Loans Receivable | Loans Receivable and Allowance for Credit Losses Loans receivable are summarized as follows at the dates indicated: March 31, 2023 December 31, 2022 (In thousands) One-to-four family residential: Permanent owner occupied $ 242,477 $ 232,869 Permanent non-owner occupied 240,183 241,311 482,660 474,180 Multifamily 143,332 126,866 Commercial real estate 408,905 407,904 Construction/land: One-to-four family residential 53,948 52,492 Multifamily (131) 15,393 Land 9,786 9,759 63,603 77,644 Business 31,659 31,363 Consumer 70,619 64,353 Total loans receivable, gross 1,200,778 1,182,310 Less: ACL 16,028 15,227 Total loans receivable, net $ 1,184,750 $ 1,167,083 At March 31, 2023, loans totaling $648.0 million were pledged to secure borrowings from the FHLB compared to $605.0 million at December 31, 2022. In addition, loans totaling $85.2 million and $87.7 million were pledged to the Federal Reserve Bank of San Francisco to secure a line of credit at March 31, 2023 and December 31, 2022, respectively. Credit Quality Indicators . The Company assigns a risk rating to all credit exposures based on a risk rating system designed to define the basic characteristics and identified risk elements of each credit extension. The Company utilizes a nine point risk rating system. A description of the general characteristics of the risk grades is as follows: • Grades 1 through 5: These grades are considered to be “pass” credits. These include assets where there is virtually no credit risk, such as cash secured loans with funds on deposit with the Company. Pass credits also include credits that are on the Company’s watch list (grade 5), where the borrower exhibits potential weaknesses, which may, if not checked or corrected, negatively affect the borrower’s financial capacity and threaten their ability to fulfill debt obligations in the future. • Grade 6: These credits, classified as “special mention”, possess weaknesses that deserve management’s close attention. Special mention assets do not expose the Company to sufficient risk to warrant adverse classification in the substandard, doubtful or loss categories. If left uncorrected, these potential weaknesses may result in deterioration in the Company’s credit position at a future date.Grade 7: These credits, classified as “substandard”, present a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These credits have well defined weaknesses which jeopardize the orderly liquidation of the debt and are inadequately protected by the current net worth and payment capacity of the borrower or of any collateral pledged. • Grade 8: These credits are classified as “doubtful” and possess well defined weaknesses which make the full collection or liquidation of the loan highly questionable and improbable. This classification is used where significant risk exposures are perceived but the exact amount of the loss cannot yet be determined due to pending events. • Grade 9: Assets classified as “loss” are considered uncollectible and cannot be justified as a viable asset for the Company. There is little or no prospect of near term recovery and no realistic strengthening action of significance is pending. The grades for watch and special mention loans are used by the Company to identify and track potential problem loans which do not rise to the levels described for substandard, doubtful, or loss. These are loans which have been criticized based upon known characteristics such as periodic payment delinquency, failure to comply with contractual terms of the loan or stale financial information from the borrower and/or guarantors. Loans identified as criticized (watch and special mention) or classified (substandard, doubtful or loss) are subject to problem loan reporting every three months. As of March 31, 2023, and December 31, 2022, the Company had no loans rated as doubtful or loss. The following tables represent a summary of loans at March 31, 2023, and