| Loans Receivable | 3)
Loans Receivable Loans receivable at December 31, 2021
and 2020 are summarized as follows:
December 31,
2021
2020
Mortgage loans:
(In Thousands)
Residential real estate:
One- to four-family
$
300,523
$
426,792
Multi family
537,956
571,948
Home equity
11,012
14,820
Construction and land
82,588
77,080
Commercial real estate
250,676
238,375
Consumer
732
736
Commercial loans
22,298
45,386
Total loans receivable
$
1,205,785
$
1,375,137 The Company provides several types of loans to its customers, including residential, construction, commercial and consumer
loans. Significant loan concentrations are considered to exist for a financial institution when there are amounts loaned to one borrower or to multiple borrowers engaged in similar activities that would cause them to be similarly impacted by
economic or other conditions. While credit risks tend to be geographically concentrated in the Company’s Milwaukee metropolitan area and while 70.5%
of the Company’s loan portfolio involves loans that are secured by residential real estate, there are no concentrations with individual or groups of related borrowers. While the real estate collateralizing these loans is primarily residential in
nature, it ranges from owner-occupied single family homes to large apartment complexes. Qualifying loans receivable totaling $886.7
million were pledged as collateral against $475.0 million and $1.07 billion were pledged as collateral against $499.0 million in
outstanding Federal Home Loan Bank of Chicago advances under a blanket security agreement at December 31, 2021 and December 31, 2020, respectively. Certain of the Company's executive officers, directors, employees, and their related interests have loans with the Bank. As of December 31, 2021 and December 31, 2020,
loans aggregating approximately $2.5 million and $7.2 million, respectively, were outstanding to such parties. None of these loans were past due or
considered impaired as of December 31, 2021 and December 31, 2020. An analysis of past due loans receivable as of December 31, 2021 and 2020 follows:
As of December 31, 2021
1-59 Days Past Due (1)
60-89 Days Past Due (2)
90 Days or Greater Past Due
Total Past Due
Current (3)
Total Loans
Mortgage loans:
(In Thousands)
Residential real estate:
One- to four-family
$
622
$
2,028
$
4,214
$
6,864
$
293,659
$
300,523
Multi family
-
-
128
128
537,828
537,956
Home equity
14
23
26
63
10,949
11,012
Construction and land
-
-
-
-
82,588
82,588
Commercial real estate
-
-
-
-
250,676
250,676
Consumer
-
-
-
-
732
732
Commercial loans
7
-
-
7
22,291
22,298
Total
$
643
$
2,051
$
4,368
$
7,062
$
1,198,723
$
1,205,785
As of December 31, 2020
1-59 Days Past Due (1)
60-89 Days Past Due (2)
90 Days or Greater Past Due
Total Past Due
Current (3)
Total Loans
Mortgage loans:
(In Thousands)
Residential real estate:
One- to four-family
$
3,796
$
142
$
3,530
$
7,468
$
419,324
$
426,792
Multi family
-
-
314
314
571,634
571,948
Home equity
-
-
30
30
14,790
14,820
Construction and land
-
-
43
43
77,037
77,080
Commercial real estate
-
-
41
41
238,334
238,375
Consumer
-
-
-
-
736
736
Commercial loans
-
-
-
-
45,386
45,386
Total
$
3,796
$
142
$
3,958
$
7,896
$
1,367,241
$
1,375,137
(1)
Includes $43,000 and $611,000 for December 31, 2021 and 2020,
respectively, which are on non-accrual status.
(2)
Includes $347,000 and $- for December 31, 2021 and 2020,
respectively, which are on non-accrual status.
(3)
Includes $816,000 and $1.6 million for December 31, 2021 and 2020,
respectively, which are on non-accrual status. We currently manage our loan portfolios and the respective exposure to credit losses (credit risk) by the following specific portfolio
segments, which are levels at which we develop and document our systematic methodology to determine the allowance for credit losses attributable to each respective portfolio segment. These segments are as follows: One- to four-family residential mortgage loans – This residential real estate subsegment contains permanent mortgage loans principally
to consumers secured by residential real estate. Residential real estate loans are evaluated for the adequacy of repayment sources at the time of approval, based upon measures including credit scores, debt-to-income ratios and collateral values.
