799 
Non-Performing— — — — — 3,282 — 3,282 
Total22,419 3,860 13,517 1,440 9,059 34,786 — 85,081 
Consumer
Performing11,123 695 11 26 — 1,060 — 12,915 
Non-Performing— 1 3 — — — — 4 
Total11,123 696 14 26 — 1,060 — 12,919 
Gross charge-offs— — — — — 117 — 117 
Total Loans$66,625 $130,933 $151,687 $59,308 $48,383 $154,166 $— $611,102 
    At March 31, 2023, the risk category by class of loans was as follows:
$ in thousandsMultifamilyCommercial Real EstateBusiness
Credit Risk Profile by Internally Assigned Grade:
Pass$175,981 $170,534 $154,056 
Special Mention771 701 5,719 
Substandard 2,365 7,189 7,133 
Total$179,117 $178,424 $166,908 
One-to-four familyConsumer
Credit Risk Profile Based on Payment Activity:
Performing$60,629 $7,639 
Non-Performing5,179 — 
Total$65,808 $7,639 

    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 table presents an aging analysis of the amortized cost of past due loans receivables at September 30, 2023 and March 31, 2023.
.
September 30, 2023
$ 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$— $203 $2,668 $2,871 $82,210 $85,081 
Multifamily— 487 1,070 1,557 177,482 179,039 
Commercial real estate— — 4,522 4,522 166,590 171,112 
Construction— — — — 491 491 
Business88 12,608 2,645 15,341 147,119 162,460 
Consumer7 3 1 11 12,908 12,919 
Total$95 $13,301 $10,906 $24,302 $586,800 $611,102 
March 31, 2023
$ 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$1,207 $185 $2,475 $3,867 $61,941 $65,808 
Multifamily1,458 — 71 1,529 177,588 179,117 
Commercial real estate1,370 — — 1,370 177,054 178,424 
Business11,006 — 5,014 16,020 150,888 166,908 
Consumer99 26 34 159 7,480 7,639 
Total$15,140 $211 $7,594 $22,945 $574,951 $597,896 

At September 30, 2023 and March 31, 2023, there were no loans 90 or more days past due and accruing interest.
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, 2023:
Collateral Type
$ in thousandsReal EstateOtherAllowance Allocated
One-to-four family$4,290 $— $23 
Multifamily2,600 — — 
Commercial real estate4,522 — — 
Business5,775 379 10 
Consumer— 3 — 
$17,187 $382 $33 

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.

The following table presents information on impaired loans with the associated allowance amount and interest income recognized on a cash basis, if applicable, at March 31, 2023.
At March 31, 2023
$ in thousandsRecorded
Investment		Unpaid
Principal
Balance		Associated
Allowance		Average BalanceInterest Income Recognized
With no specific allowance recorded:
One-to-four family$3,972 $4,567 $— $3,861 $111 
Multifamily71 71 — 220 — 
Commercial real estate7,190 7,378 — 4,054 36 
Business1,114 1,146 — 1,723 — 
Consumer1 1 — — — 
With an allowance recorded:
One-to-four family1,031 1,031 109 554 41 
Business4,809 4,820 202 5,116 316 
Total$18,188 $19,014 $311 $15,528 $504 


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, 2023. There were two one-to-four family loans totaling $1.0 million modified during the six months ended September 30, 2022. At September 30, 2023, loans modified to borrowers experiencing financial difficulty totaled $7.4 million, $1.6 million 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 four modified loans totaling $5.8 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 restructured terms for a period of at least six months.

    In an effort to proactively resolve delinquent loans, the Bank has selectively extended to certain borrowers concessions such as extensions, rate reductions or forbearance agreements. For the periods ended September 30, 2023 and 2022, 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, 2023.