Note 4 - Loans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Financing Receivables [Text Block]

NOTE 4 – LOANS

In conjunction with the adoption of ASC 326, the Company made certain loan portfolio segment reclassifications to conform to the new ACL methodology. Loans and these related reclassifications, are summarized as follows at December 31, 2023 and December 31, 2022:

				Pre Adoption						Post Adoption
	December 31,			December 31,			The effect of			December 31,
	2023			2022			adoption			2022
Real estate:
Residential First Mortgage	$	486,052,422		$	466,100,627		$	29,589,213		$	495,689,840
Commercial and Multi-Family Real Estate		-			162,338,669			(162,338,669	)		-
Commercial Real Estate		99,830,514			-			96,030,721			96,030,721
Multi-Family Real Estate		75,612,566			-			66,400,713			66,400,713
Construction		49,302,040			61,825,478			-			61,825,478
Commercial & Industrial		6,658,370			1,684,189			-			1,684,189
Consumer:
Home equity and other		-			29,654,973			(29,654,973	)		-
Consumer		18,672			-			98,770			98,770
Total loans		717,474,584			721,603,936			125,775			721,729,711
Allowance for credit losses		(2,785,949	)		(2,578,174	)		(282,775	)		(2,860,949	)
Net loans	$	714,688,635		$	719,025,762		$ ($157,000)			$	718,868,762

The Bank has granted loans to executive officers and directors of the Bank. At December 31, 2023 and 2022, such loans totaled $1,610,688 and $1,739,725, respectively.

	2023			2022
Outstanding, January 1,	$	1,739,725		$	577,143
New loans		-			1,317,500
Loan repayments		(129,037	)		(154,918	)
Outstanding, December 31,		1,610,688			1,739,725

At December 31, 2023, deferred loan fees were $2,873,724 and $3,078,612 respectively.

The following table presents the activity in the allowance for credit losses by portfolio segments for the years ended  December 31, 2023 and 2022:

	Residential First Mortgage		Commercial Real Estate			Multi-Family Real Estate		Construction			Commercial & Industrial		Consumer			Total
December 31, 2023
Allowance for credit losses:
Beginning balance	$	1,602,534	$	381,180		$	234,300	$	258,500		$	3,960	$	97,700		$	2,578,174
Impact of ASC 326 adoption		113,969		141,797			25,469		1,500			40		—			282,775
Provision for loan losses (recovery)		135,466		(85,797	)		57,531		(102,500	)		18,000		(97,700	)		(75,000	)
Loans charged-off		—		—			—		—			—		—			—
Recoveries		—		—			—		—			—		—			—
Total ending allowance balance	$	1,851,969	$	437,180		$	317,300	$	157,500		$	22,000	$	—		$	2,785,949
	Residential First Mortgage		Commercial & Multi- Family Real Estate			Construction		Commercial & Industrial			Home Equity & Other		Total
December 31, 2022
Allowance for loan losses:
Beginning balance	$	1,092,474	$	768,600		$	195,000	$	9,400		$	87,700	$	2,153,174
Provision for loan losses (credit)		510,060		(153,120	)		63,500		(5,440	)		10,000		425,000
Loans charged-off		—		—			—		—			—		—
Recoveries		—		—			—		—			—		—
Total ending allowance balance	$	1,602,534	$	615,480		$	258,500	$	3,960		$	97,700	$	2,578,174

The provision fluctuations during the years ended December 31, 2023 and 2022 were due to increases or decreases in loan balances in different loans types and economic conditions.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segments and based on impairment method as of December 31, 2022:

	Residential First Mortgage		Commercial & Multi- Family Real Estate		Construction		Commercial & Industrial		Home Equity & Other		Total
December 31, 2022
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	33,000	$	—	$	—	$	—	$	—	$	33,000
Collectively evaluated for impairment		1,569,534		615,480		258,500		3,960		97,700		2,545,174
Total ending allowance balance	$	1,602,534	$	615,480	$	258,500	$	3,960	$	97,700	$	2,578,174
Loans:
Loans individually evaluated for impairment	$	819,590			$	—	$	—	$	37,069	$	856,659
Loans collectively evaluated for impairment		462,439,940		160,990,186		61,825,478		1,684,189		29,586,787		716,526,580
Loans acquired with deteriorated credit quality		2,841,097		1,348,483		—		—		31,117		4,220,697
Total ending loans balance	$	466,100,627	$	162,338,669	$	61,825,478	$	1,684,189	$	29,654,973	$	721,603,936

Collateral - dependent loans individually evaluated with the ACL by collateral type were as follows at December 31, 2023:

Portfolio segment	Real estate	Other
Residential First Mortgage	$ 1,432,072	$ —
Commercial Real Estate	450,392	—
Multi-Family Real Estate	—	—
Construction	10,893,713	—
Commercial and Industrial	—	—
Other Consumer	—	—
	$ 12,776,177	$ —

Impaired loans as of and for the year ended December 31, 2022 were as follows:

	Loans With no related allowance recorded		Loans with an allowance recorded		Average Of individually Impaired loans		Amount of allowance for loan losses allocated
Residential first mortgages	$	1,199,278	$	171,616	$	1,300,615	$	33,000
Commercial and Multi-Family		488,222		—		488,196		—
Construction		—		—		—		—
Commercial & Industrial		—		—		—		—
Home equity & other consumer		37,069		—		26,298		—
	$	1,724,569	$	171,616	$	1,815,109	$	33,000

Interest income recognized during impairment and cash-basis interest income recognized in both 2023 and 2022 was nominal.

Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually evaluated loans.

No nonaccrual loans had specific reserves as of December 31, 2023 and the Bank had no other real estate owned at either December 31, 2023 or December 31, 2022.