Credit risk arises from the borrower’s continuing financial stability, which can be adversely impacted by job loss, divorce, illness or personal bankruptcy, among other factors. Also impacting credit risk would be a shortfall in the value of the
residential real estate in relation to the outstanding loan balance in the event of a default or subsequent liquidation of the real estate collateral. Multi family residential real estate loans – Multi family real estate loans consist of multifamily rentals with a history of occupancy
and cash flow. This segment includes both internally originated and purchased participation loans. These loans carry the risk of adverse changes in the local economy and a tenant’s deteriorating credit strength, lease expirations in soft markets and
sustained vacancies, which can adversely impact cash flow. Home equity residential mortgage loans – This segment includes subsegment for senior lien and subordinate lien lines of credit. Credit
risk is similar to residential real estate loans described above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan. Construction and land loans – Construction and land loans are intended to finance the construction of commercial and residential
properties, including the construction of single-family dwellings, and also includes loans for the acquisition and development of land.Construction lending generally involves a greater degree of risk than other residential mortgage lending. The
repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the construction of the subject property within specified cost limits. The Bank of Greene County completes inspections during the
construction phase prior to any disbursements. The Bank of Greene County limits its risk during the construction as disbursements are not made until the required work for each advance has been completed. Construction delays may further impair the
borrower’s ability to repay the loan. Commercial real estate loans – Commercial real estate loans consist of non-owner occupied properties, such as investment properties for
retail, and office with a history of occupancy and cash flow. This segment includes both internally originated loans. Commercial real estate loans often involve large loan
balances to single borrowers or groups of related borrowers. Payments on these loans depend to a large degree on the results of operations and management of the properties or underlying businesses, and may be affected to a greater extent by adverse
conditions in the real estate market or the economy in general. Accordingly, the nature of commercial real estate loans makes them more difficult for management to monitor and evaluate. Consumer loans – This segment of loans includes primarily installment loans and personal lines of credit. Consumer loans generally
involve greater credit risk than residential mortgage loans because of the difference in the nature of the underlying collateral. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding
loan balance because of the greater likelihood of damage, loss or depreciation in the underlying collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency
judgment. In addition, consumer loan collections depend on the borrower’s personal financial stability. As such, these loans are subject to a higher risk of default than the typical consumer loan. Commercial business loans – Commercial loans are made to provide funds for equipment and general corporate needs, as well as to finance
owner-occupied real estate. Repayment of these loans primarily uses the funds obtained from the operation of the borrower’s business. Commercial loans also include lines of credit that are utilized to finance a borrower’s short-term credit needs
and/or to finance a percentage of eligible receivables and inventory. This segment includes both internally originated and purchased participation loans. Credit risk arises from the successful operation of the business, which may be affected by
competition, rising interest rates, regulatory changes and adverse conditions in the local and regional economy. As of December 31, 2021,
no loans were 90 or more days past due and still accruing interest. As of December 31, 2020, there were $586,000 loans that were 90 or more