December 31, 2022 by type and risk category: March 31, 2023 Term Loans by Year of Origination 2023 2022 2021 2020 2019 Prior Total Loans (In thousands) One-to-four family residential Pass $ 18,166 $ 155,300 $ 102,559 $ 67,545 $ 34,995 $ 102,459 $ 481,024 Watch — — — — — 620 620 Special mention — — — — — 1,016 1,016 Substandard — — — — — — — Total one-to-four family residential 18,166 155,300 102,559 67,545 34,995 104,095 482,660 Multifamily Pass 1,097 7,579 23,088 43,936 29,609 34,129 139,438 Watch — — — — — 2,274 2,274 Special mention — — — — — — — Substandard — — — — — 1,620 1,620 Total multifamily 1,097 7,579 23,088 43,936 29,609 38,023 143,332 Commercial Pass 12,083 35,346 82,859 70,849 22,362 116,683 340,182 Watch — — 4,185 8,783 — 5,949 18,917 Special mention — — — — — 4,651 4,651 Substandard — — — 527 1,295 43,333 45,155 Total commercial real estate 12,083 35,346 87,044 80,159 23,657 170,616 408,905 Construction/land Pass (131) 25,583 34,813 2,931 407 — 63,603 Watch — — — — — — — Special mention — — — — — — — Substandard — — — — — — — Total construction/land (131) 25,583 34,813 2,931 407 — 63,603 March 31, 2023 Term Loans by Year of Origination 2023 2022 2021 2020 2019 Prior Total Loans (1) (In thousands) Business Pass 71 4,918 495 1,672 1,724 22,779 31,659 Watch — — — — — — — Special mention — — — — — — — Substandard — — — — — — — Total business 71 4,918 495 1,672 1,724 22,779 31,659 Consumer Pass 10,942 30,776 12,528 6,869 5,781 3,448 70,344 Watch — — — — 26 — 26 Special mention — — — — 48 — 48 Substandard — — 201 — — — 201 Total consumer 10,942 30,776 12,729 6,869 5,855 3,448 70,619 Total loans receivable, gross Pass $ 42,228 $ 259,502 $ 256,342 $ 193,802 $ 94,878 $ 279,498 $ 1,126,250 Watch — — 4,185 8,783 26 8,843 21,837 Special mention — — — — 48 5,667 5,715 Substandard — — 201 527 1,295 44,953 46,976 $ 42,228 $ 259,502 $ 260,728 $ 203,112 $ 96,247 $ 338,961 $ 1,200,778 December 31, 2022 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) Risk Rating: Pass, grade 1-4 $ 473,700 $ 122,972 $ 342,827 $ 78,120 $ 31,371 $ 61,632 $ 1,110,622 Pass, grade 5 (watch) 1,113 2,291 14,845 — — 27 18,276 Special mention 1,023 — 4,668 — — 203 5,894 Substandard — 1,632 45,542 — — 193 47,367 Total loans $ 475,836 $ 126,895 $ 407,882 $ 78,120 $ 31,371 $ 62,055 $ 1,182,159 ACL . ACL is a valuation account that is deducted from the loans amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the ACL when management believes the non-collectability of a loan balance is confirmed. Expected recoveries may not exceed the aggregate amounts previously charged-off and expected to be charged-off. The allowance for credit losses, as reported in our consolidated statements of financial conditions, is adjusted by a provision for credit losses, which is reported in earnings, and reduced by the charge-offs of loan amounts, net of recoveries. When the Company classifies problem assets as either substandard or doubtful, pursuant to Federal regulations, or identifies a loan where it is uncertain if the Company will be able to collect all amounts due according to the contractual terms of the loan, it may establish a specific allowance in an amount deemed prudent to address the risk specifically. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been specifically allocated to the particular problem assets. When an insured institution classifies problem assets as a loss, pursuant to Federal regulations, it is required to charge-off such assets in the period in which they are deemed uncollectible. The determination as to the classification of the Company’s assets and the amount of valuation allowances is subject to review by bank regulators, who can require the establishment of additional allowances for credit losses. At March 31, 2023, total loans receivable included $707,000 of loans originated under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) as compared to $5.2 million at March 