Note 6 - Loans Receivable, Net and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Financing Receivables [Text Block]

N

ote

6

- Loans Receivable, Net and Allowance for Loan Losses

The composition of net loans receivable is as follows:

	March 31, 20 20			December 31, 20 19
Real estate loans:
One-to-four family residential:
Owner occupied	$	6,446		$	6,298
Non-owner occupied		39,427			39,897
Total one-to-four family residential		45,873			46,195
Multi-family (five or more) residential		24,061			22,233
Commercial real estate		123,902			119,323
Construction		9,327			12,523
Home equity		4,247			3,726
Total real estate loans		207,410			204,000
Commercial business		46,797			45,745
Other consumer		16			22
Total Loans		254,223			249,767
Deferred loan fees and costs		(789	)		(844	)
Allowance for loan losses		(2,346	)		(2,231	)
Net Loans	$	251,088		$	246,692

The following tables present 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

March 31, 2020

and

December 

31,

2019

(in thousands): 

	March 31, 201 9
	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family residential owner occupied	$	6,274	$	-	$	172	$	-	$	6,446
One-to-four family residential non-owner occupied		39,110		-		317		-		39,427
Multi-family residential		24,061		-		-		-		24,061
Commercial real estate		123,102		508		292		-		123,902
Construction		9,327		-		-		-		9,327
Home equity		4,247		-		-		-		4,247
Commercial business		46,797		-		-		-		46,797
Other consumer		16		-		-		-		16
Total	$	252,934	$	508	$	781	$	-	$	254,223

	December 31, 201 9
	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family residential owner occupied	$	6,126	$	-	$	172	$	-	$	6,298
One-to-four family residential non-owner occupied		39,579		-		318		-		39,897
Multi-family residential		22,233		-		-		-		22,233
Commercial real estate		118,233		798		292		-		119,323
Construction		12,523		-		-		-		12,523
Home equity		3,726		-		-		-		3,726
Commercial business		45,745		-		-		-		45,745
Other consumer		22		-		-		-		22
Total	$	248,187	$	798	$	782	$	-	$	249,767

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was

not

necessary as of

March 31, 2020

as well as the average recorded investment and related interest income for the period then ended (in thousands):

	March 31, 20 20
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to-four family residential owner occupied	$	172	$	178	$	-	$	178	$	-
One-to-four family residential non-owner occupied		19		19		-		19		1
Multi-family residential		-		-		-		-		-
Commercial real estate		-		-		-		-		-
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
								-
With an allowance recorded:
One-to-four family residential owner occupied	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		-		-		-		-		-
Multi-family residential		-		-		-		-		-
Commercial real estate		131		131		3		131		3
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total:
One-to-four family residential owner occupied	$	172	$	178	$	-	$	178	$	-
One-to-four family residential non-owner occupied		19		19		-		19		1
Multi-family residential		-		-		-		-		-
Commercial real estate		131		131		3		131		3
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total	$	322	$	328	$	3	$	328	$	4

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was

not

necessary as of

December 31, 2019

as well as the average recorded investment and related interest income for the year then ended (in thousands):

	December 31, 201 9
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One-to-four family residential owner occupied	$	172	$	178	$	-	$	178	$	-
One-to-four family residential non-owner occupied		19		19		-		225		13
Multi-family residential		-		-		-		-		-
Commercial real estate		-		-		-		-		-
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
With an allowance recorded:
One-to-four family residential owner occupied	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		-		-		-		-		-
Multi-family residential		-		-		-		-		-
Commercial real estate		132		132		4		133		12
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total:
One-to-four family residential owner occupied	$	172		178	$	-	$	178	$	-
One-to-four family residential non-owner occupied		19		19		-		225		13
Multi-family residential		-		-		-		-		-
Commercial real estate		132		132		4		133		12
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total	$	323	$	329	$	4	$	536	$	25

The loan portfolio also includes certain loans that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forbearance, or other actions. At

March 31, 2020,

the Company had

two

loans totaling

$150,000

that were identified as troubled debt restructurings. One of these loans was performing in accordance with its modified terms and

one

was over

90

days delinquent but still accruing interest. During the

three

months ended

March 31, 2020,

no

new loans were identified as TDRs. At

December 31, 2019,

the Company had

two

loans totaling

$151,000

that were identified as troubled debt restructurings. If a TDR is placed on non-accrual it is

not

reverted back to accruing status until the borrower makes timely payments as contracted for at least

six

months and future collection under the revised terms is probable.