days past due and still accruing interest. The bank received full payoff of the loan subsequent to December 31, 2020. A summary of the activity for the years ended December 31, 2021,
2020 and 2019 in the
allowance for loan losses follows:
One- to Four- Family
Multi Family
Home Equity
Construction and Land
Commercial Real Estate
Consumer
Commercial
Total
(In Thousands)
Year ended December 31, 2021
Balance at beginning of period
$
5,459
$
5,600
$
194
$
1,755
$
5,138
$
35
$
642
$
18,823
Provision (credit) for loan losses
(2,294
)
(318
)
(121
)
(408
)
(650
)
16
(215
)
(3,990
)
Charge-offs
(151
)
-
-
(13
)
(10
)
(18
)
-
(192
)
Recoveries
949
116
16
52
4
-
-
1,137
Balance at end of period
$
3,963
$
5,398
$
89
$
1,386
$
4,482
$
33
$
427
$
15,778
Year ended December 31, 2020
Balance at beginning of period
$
4,907
$
4,138
$
201
$
610
$
2,145
$
14
$
372
$
12,387
Provision (credit) for loan losses
486
1,446
(21
)
1,151
2,977
31
270
6,340
Charge-offs
(82
)
(5
)
(13
)
(8
)
-
(10
)
-
(118
)
Recoveries
148
21
27
2
16
-
-
214
Balance at end of period
$
5,459
$
5,600
$
194
$
1,755
$
5,138
$
35
$
642
$
18,823
Year ended December 31, 2019
Balance at beginning of period
$
5,742
$
4,153
$
325
$
400
$
2,126
$
20
$
483
$
13,249
Provision (credit) for loan losses
(845
)
(42
)
(107
)
210
(4
)
(1
)
(111
)
(900
)
Charge-offs
(125
)
(3
)
(44
)
-
(2
)
(5
)
-
(179
)
Recoveries
135
30
27
-
25
-
-
217
Balance at end of period
$
4,907
$
4,138
$
201
$
610
$
2,145
$
14
$
372
$
12,387 A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment
by collateral class as of the year ended December 31, 2021 follows:
One- to Four- Family
Multi Family
Home Equity
Construction and Land
Commercial Real Estate
Consumer
Commercial
Total
(In Thousands)
Allowance related to loans individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Allowance related to loans collectively evaluated for impairment
3,963
5,398
89
1,386
4,482
33
427
15,778
Balance at end of period
$
3,963
$
5,398
$
89
$
1,386
$
4,482
$
33
$
427
$
15,778
Loans individually evaluated for impairment
$
5,420
$
128
$
26
$
-
$
1,222
$
-
$
1,097
$
7,893
Loans collectively evaluated for impairment
295,103
537,828
10,986
82,588
249,454
732
21,201
1,197,892
Total gross loans
$
300,523
$
537,956
$
11,012
$
82,588
$
250,676
$
732
$
22,298
$
1,205,785 A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment by collateral class as of the
year ended December 31, 2020 follows:
One- to Four- Family
Multi Family
Home Equity
Construction and Land
Commercial Real Estate
Consumer
Commercial
Total
(In Thousands )
Allowance related to loans individually evaluated for impairment
$
23
$
-
$
-
$
-
$
-
$
-
$
-
$
23
Allowance related to loans collectively evaluated for impairment
5,436
5,600
194
1,755
5,138
35
642
18,800
Balance at end of period
$
5,459
$
5,600
$
194
$
1,755
$
5,138
$
35
$
642
$
18,823
Loans individually evaluated for impairment
$
7,805
$
341
$
63
$
43
$
7,248
$
-
$
1,097
$
16,597
Loans collectively evaluated for impairment
418,987
571,607
14,757
77,037
231,127
736
44,289
1,358,540
Total gross loans
$
426,792
$
571,948
$
14,820
$
77,080
$
238,375
$
736
$
45,386
$
1,375,137 The following table presents information relating to the Company’s internal risk ratings of its loans receivable as of December 31, 2021 and 2020:
One- to Four- Family
Multi Family
Home Equity
Construction and Land
Commercial Real Estate
Consumer
Commercial
Total
At December 31, 2021
(In Thousands)
Substandard
$
5,420
$
128
$
26
$
-
$
6,827
$
-
$
1,097
$
13,498
Watch
7,937
-
37
4,212
5,870
-
3,194
21,250
Pass
287,166
537,828
10,949
78,376
237,979
732
18,007
1,171,037
$
300,523
$
537,956
$
11,012
$
82,588
$
250,676
$
732
$
22,298
$
1,205,785
At December 31, 2020
(In Thousands)
Substandard
$
7,804
$
341
$
248
$
43
$
6,026
$
-
$
710
$
15,172
Watch
7,667
275
15
4,282
6,714
-
4,101
23,054
Pass
411,321
571,332
14,557
72,755
225,635
736
40,575
1,336,911
$
426,792
$
571,948
$
14,820
$
77,080
$
238,375
$
736
$
45,386
$
1,375,137 Factors that are important to managing overall credit quality include sound loan underwriting and administration, systematic
monitoring of existing loans and commitments, effective loan review on an ongoing basis, early identification of potential problems, an allowance for loan losses, and sound non-accrual and charge-off policies. Our underwriting policies require an
officers' loan committee review and approval of all loans in excess of $500,000 except for residential loans which has an approval limit in