31, 2022. Although these loans were included in the population of loans collectively evaluated for impairment, no general allowance was allocated to them as these loans are 100% guaranteed by the SBA. The following tables detail activity in the allowance for credit losses on loans by loan categories at or for the three months ended March 31, 2023 and in the allowance for loan and lease losses (“ALLL”) under the incurred loss methodology for the three months ended March 31, 2022: At or For the Three Months Ended March 31, 2023 One-to-Four Multifamily Commercial Real Estate Construction/ Business Consumer Total (In thousands) ACL: Beginning balance $ 4,043 $ 1,210 $ 5,397 $ 1,717 $ 948 $ 1,912 $ 15,227 Adjustment for adoption of Topic 326 1,520 83 (970) 408 (510) (31) $ 500 Recoveries 1 — — — — — 1 Provision (recapture) 47 314 69 (332) (25) 227 300 Ending balance $ 5,611 $ 1,607 $ 4,496 $ 1,793 $ 413 $ 2,108 $ 16,028 At or For the Three Months Ended March 31, 2022 One-to-Four Multifamily Commercial Real Estate Construction/ Business Consumer Total (In thousands) ALLL Beginning balance $ 3,214 $ 1,279 $ 6,615 $ 2,064 $ 1,112 $ 1,373 $ 15,657 Recoveries 2 — — — — — 2 Provision (recapture) 259 176 (300) (422) (331) 118 (500) Ending balance $ 3,475 $ 1,455 $ 6,315 $ 1,642 $ 781 $ 1,491 $ 15,159 ALLL by category: General allowance $ 3,457 $ 1,455 $ 6,315 $ 1,642 $ 781 $ 1,491 $ 15,141 Specific allowance 18 — — — — — 18 Loans: Total loans $ 412,231 $ 152,855 $ 416,988 $ 74,697 $ 30,546 $ 49,431 $ 1,136,748 Loans collectively evaluated for impairment 410,136 151,195 376,815 74,697 30,546 49,431 1,092,820 Loans individually evaluated for impairment 2,095 1,660 40,173 — — — 43,928 Past Due Loans. Loans are considered past due if a scheduled principal or interest payment is due and unpaid for 30 days or more. Loans past due were $230,000 and $220,000 at March 31, 2023, and December 31, 2022, respectively, representing 0.02% of total loans receivable at both dates. The following tables represent a summary of the aging of loans by type at the dates indicated: Loans Past Due as of March 31, 2023 30-59 Days 60-89 Days 90 Days and Total Past Current Total (1) (In thousands) Real estate: One-to-four family residential: Owner occupied $ — $ — $ — $ — $ 242,477 $ 242,477 Non-owner occupied — — — 240,183 240,183 Multifamily — — — — 143,332 143,332 Commercial real estate — — — — 408,905 408,905 Construction/land — — — 63,603 63,603 Total real estate — — — — 1,098,500 1,098,500 Business — — — — 31,659 31,659 Consumer 29 — 201 230 70,389 70,619 Total loans $ 29 $ — $ 201 $ 230 $ 1,200,548 $ 1,200,778 ________________ (1) There were no loans 90 days and greater past due and still accruing interest at March 31, 2023. Loans Past Due as of December 31, 2022 30-59 Days 60-89 Days 90 Days and Total Past Current Total (1) (In thousands) Real estate: One-to-four family residential: Owner occupied $ — $ — $ — $ — $ 233,785 $ 233,785 Non-owner occupied 27 — — 27 242,024 242,051 Multifamily — — — — 126,895 126,895 Commercial real estate — — — — 407,882 407,882 Construction/land — — — — 78,120 78,120 Total real estate 27 — — 27 1,088,706 1,088,733 Business — — — — 31,371 31,371 Consumer — — 193 193 61,862 62,055 Total loans $ 27 $ — $ 193 $ 220 $ 1,181,939 $ 1,182,159 _________________ (1) There were no loans 90 days and greater past due and still accruing interest at December 31, 2022. Nonperforming Loans. When a loan becomes 90 days past due, the Company generally places the loan on nonaccrual status. Loans may be placed on nonaccrual status prior to being 90 days past due if there is an identified problem that indicates the borrower is unable to meet their scheduled payment obligations. Nonaccrual loans totaled $201,000 and $193,000 at March 31, 2023 and March 31, 2022, respectively. The following tables summarize the loan portfolio by type and payment status at the dates indicated: March 31, 2023 