| Loans Receivable | 5. Loans Receivable Major classifications of loans are as follows: At June 30, At December 31, (In thousands) 2024 2023 Residential mortgages: One- to four-family $ 169,502 $ 168,387 169,502 168,387 Commercial loans: Real estate - nonresidential 13,864 14,437 Multi-family 777 832 Commercial business 14,902 18,821 29,543 34,090 Consumer: Home equity and junior liens 15,096 13,632 Manufactured homes 46,209 48,681 Automobile 19,459 22,424 Student 1,441 1,569 Recreational vehicle 21,403 22,915 Other consumer 8,897 9,555 112,505 118,776 Total Loans 311,550 321,253 Net deferred loan costs 13,897 15,351 Fair value credit and yield adjustment (115) (149) Less allowance for loan losses (3,177) (2,973) Loans receivable, net $ 322,155 $ 333,482 The Company originates residential mortgage, commercial, and consumer loans to customers, principally located in the Finger Lakes Region of New York State and extending north to Orleans County. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ abilities to honor their contracts is dependent upon the counties’ employment and economic conditions. To further diversify the loan portfolio, the Company also purchases loans that have been originated outside of the region. High quality automobile loans, originated in the Northeastern United States, are purchased regularly from a Connecticut based company. In 2019, the Company also began to purchase modular home loans originated throughout the United States, the seller of which then services the loans for the Company. In 2020, the Company began to purchase automobile and recreational vehicle loans originated in New York State. In 2022, the Company began to purchase one- to four-family, owner-occupied residential real estate loans from a third-party originator. These loans are serviced by the Company and primarily located in Cayuga, Ontario, Orleans, and Seneca counties. Loan Origination / Risk Management The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by frequently providing management with reports related to loan production, loan quality, loan delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions. The loan portfolio is segregated into risk rating categories based on the borrower’s overall financial condition, repayment sources, guarantors, and value of collateral, if appropriate. The risk ratings are evaluated at least annually for commercial loans. Risk ratings are also reviewed when credit deficiencies arise, such as delinquent loan payments, for commercial, residential mortgage, or consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful, and loss. Loans classified as loss are considered uncollectible and are charged to the allowance for credit loss. Loans not classified are rated as pass. The following table presents the classes of the loan portfolio summarized by the credit quality indicator: At June 30, 2024 Special (In thousands) Pass Mention Substandard Doubtful Total Residential mortgages: One- to four-family $ 166,231 $ 1,265 $ 2,006 $ — $ 169,502 166,231 1,265 2,006 — 169,502 Commercial loans: Real estate - nonresidential 11,974 1,610 280 — 13,864 Multi-family 777 — — — 777 Commercial business 14,004 521 377 — 14,902 26,755 2,131 657 — 29,543 Consumer: Home equity and junior liens 14,911 98 87 — 15,096 Manufactured homes 45,708 233 268 — 46,209 Automobile 19,341 49 69 — 19,459 Student 1,409 5 27 — 1,441 Recreational vehicle 20,704 333 366 — 21,403 Other consumer 8,844 53 — — 8,897 110,917 771 817 — 112,505 Total loans $ 303,903 $ 4,167 $ 3,480 $ — $ 311,550 At December 31, 2023 Special (In thousands) Pass Mention Substandard Doubtful Total Residential mortgages: One- to four-family $ 164,940 $ 1,169 $ 2,278 $ — $ 168,387 164,940 1,169 2,278 — 168,387 Commercial loans: Real estate - nonresidential 12,505 1,633 299 — 14,437 Multi-family 832 — — — 832 Commercial business 16,016 615 2,190 — 18,821 29,353 2,248 2,489 — 34,090 Consumer: Home equity and junior liens 13,486 61 85 — 13,632 Manufactured homes 48,286 72 323 — 48,681 Automobile 22,216 88 120 — 22,424 Student 1,543 — 26 — 1,569 Recreational vehicle 21,974 650 291 — 22,915 Other consumer 9,428 56 71 — 9,555 116,933 927 916 — 118,776 Total loans $ 311,226 $ 4,344 $ 5,683 $ — $ 321,253 Management has reviewed its loan portfolio