excess of $1.0 million. A member of the credit department, independent of the loan originator, performs a loan review for all loans. Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem
loans. To do so, we maintain a loan review system under which our credit management personnel review non-owner occupied one- to four-family, multi-family, construction and land, and commercial real estate that individually, or as part of an overall
borrower relationship exceed $1.0 million in potential exposure and review commercial loans that individually, or as part of an overall
borrower relationship exceed $200,000 in potential exposure. Loans meeting these criteria are reviewed on an annual basis, or more
frequently, if the loan renewal is less than one year. With respect to this review process, management has determined that pass loans
include loans that exhibit acceptable financial statements, cash flow and leverage. Watch loans have potential weaknesses that deserve management’s attention, and if left uncorrected, these potential weaknesses may result in deterioration of the
repayment prospects for the credit. Substandard loans are considered inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These loans generally have a well-defined weakness that may
jeopardize liquidation of the debt and are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Finally, a loan is considered to be impaired when it is probable that the Bank will not
be able to collect all amounts due according to the contractual terms of the loan agreement. Management has determined that all non-accrual loans and loans modified under troubled debt restructurings meet the definition of an impaired loan. The Company’s procedures dictate that an updated valuation must be obtained with respect to underlying collateral at the time a loan
is deemed impaired. Updated valuations may also be obtained upon transfer from loans receivable to real estate owned based upon the age of the prior appraisal, changes in market conditions or known changes to the physical condition of the property. Estimated fair values are reduced to account for sales commissions, broker fees, unpaid property taxes and additional selling expenses
to arrive at an estimated net realizable value. This estimated adjustment factor is based upon the Company’s actual experience with respect to sales of real estate owned over the prior two years. In situations in which we are placing reliance on an appraisal that is more than one year old, an additional adjustment factor is applied to account for downward
market pressure since the date of appraisal. The additional adjustment factor is based upon relevant sales data available for our general operating market as well as company-specific historical net realizable values as compared to the most recent
appraisal prior to disposition. With respect to multi family income producing real estate, appraisals are reviewed and estimated collateral values are adjusted by
updating significant appraisal assumptions to reflect current real estate market conditions. Significant assumptions reviewed and updated include the capitalization rate, rental income and operating expenses. These adjusted assumptions are based
upon recent appraisals received on similar properties as well as on actual experience related to real estate owned and currently under Company management. The following tables present data on impaired loans as of and for the year ended December 31, 2021 and 2020.
As of or for the Year Ended December 31, 2021
Recorded Investment
Unpaid Principal
Reserve
Cumulative Charge-Offs
Average Recorded Investment
Interest Paid YTD
(In Thousands)
Total Impaired with Reserve
One- to four-family
$
-
$
-
$
-
$
-
$
-
$
-
Multi family
-
-
-
-
-
-
Home equity
-
-
-
-
-
-
Construction and land
-
-
-
-
-
-
Commercial real estate
-
-
-
-
-
-
Consumer
-
-
-
-
-
-
Commercial
-
-
-
-
-
-
$
-
$
-
$
-
$
-
$
-
$
-
Total Impaired with no Reserve
One- to four-family
$
5,420
$
5,450
$
-
$
30
$
5,465
$
186
Multi family
128
128
-
-
129
4
Home equity
26
26
-
-
29
2
Construction and land
-
-
-
-
-
-
Commercial real estate
1,222
1,222
-
-
1,222
56
Consumer
-
-
-
-
-
-
Commercial
1,097
1,097
-
-
1,097
50
$
7,893
$
7,923
$
-
$
30
$
7,942
$
298
Total Impaired
One- to four-family