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) Performing (1) $ 482,660 $ 143,332 $ 408,905 $ 63,603 $ 31,659 $ 70,418 $ 1,200,577 Nonperforming — — — — 201 201 Total loans $ 482,660 $ 143,332 $ 408,905 $ 63,603 $ 31,659 $ 70,619 $ 1,200,778 _____________ (1) There were $242.5 million of owner-occupied one-to-four family residential loans and $240.2 million of non-owner occupied one-to-four family residential loans classified as performing. December 31, 2022 One-to-Four Multifamily Commercial Construction/ Business Consumer Total (In thousands) Performing (1) $ 475,836 $ 126,895 $ 407,882 $ 78,120 $ 31,371 $ 61,862 $ 1,181,966 Nonperforming — — — — — 193 193 Total loans $ 475,836 $ 126,895 $ 407,882 $ 78,120 $ 31,371 $ 62,055 $ 1,182,159 _____________ (1) There were $233.8 million of owner-occupied one-to-four family residential loans and $242.1 million of non-owner occupied one-to-four family residential loans classified as performing. Impaired Loans and Allowance for Loan Losses - Prior to the implementation of Financial Instruments - Credit Losses (Topic 326) on January 1, 2023, a loan was considered impaired when, based on current information and circumstances, the Company determines it was probable that it would be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. Factors considered in determining impairment included, but were not limited to, the financial condition of the borrower, the value of the underlying collateral and the status of the economy. Impaired loans were comprised of loans on nonaccrual, TDRs that were performing under their restructured terms, and loans that were 90 days or more past due, but were still on accrual. The following table presents a summary of loans individually evaluated for impairment by loan type at December 31, 2022: December 31, 2022 Recorded Investment (1) Unpaid Principal Balance (2) Related Allowance (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 174 $ 175 $ — Non-owner occupied 188 188 — Multifamily 1,632 1,632 — Commercial real estate 45,542 45,542 — Total 47,536 47,537 — Loans with an allowance: One-to-four family residential: Owner occupied 486 533 12 Non-owner occupied 512 512 1 Total 998 1,045 13 Total impaired loans: One-to-four family residential: Owner occupied 660 708 12 Non-owner occupied 700 700 1 Multifamily 1,632 1,632 — Commercial real estate 45,542 45,542 — Total $ 48,534 $ 48,582 $ 13 _________________ (1) Represents the loan balance less charge-offs. (2) Contractual loan principal balance. The following table presents the amortized cost basis of loans on nonaccrual status and loans 90 days or more past due and still accruing as of March 31, 2023: March 31, 2023 Nonaccrual with No ACL Nonaccrual with ACL Total Nonaccrual 90 Days or More Past Due and Still Accruing (In thousands) Consumer Loans $ 201 $ — $ 201 $ — Total $ 201 $ — $ 201 $ — The following table presents the amortized cost basis of collateral dependent loans by class as of March 31, 2023: March 31, 2023 Real Estate Total (In thousands) Multifamily $ 1,620 $ 1,620 Commercial Real Estate $ 45,155 $ 45,155 Total $ 46,775 $ 46,775 The following table presents the average recorded investment in loans individually evaluated for impairment and the interest income recognized for the three months ended March 31, 2022: Three Months Ended March 31, 2022 Average Recorded Investment Interest Income Recognized (In thousands) Loans with no related allowance: One-to-four family residential: Owner occupied $ 178 $ 3 Non-owner occupied 912 15 Multifamily 830 17 Commercial real estate 37,102 410 Total 39,022 445 Loans with an allowance: One-to-four family residential: Owner occupied 493 7 Non-owner occupied 519 9 Total 1,012 16 Total impaired loans: One-to-four family residential: Owner occupied 671 10 Non-owner occupied 1,431 24 Multifamily 830 17 Commercial real estate 37,102 410 Total $ 40,034 $ 461 Troubled Debt Restructurings (“TDR”). On January 1, 2023, |