	Nonaccrual loans beginning of period		Nonaccrual loans end of period		Nonaccrual with no Allowance for Credit Loss		Loans Past Due 90 Days or More Still Accruing		Interest recognized on nonaccrual loans
December 31, 2023
Residential First Mortgage	$	819,590	$	1,432,072	$	1,432,072	$	—	$	—
Commercial Real Estate				450,392		450,392
Construction		—		10,893,713		10,893,713		—		—
Consumer		37,069		—		—		—		—
Total	$	856,659	$	12,776,177	$	12,776,177	$	—	$	—

The following table presents the recorded investment in nonaccrual and loans past due 90 days or more and still on accrual by class of loans as of December 31, 2022:

	Nonaccrual	Loans Past Due 90 Days or More Still Accruing
December 31, 2022
Residential first mortgage	$ 819,590	$ —
Commercial and multi-family	—	—
Construction	—	—
Commercial & Industrial	—	—
Home equity and other consumer	37,069	—
Total	$ 856,659	$ —

The following table presents the aging of the recorded investment in past due loans as of December 31, 2023 and 2022, by class of loans:

		30 – 59 Days Past Due		60 – 89 Days Past Due		Greater than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
December 31, 2023
Residential first mortgage	$	—	$	297,118	$	964,806	$	1,261,924	$	484,790,498	$	486,052,422
Commercial real estate		—		—		450,392		450,392		99,380,122		99,830,514
Multi-Family real estate		—		—		—		—		75,612,566		75,612,566
Construction		—		—		10,893,713		10,893,713		38,408,327		49,302,040
Commercial & Industrial		—		—		—		—		6,658,370		6,658,370
Consumer		-		—		—		-		18,672		18,672
Total	$	—	$	297,118	$	12,308,911	$	12,606,029	$	704,868,555	$	717,474,584
	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater than 89 Days Past Due		Total Past Due		Loans Not Past Due		PCI loans		Total
December 31, 2022
Residential first mortgage	$	—	$	360,849	$	279,515	$	640,364	$	462,619,166	$	2,841,097	$	466,100,627
Commercial and Multi-Family		—		—		—		—		160,990,186		1,348,483		162,338,669
Construction		—		—		—		—		61,825,478		—		61,825,478
Commercial & Industrial		—		—		—		—		1,684,189		—		1,684,189
Home equity and other consumer		92,977		—		19,122		112,099		29,511,757		31,117		29,654,973
Total	$	92,977	$	360,849	$	298,637	$	752,463	$	716,630,776	$	4,220,697	$	721,603,936

Loans greater than 89 days past due are considered to be non-performing.

Credit Quality Indicators

The Bank 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. The Bank analyzes loans individually by classifying the loans as to credit risk. Commercial real estate, commercial and industrial and construction loans are graded on an annual basis. Residential real estate and consumer loans are primarily evaluated based on performance. Refer to the table on the prior page for the aging of the recorded investment of these loan segments. The Bank uses the following definitions for risk ratings:

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, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above are considered to be Pass rated loans.

Based on the most recent analysis performed, the risk category of loans by class is as follows:

	Term Loans by Origination Year
Balance at December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans		Totals
Residential First Mortgage
Pass	$	5,174,879	$	111,903,094	$	37,747,971	$	28,952,299	$	26,155,892	$	114,830,194	$	159,976,218	$	484,740,547
Special Mention		—		—		—		191,276		169,343		389,565		107,538		857,722
Substandard		—		—		—		—		—		169,131		285,022		454,153
Doubtful		—		—		—		—		—		—		—		—
Total		5,174,879		111,903,094		37,747,971		29,143,575		26,325,235		115,388,890		160,368,778		486,052,422
Gross charge-offs by vintage		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass		—		3,065,843		—		6,893,352		5,501,995		11,722,774		72,196,158		99,380,122
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		450,392		450,392
Doubtful		—		—		—		—		—		—		—		—
Total		—		3,065,843		—		6,893,352		5,501,995		11,722,774		72,646,550		99,830,514
Gross charge-offs by vintage		—		—		—		—		—		—		—		—
Multi-Family Real Estate
Pass		—		2,362,920		—		1,162,353		—		2,117,462		69,969,831		75,612,566
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		2,362,920		—		1,162,353		—		2,117,462		69,969,831		75,612,566
Gross charge-offs by vintage		—		—		—		—		—		—		—		—
Construction
Pass		—		—		—		—		—		—		38,459,962		38,459,962
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		10,842,078		10,842,078
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		49,302,040		49,302,040
Gross charge-offs by vintage		—		—		—		—		—		—		—		—
Commercial and Industrial
Pass		241,109		—		—		576,164		94,204		—		5,746,893		6,658,370
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		241,109		—		—		576,164		94,204		—		5,746,893		6,658,370
Gross charge-offs by vintage		—		—		—		—		—		—		—		—
Consumer
Pass		—		—		—		—		—		—		18,672		18,672
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		18,672		18,672
Total loans	$	5,415,988	$	117,331,857	$	37,747,971	$	37,775,444	$	31,921,434	$	129,229,126	$	358,052,764	$	717,474,584

	Pass		Special Mention		Substandard		Totals
December 31, 2022
Residential first mortgage	$	465,089,495	$	555,965	$	455,167	$	466,100,627
Commercial and Multi-Family		162,338,669		—		—		162,338,669
Construction		61,825,478		—		—		61,825,478
Commercial & Industrial		1,684,189		—		—		1,684,189
Home equity and other consumer		29,617,904		19,122		17,947		29,654,973
Total	$	720,555,735	$	575,087	$	473,114	$	721,603,936