The following tables present the Company’s TDR loans as of

March 31, 2020

and

December 31, 2019 (

dollar amounts in thousands):

	March 31, 20 20
	Number of Contracts		Recorded Investment		Non- Accrual		Accruing		Related Allowance
One-to-four family residential owner occupied		-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		1		19		-		19		-
Multi-family residential		-		-		-		-		-
Commercial real estate		1		131		-		131		3
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total		2	$	150	$	-	$	150	$	3

	December 31, 201 9
	Number of Contracts		Recorded Investment		Non- Accrual		Accruing		Related Allowance
One-to-four family residential owner occupied		-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		1		19		-		19		-
Multi-family residential		-		-		-		-		-
Commercial real estate		1		132		-		132		3
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total		2	$	151	$	-	$	151	$	3

The contractual aging of the TDRs in the table above as of

March 31, 2020

and

December 31, 2019

is as follows (in thousands):

	March 31, 20 20
	Accruing Past Due Less than 30 Days		Past Due 30-89 Days		90 Days or More Past Due		Non- Accrual		Total
One-to-four family residential owner occupied	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		-		-		19		-		19
Multi-family residential		-		-		-		-		-
Commercial real estate		131		-		-		-		131
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total	$	131	$	-	$	19	$	-	$	150

	December 31, 201 9
	Accruing Past Due Less than 30 Days		Past Due 30-89 Days		90 Days or More Past Due		Non- Accrual		Total
One-to-four family residential owner occupied	$	-	$	-	$	-	$	-	$	-
One-to-four family residential non-owner occupied		-		19		-		-		19
Multi-family residential		-		-		-		-		-
Commercial real estate		132		-		-		-		132
Construction		-		-		-		-		-
Home equity		-		-		-		-		-
Commercial business		-		-		-		-		-
Other consumer		-		-		-		-		-
Total	$	132	$	19	$	-	$	-	$	151

Any reserve for an impaired TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent. At

March 31, 2020

there were

no

commitments to lend additional funds to debtors whose loan terms have been modified as TDRs.

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan in full. If a borrower continues to be delinquent or cannot meet the terms of a TDR modification and the loan is determined to be uncollectible, the loan will be charged off.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the

three

months ended

March 31, 2020

and recorded investment in loans receivable as of

March 31, 2020 (

in thousands):

	March 31, 201 9
	1-4 Family Residential Owner Occupied			1-4 Family Residential Non- Owner Occupied			Multi-Family Residential		Commercial Real Estate		Construction			Home Equity		Commercial Business and Other Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	52		$	351		$	145	$	854	$	250		$	19	$	500	$	60	$	2,231
Charge-offs		-			-			-		-		-			-		-		-		-
Recoveries		-			-			-		-		-			-		-		-		-
Provision		(5	)		(44	)		72		90		(82	)		7		37		40		115
Ending balance	$	47		$	307		$	217	$	944	$	168		$	26	$	537	$	100	$	2,346
Ending balance evaluated for impairment
Individually	$	-		$	-		$	-	$	3	$	-		$	-	$	-	$	-	$	3
Collectively	$	47		$	307		$	217	$	941	$	168		$	26	$	537	$	100	$	2.343
Loans receivable:
Ending balance	$	6,446		$	39,427		$	24,061	$	123,902	$	9,327		$	4,247	$	46,813			$	254,223
Ending balance evaluated for impairment
Individually	$	172		$	19		$	-	$	131	$	-		$	-	$	-			$	322
Collectively	$	6,274		$	39,408		$	24,061	$	123,771	$	9,327		$	4,247	$	46,813			$	253,901

The Bank allocated increased allowance for loan loss provisions to the commercial real estate loan portfolio class for the

three

months ended

March 31, 2020,

due primarily to increased balances in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the multi-family residential loan and commercial business portfolio classes for the

three

months ended

March 31, 2020,

due primarily to changes in volume and qualitative factors in these portfolio classes. The Bank allocated decreased allowance for loan loss provisions to the construction loan and

1

-

4

family non-owner occupied loan portfolio classes for the

three

months ended

March 31, 2020,

due primarily to a decrease in balances and delinquencies in this portfolio class and qualitative factors in these portfolio classes. In general, the primary driver of the increase in qualitative factors was the economic trends factor associated with the COVID-

19

pandemic.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the

three

months ended

March 31, 2019 (

in thousands):

	March 31, 2019
	1-4 Family Residential Owner Occupied			1-4 Family Residential Non- Owner Occupied		Multi-Family Residential		Commercial Real Estate			Construction			Home Equity		Commercial Business and Other Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	51		$	435	$	156	$	839		$	175		$	21	$	247	$	41	$	1,965
Charge-offs		-			-		-		-			-			-		-		-		-
Recoveries		-			-		-		-			-			-		-		-		-
Provision		(2	)		28		4		(30	)		(33	)		3		56		59		85
Ending balance	$	49		$	463	$	160	$	809		$	142		$	24	$	303	$	100	$	2,050
Ending balance evaluated for impairment
Individually	$	-		$	50	$	-	$	5		$	-		$	-	$	-	$	-	$	55
Collectively	$	49		$	413	$	160	$	804		$	142		$	24	$	303	$	100	$	1,995

The Bank allocated increased allowance for loan loss provisions to the commercial business portfolio class for the

three

months ended

March 31, 2019,

due primarily to increased balances in this portfolio class. The Bank allocated increased allowance for loan loss provisions to the

1

-

4

family non-owner occupied loan portfolio class for the

three

months ended

March 31, 2019,

due primarily to changes in qualitative factors in this portfolio class. The Bank allocated decreased allowance for loan loss provisions to the construction loan portfolio class for the

three

months ended

March 31, 2019,

due primarily to a decrease in balances and delinquencies in this portfolio class. The Bank allocated decreased allowance for loan loss provisions to the commercial real estate loan portfolio class for the

three

months ended

March 31, 2019,

due primarily to a decrease in delinquencies in this portfolio class.