$
5,420
$
5,450
$
-
$
30
$
5,465
$
186
Multi family
128
128
-
-
129
4
Home equity
26
26
-
-
29
2
Construction and land
-
-
-
-
-
-
Commercial real estate
1,222
1,222
-
-
1,222
56
Consumer
-
-
-
-
-
-
Commercial
1,097
1,097
-
-
1,097
50
$
7,893
$
7,923
$
-
$
30
$
7,942
$
298
As of or for the Year Ended December 31, 2020
Recorded Investment
Unpaid Principal
Reserve
Cumulative Charge-Offs
Average Recorded Investment
Interest Paid YTD
(In Thousands)
Total Impaired with Reserve
One- to four-family
$
208
$
208
$
23
$
-
$
213
$
15
Multi family
-
-
-
-
-
-
Home equity
-
-
-
-
-
-
Construction and land
-
-
-
-
-
-
Commercial real estate
-
-
-
-
-
-
Consumer
-
-
-
-
-
-
Commercial
-
-
-
-
-
-
$
208
$
208
$
23
$
-
$
213
$
15
Total Impaired with no Reserve
One- to four-family
$
7,597
$
8,444
$
-
$
847
$
7,770
$
349
Multi family
341
352
-
11
353
17
Home equity
63
63
-
-
67
4
Construction and land
43
51
-
8
51
1
Commercial real estate
7,248
7,248
-
-
7,295
333
Consumer
-
-
-
-
-
-
Commercial
1,097
1,097
-
-
1,097
2
$
16,389
$
17,255
$
-
$
866
$
16,633
$
706
Total Impaired
One- to four-family
$
7,805
$
8,652
$
23
$
847
$
7,983
$
364
Multi family
341
352
-
11
353
17
Home equity
63
63
-
-
67
4
Construction and land
43
51
-
8
51
1
Commercial real estate
7,248
7,248
-
-
7,295
333
Consumer
-
-
-
-
-
-
Commercial
1,097
1,097
-
-
1,097
2
$
16,597
$
17,463
$
23
$
866
$
16,846
$
721 The difference between a loan’s recorded investment and the unpaid principal balance represents a partial charge-off resulting from a
confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that the full collection of the loan balance is not likely. When a loan is considered impaired, interest payments received are treated as interest income on a cash basis as long as the remaining
book value of the loan (i.e., after charge-off of all identified losses) is deemed to be fully collectible. If the remaining book value is not deemed to be fully collectible, all payments received are applied to unpaid principal. Determination as to
the ultimate collectability of the remaining book value is supported by an updated credit department evaluation of the borrower’s financial condition and prospects for repayment, including consideration of the borrower’s sustained historical
repayment performance and other relevant factors. The determination as to whether an allowance is required with respect to impaired loans is based upon an analysis of the value of the
underlying collateral and/or the borrower’s intent and ability to make all principal and interest payments in accordance with contractual terms. The evaluation process is subject to the use of significant estimates and actual results could differ
from estimates. This analysis is primarily based upon third party appraisals and/or a discounted cash flow analysis. In those cases in which no allowance has been provided for an impaired loan, the Company has determined that the estimated value of
the underlying collateral exceeds the remaining outstanding balance of the loan. Of the total $7.9 million of impaired loans as of December 31, 2021 for which no allowance has been provided, $30,000 in charge-offs have been recorded to reduce the unpaid principal balance to an amount that is commensurate with the loan’s net realizable value, using the estimated fair value of the underlying collateral. To
the extent that further deterioration in property values continues, the Company may have to reevaluate the sufficiency of the collateral servicing these impaired loans resulting in additional provisions to the allowance for loans losses or
charge-offs. The following presents data on troubled debt restructurings:
As of December 31, 2021
Accruing
Non-accruing
Total
Amount
Number
Amount
Number
Amount
Number
(Dollars in Thousands)
One- to four-family
$
-
-
$
1,670
5
$
1,670
5
Commercial real estate
1,222
1
-
-
1,222
1
Commercial
1,097
1
-
-
1,097
1
$
2,319
2
$
1,670
5
$
3,989
7
As of December 31, 2020
Accruing
Non-accruing
Total
Amount
Number
Amount
Number
Amount
Number
(Dollars in Thousands)
One- to four-family
$
2,733
2
$
532
3
$
3,265
5
Commercial real estate
7,207
3
-
-
7,207
3
Comercial
1,097
1
-
-
1,097
1
$
11,037
6
$
532
3
$
11,569
9 Troubled debt restructurings involve granting concessions to a borrower experiencing financial difficulty by modifying the terms of the