and determined that, to the best of its knowledge, little or no exposure exists to sub-prime or other high-risk residential mortgages. The Company is not in the practice of originating these types of loans. Non-accrual and Past Due Loans Loans are considered past due if the required principal and interest payments have not been received within thirty days of the payment due date. For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on non-accrual status, unpaid interest is reversed and charged to interest income. Interest received on non-accrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six When future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a non-accrual loan had been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to allowance for loan losses until prior charge-offs have been fully recovered. An age analysis of past due loans, segregated by class of loans, as are as follows: At June 30, 2024 90 Days 30-59 Days 60-89 Days or More Total Total Loans Total Loans (In thousands) Past Due Past Due Past Due Past Due Current Receivable Residential mortgage loans: One- to four-family $ 5,134 $ 1,356 $ 2,006 $ 8,496 $ 161,006 $ 169,502 5,134 1,356 2,006 8,496 161,006 169,502 Commercial loans: Real estate - nonresidential 81 — 18 99 13,765 13,864 Multi-family 380 — — 380 397 777 Commercial business 59 — — 59 14,843 14,902 520 — 18 538 29,005 29,543 Consumer loans: Home equity and junior liens 195 94 87 376 14,720 15,096 Manufactured homes 737 233 268 1,238 44,971 46,209 Automobile 198 49 70 317 19,142 19,459 Student — 5 27 32 1,409 1,441 Recreational vehicle 594 333 366 1,293 20,110 21,403 Other consumer 211 53 — 264 8,633 8,897 1,935 767 818 3,520 108,985 112,505 Total loans $ 7,589 $ 2,123 $ 2,842 $ 12,554 $ 298,996 $ 311,550 At December 31, 2023 90 Days 30-59 Days 60-89 Days or More Total Total Loans Total Loans (In thousands) Past Due Past Due Past Due Past Due Current Receivable Residential mortgage loans: One- to four-family $ 5,397 $ 1,491 $ 2,277 $ 9,165 $ 159,222 $ 168,387 5,397 1,491 2,277 9,165 159,222 168,387 Commercial loans: Real estate - nonresidential — — 29 29 14,408 14,437 Multi-family 384 — — 384 448 832 Commercial business 388 73 41 502 18,319 18,821 772 73 70 915 33,175 34,090 Consumer loans: Home equity and junior liens 336 77 85 498 13,134 13,632 Manufactured homes 609 72 323 1,004 47,677 48,681 Automobile 246 88 120 454 21,970 22,424 Student 4 — 25 29 1,540 1,569 Recreational vehicle 913 650 291 1,854 21,061 22,915 Other consumer 154 56 71 281 9,274 9,555 2,262 943 915 4,120 114,656 118,776 Total loans $ 8,431 $ 2,507 $ 3,262 $ 14,200 $ 307,053 $ 321,253 There were no loans past due more than ninety days and still accruing interest at June 30, 2024 and December 31, 2023. Income recognized on a cash basis was not materially different than interest income recognized on an accrual basis for the periods. The following tables provide loans on non-accrual status. Non-accrual loans may have an allowance for credit losses or a negative allowance for credit losses from expected recoveries of amounts previously written off. Non-accrual loans may not have an allowance for credit losses if the loss expectations are zero given a solid collateral value. At June 30, 2024 At December 31,2023 Non-accrual loans Non-accrual loans with no allowance with no allowance (In thousands) Non-accrual loan for credit losses Non-accrual loan for credit losses Residential mortgage loans: One- to four-family $ 2,006 $ 1,894 $ 2,277 $ 2,277 Commercial loans: Real estate - nonresidential 18 18 29 29 Commercial business 298 298 397 356 Consumer loans: Home equity and junior liens 87 87 85 85 Manufactured homes 268 268 323 323 Automobile 70 70 120 120 Student 27 27 25 25 Recreational vehicle 366 366 291 291 Other consumer — — 71 71 $ 3,140 $ 3,028 $ 3,618 $ 3,577 The following table summarizes interest income recognized on non-accrual loans: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 Residential mortgage loans: One- to four-family $ 11 $ 4 $ 23 $ 31 Commercial loans: Commercial business — — — 1 Consumer loans: Home equity and junior liens — 1 1 2 Automobile 1 1 2 2 Recreational vehicle 3 4 8 6 15 10 34 42 Loan Modifications The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. There