Following is a summary, by loan portfolio class, of changes in the allowance for loan losses for the year ended

December 31, 2019

and recorded investment in loans receivable based on impairment evaluation as of

December 31, 2019 (

in thousands):

	December 31, 201 9
	1-4 Family Residential Owner Occupied		1-4 Family Residential Non- Owner Occupied			Multi-Family Residential			Commercial Real Estate		Construction		Home Equity			Commercial Business and Other Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	51	$	435		$	156		$	839	$	175	$	21		$	247	$	41	$	1,965
Charge-offs		-		(37	)		-			-		-		-			-		--		(37	)
Recoveries		-		-			-			-		-		-			-		--		-
Provision		1		(47	)		(11	)		15		75		(2	)		253		19		303
Ending balance	$	52	$	351		$	145		$	854	$	250	$	19		$	500	$	60	$	2,231
Ending balance evaluated for impairment:
Individually	$	-	$	-		$	-		$	4	$	-	$	-		$	-	$	-	$	4
Collectively	$	52	$	351		$	145		$	850	$	250	$	19		$	500	$	60	$	2,227
Loans receivable:
Ending balance	$	6,298	$	39,897		$	22,233		$	119,323	$	12,523	$	3,726		$	45,767			$	249,767
Ending balance evaluated for impairment:
Individually	$	172	$	19		$	-		$	132	$	-	$	-		$	-			$	323
Collectively	$	6,126	$	39,878		$	22,233		$	119,191	$	12,523	$	3,726		$	45,767			$	249,444

The Bank allocated increased allowance for loan loss provisions to the commercial business loan portfolio class, the construction loan portfolio class, and the commercial real estate loan portfolio class for the year ended

December 31, 2019,

due primarily to increased balances in these portfolio classes. The Bank allocated decreased allowance for loan loss provisions to the

1

-

4

family non-owner occupied loan portfolio class for the year ended

December 31, 2019,

due primarily to a decrease in balances in this portfolio class.

The following table presents nonaccrual loans by classes of the loan portfolio as of

March 31, 2020

and

December 31, 2019 (

in thousands):

	March 31, 20 20		December 31, 20 19
One-to-four family residential owner occupied	$	172	$	172
One-to-four family residential non-owner occupied		-		-
Multi-family residential		-		-
Commercial real estate		-		-
Construction		-		-
Home equity		-		-
Commercial business		-		-
Other consumer		-		-
Total	$	172	$	172

Non-performing loans, which consist of non-accruing loans plus accruing loans

90

days or more past due, amounted to

$860,000

and

$362,000

at

March 31, 2020

and

December 31, 2019,

respectively. For the delinquent loans in our portfolio, we have considered our ability to collect the past due interest, as well as the principal balance of the loan, in order to determine whether specific loans should be placed on non-accrual status. In cases where our evaluations have determined that the principal and interest balances are collectible, we have continued to accrue interest.

For the

three

months ended

March 31, 2020

and

2019

there was

no

interest income recognized on non-accrual loans on a cash basis. Interest income foregone on non-accrual loans was approximately

$3,000

and

$5,000

for the

three

months ended

March 31, 2020

and

2019,

respectively.

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of

March 31, 2020

and

December 31, 2019 (

in thousands):

	March 31, 20 20
	30- 89 Days Past Due		90 Days or M ore Pas t Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable 90 Days or More Past Due and Accruing
One-to-four family residential owner occupied	$	547	$	171	$	718	$	5,728	$	6,446	$	-
One-to-four family residential non-owner occupied		719		66		785		38,642		39,427		66
Multi-family residential		32		-		32		24,029		24,061		-
Commercial real estate		1,072		292		1,3640		122,538		123,902		292
Construction		-		330		330		8,997		9,327		330
Home equity		97		-		97		4,150		4,247		-
Commercial business		181		-		181		46,616		46,797		-
Other consumer		-		-		-		16		16		-
Total	$	2,648	$	859	$	3,507	$	250,716	$	254,223	$	688

	December 31, 20 19
	30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Loans Receivable 90 Days or More Past Due and Accruing
One-to-four family residential owner occupied	$	1,199	$	172	$	1,371	$	4,927	$	6,298	$	-
One-to-four family residential non-owner occupied		1,069		-		1,069		38,828		39,897		-
Multi-family residential		-		-		-		22,233		22,233		-
Commercial real estate		986		190		1,176		118,147		119,323		190
Construction		1,120		-		1,120		11,403		12,523		-
Home equity		-		-		-		3,726		3,726		-
Commercial business		66		-		66		45,679		45,745		-
Other consumer		-		-		-		22		22		-
Total	$	4,440	$	362	$	4,802	$	244,965	$	249,767	$	190