loan in an effort to avoid foreclosure. Typical restructured terms include six months to twelve months of principal forbearance, a reduction in interest rate or both. In no instances have the restructured terms included a reduction of outstanding principal
balance. At December 31, 2021, $4.0
million in loans had been modified in troubled debt restructurings and $1.7 million of these loans were included in the non-accrual loan
total. The remaining $2.3 million, while meeting the internal requirements for modification in a troubled debt restructuring, were current
with respect to payments under their original loan terms at the time of the restructuring, and thus continued to be included with accruing loans. Provided these loans perform in accordance with the modified terms, they will continue to be accounted
for on an accrual basis. All loans that have been modified in a troubled debt restructuring are considered to be impaired. As such, an analysis has been
performed with respect to all of these loans to determine the need for a valuation reserve. When a loan is expected to perform in accordance with the restructured terms and ultimately return to and perform under contract terms, a valuation allowance
is established equal to the excess of the present value of the expected future cash flows under the original contract terms as compared with the modified terms, including an estimated default rate. When there is doubt as to the borrower’s ability to
perform under the restructured terms or ultimately return to and perform under market terms, a valuation allowance is established equal to the impairment when the carrying amount exceeds fair value of the underlying collateral. As a result of the
impairment analysis, no valuation allowance has been deemed necessary as of December 31, 2021 with respect to the $4.0 million in troubled
debt restructurings. As of December 31, 2020, no valuation allowance had been established with respect to the $11.6 million in troubled debt
restructurings. If an updated credit department review indicates no other evidence of elevated credit risk and the borrower completes a minimum of six consecutive contractual payments, the loan is returned to accrual status at that time. The following presents troubled debt restructurings by concession type at December 31, 2021 and 2020:
As of December 31, 2021
Performing in accordance with modified terms
In Default
Total
Amount
Number
Amount
Number
Amount
Number
(Dollars in Thousands)
Interest reduction and principal forbearance
$
388
2
$
-
-
$
388
2
Interest reduction
24
1
-
-
24
1
Principal forbearance
3,577
4
-
-
3,577
4
$
3,989
7
$
-
-
$
3,989
7
As of December 31, 2020
Performing in accordance with modified terms
In Default
Total
Amount
Number
Amount
Number
Amount
Number
(Dollars in Thousands)
Interest reduction and principal forbearance
$
3,236
4
$
-
-
$
3,236
4
Interest reduction
302
2
-
-
302
2
Principal forebearance
8,031
3
-
-
8,031
3
$
11,569
9
$
-
-
$
11,569
9 The following presents data on troubled debt restructurings:
For the Year Ended
December 31, 2021
December 31, 2020
Amount
Number
Amount
Number
(Dollars in Thousands)
Loans modified as a troubled debt restructure
One- to four-family
$
1,258
2
$
-
-
Commercial real estate
-
-
6,934
2
Commercial
-
-
1,097
1
$
1,258
2
$
8,031
3 There were no troubled
debt restructurings within the past twelve months for which there was a default during the years ended December 31, 2021 and 2020. The provisions of the CARES Act and the 2021 Consolidated Appropriations Act included an election to not apply the guidance on accounting
for troubled debt restructurings to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency. The
relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. At December 31, 2021, the Company had approximately $405,000 in outstanding loans subject to interest and principal and principal deferral agreements. The following table presents data on non-accrual loans:
As of December 31,
2021
2020
(Dollars in Thousands)
Residential
One- to four-family
$
5,420
$
5,072
Multi family
128
341
Home equity
26
63
Construction and land
-
43
Commercial real estate
-
41
Commercial
-
-
Consumer
-
-
Total non-accrual loans
$
5,574
$
5,560
Total non-accrual loans to total loans
0.46
%
0.40
%
Total non-accrual loans to total assets
0.25
%
0.25
% |