were no loans modified with financial difficulty during the three and six months ended June 30, 2024 and 2023. The following tables present an analysis of collateral-dependent loans of the Company as of June 30, 2024 and December 31, 2023: At June 30, 2024 Residential Business Commercial Total (In thousands) properties assets Land property Other Loans One- to four-family $ 1,594 $ — $ — $ — $ — $ 1,594 Real estate - nonresidential 18 — — — — 18 Commercial business — 298 — — — 298 Home equity and junior liens 87 — — — — 87 Total loans $ 1,699 $ 298 $ — $ — $ — $ 1,997 At December 31, 2023 Residential Business Commercial Total (In thousands) properties assets Land property Other Loans One- to four-family $ 1,977 $ — $ — $ — $ — $ 1,977 Real estate - nonresidential 29 — — — — 29 Commercial business — 414 — — — 414 Home equity and junior liens 85 — — — — 85 Total loans $ 2,091 $ 414 $ — $ — $ — $ 2,505 The following tables present the loans to customers as of June 30, 2024 and December 31, 2023 based on year of origination within each credit quality indicator: At June 30, 2024 2024 2023 2022 2021 2020 Prior Total Residential mortgage loans: 4 Internal grade $ 7,663 $ 38,981 $ 39,684 $ 9,244 $ 10,606 $ 60,053 $ 166,231 5 Internal grade — — 235 135 — 895 1,265 6 Internal grade — 175 136 117 41 1,537 2,006 $ 7,663 $ 39,156 $ 40,055 $ 9,496 $ 10,647 $ 62,485 $ 169,502 Commercial loans: 2 Internal grade $ — $ — $ — $ — $ — $ — $ — 3 Internal grade — 637 35 577 205 4,520 5,974 4 Internal grade — 5,757 3,657 549 185 10,633 20,781 5 Internal grade — — — — — 2,131 2,131 6 Internal grade — — — — — 657 657 $ — $ 6,394 $ 3,692 $ 1,126 $ 390 $ 17,941 $ 29,543 Consumer loans: 4 Internal grade $ 1,951 $ 15,510 $ 22,115 $ 24,085 $ 30,053 $ 17,203 $ 110,917 5 Internal grade — 23 184 211 159 194 771 6 Internal grade — — 81 336 287 113 817 $ 1,951 $ 15,533 $ 22,380 $ 24,632 $ 30,499 $ 17,510 $ 112,505 At December 31, 2023 2023 2022 2021 2020 2019 Prior Total Residential mortgage loans: 4 Internal grade $ 39,312 $ 41,364 $ 10,185 $ 11,309 $ 11,008 $ 51,762 $ 164,940 5 Internal grade — — 27 — — 1,142 1,169 6 Internal grade — 132 — 41 763 1,342 2,278 $ 39,312 $ 41,496 $ 10,212 $ 11,350 $ 11,771 $ 54,246 $ 168,387 Commercial loans: 2 Internal grade $ — $ — $ — $ — $ — $ 360 $ 360 3 Internal grade 1,615 155 594 242 459 4,212 7,277 4 Internal grade 6,496 3,461 657 193 409 10,500 21,716 5 Internal grade — — — — 2,028 220 2,248 6 Internal grade — — — — 41 2,448 2,489 $ 8,111 $ 3,616 $ 1,251 $ 435 $ 2,937 $ 17,740 $ 34,090 Consumer loans: 4 Internal grade $ 16,103 $ 24,083 $ 25,866 $ 31,711 $ 8,668 $ 10,502 $ 116,933 5 Internal grade — 104 474 227 17 105 927 6 Internal grade — 83 406 295 54 78 916 $ 16,103 $ 24,270 $ 26,746 $ 32,233 $ 8,739 $ 10,685 $ 118,776 The following tables present the gross write-offs and recoveries based on year of origination for the six months ended June 30, 2024 and 2023: June 30, 2024 2024 2023 2022 2021 2020 Prior Total Residential mortgage loans: Current period gross write-offs $ — $ — $ — $ — $ — $ (3) $ (3) Current period recoveries — — — — — 2 2 Current period net (write-offs) recoveries $ — $ — $ — $ — $ — $ (1) $ (1) Commercial loans: Current period gross write-offs $ — $ — $ — $ — $ — $ (34) $ (34) Current period recoveries — — — — — 25 25 Current period net (write-offs) recoveries $ — $ — $ — $ — $ — $ (9) $ (9) Consumer loans: Current period gross write-offs $ — $ (23) $ (79) $ (222) $ (112) $ (24) $ (460) Current period recoveries — — 19 16 21 16 72 Current period net (write-offs) recoveries $ — $ (23) $ (60) $ (206) $ (91) $ (8) $ (388) June 30, 2023 2023 2022 2021 2020 2019 Prior Total Residential mortgage loans: Current period gross write-offs $ — $ — $ — $ — $ — $ (100) $ (100) Current period recoveries — — — — — 3 3 Current period net (write-offs) recoveries $ — $ — $ — $ — $ — $ (97) $ (97) Commercial loans: Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — Current period recoveries — — — — — 51 51 Current period net (write-offs) recoveries $ — $ — $ — $ — $ — $ 51 $ 51 Consumer loans: Current period gross write-offs $ — $ — $ (1) $ (1) $ — $ (20) $ (22) Current period recoveries — — — — — 12 12 Current period net (write-offs) recoveries $ — $ — $ (1) $ (1) $ — $ (8) $ (10) |
