LOANS RECEIVABLE, NET | LOANS RECEIVABLE, NET The Company adopted ASU 2016-13 on January 1, 2023. All disclosures as of December 31, 2023 are presented in accordance with ASU 2016-13. The Company did not reclassify comparative financial periods and has presented those disclosures under previously-applied U.S. GAAP. A summary of loans receivable, net is as follows: December 31, 2023 (In thousands) Residential one-to-four family $ 550,929 Multifamily 682,564 Non-residential 232,505 Construction 60,414 Junior liens 22,503 Commercial and industrial 11,768 Consumer and other 47 Total loans 1,560,730 Allowance for credit losses on loans (1) (14,154) Loans receivable, net $ 1,546,576 (1) For more information, see Footnote 4 - Allowance for Credit Losses. December 31, 2022 (In thousands) Residential one-to-four family $ 594,521 Multifamily 690,278 Non-residential 216,394 Construction 17,990 Junior liens 18,477 Commercial and industrial 4,682 Consumer and other 38 Total gross loans 1,542,380 Deferred fees, costs and premiums and discounts, net 2,747 Total loans 1,545,127 Allowance for loan losses (13,400) Loans receivable, net $ 1,531,727 Loans are recorded at amortized cost, which includes principal balance, net deferred fees or costs, premiums and discounts. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the consolidated balance sheets and totaled $6.1 million and $5.4 million at December 31, 2023 and December 31, 2022, respectively. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. At December 31, 2023, net deferred loan fees are included in loans by respective segment and totaled $2.0 million. The portfolio classes in the above table have unique risk characteristics with respect to credit quality: • Payment on multifamily and non-residential mortgages is driven principally by operating results of the managed properties or underlying business and secondarily by the sale or refinance of such properties. Both primary and secondary sources of repayment and the value of the properties in liquidation, may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. • Properties underlying construction loans often do not generate sufficient cash flows to service debt and thus repayment is subject to the ability of the borrower and, if applicable, guarantors, to complete development or construction of the property and carry the project, often for extended periods of time. As a result, the performance of these loans is contingent upon future events whose probability at the time of origination is uncertain. • Commercial and industrial (“C&I”) loans include C&I revolving lines of credit, term loans, SBA 7a loans and to a lesser extent, Paycheck Protection Program (“PPP”) loans. Payments on C&I loans are driven principally by the cash flows of the businesses and secondarily by the sale or refinance of any collateral securing the loans. Both the cash flow and value of the collateral in liquidation may be affected by adverse general economic conditions. • The ability of borrowers to service debt in the residential one-to-four family, junior liens and consumer loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominately collateralized by first and second liens on single family properties. If a borrower cannot maintain the loan, the Company’s ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the quality and realizable value of collateral, if any, and the ability of borrowers to service their debts such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis is performed whenever credit is extended, renewed, or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. The Company used the following definitions for risk ratings for loan classification: Pass – Loans classified as pass are loans performing under the original contractual terms, do not currently pose any identified risk and can range from the highest to pass/watch quality, depending on the degree of potential risk. 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 the Company’s credit position at some future date. Substandard – Loans classified as substandard are inadequately protected by the current sound 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 repayment and liquidation of the debt. They are characterized by a distinct possibility that the Company 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 known facts, conditions, and values, highly questionable and improbable. Loss – Assets classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be effected in the future. The following table presents the risk category of loans by class of loan and vintage as of December 31, 2023: Term Loans by Origination Year 2023 2022 2021 2020 2019 Pre-2019 Revolving Loans Total (in thousands) Residential one-to-four family Pass $ 13,338 $ 98,007 $ 109,193 $ 14,315 $ 18,460 $ 291,069 $ — $ 544,382 Special mention — — — — — 663 — 663 Substandard — — — — — 5,884 — 5,884 Total 13,338 98,007 109,193 14,315 18,460 297,616 — 550,929 Multifamily Pass 17,144 281,906 158,705 35,407 56,739 132,517 — 682,418 Substandard — — — — — 146 — 146 Total 17,144 281,906 158,705 35,407 56,739 132,663 — 682,564 Non-residential Pass 26,610 118,247 14,785 15,080 5,386 51,493 — 231,601 Special mention — — — — — 904 — 904 Total 26,610 118,247 14,785 15,080 5,386 52,397 — 232,505 Construction Pass 22,798 21,067 16,549 — — — — 60,414 Total 22,798 21,067 16,549 — — — — 60,414 Junior liens Pass 5,359 5,234 1,232 296 1,773 8,560 — 22,454 Substandard — — — — — 49 — 49 Total 5,359 5,234 1,232 296 1,773 8,609 — 22,503 Commercial and industrial Pass 7,055 105 4,492 77 — — — 11,729 Substandard (1) — — 39 — — — — 39 Total 7,055 105 4,531 77 — — — 11,768 Consumer and other Pass 25 — — — — — 22 47 Total 25 — — — — — 22 47 Total gross loans $ 92,329 $ 524,566 $ 304,995 $ 65,175 $ 82,358 $ 491,285 $ 22 $ 1,560,730 The following table presents the risk category of loans by class of loans as of December 31, 2022: Pass Special Substandard Doubtful / Total (In thousands) Residential one-to-four family $ 589,137 $ 247 $ 7,870 $ — $ 597,254 Multifamily 689,277 897 516 — 690,690 Non-residential 214,981 1,080 — — 216,061 Construction and land 17,799 — — — 17,799 Junior liens 18,579 — 52 — 18,631 Commercial and Industrial 4,653 — — — 4,653 Consumer and other 8 — 31 — 39 Total $ 1,534,434 $ 2,224 $ 8,469 $ — $ 1,545,127 Past Due and Non-accrual Loans The following table presents the recorded investment in past due and current loans by loan portfolio class as of December 31, 2023 and December 31, 2022: 30-59 60-89 90 Days Total Current Total (In thousands) December 31, 2023 Residential one-to-four family $ 887 $ 752 $ 3,926 $ 5,565 $ 545,364 $ 550,929 Multifamily — — — — 682,564 682,564 Non-residential — — — — 232,505 232,505 Construction and land — — — — 60,414 60,414 Junior liens — — 49 49 22,454 22,503 Commercial and Industrial — — 39 39 11,729 11,768 Consumer and other — — — — 47 47 Total $ 887 $ 752 $ 4,014 $ 5,653 $ 1,555,077 $ 1,560,730 December 31, 2022 Residential one-to-four family $ — $ 845 $ 6,738 $ 7,583 $ 589,671 $ 597,254 Multifamily — — 182 182 690,508 690,690 Non-residential — — — — 216,061 216,061 Construction and land — — — — 17,799 17,799 Junior liens — — 52 52 18,579 18,631 Commercial and Industrial — — 96 96 4,557 4,653 Consumer and other — — — — 39 39 Total $ — $ 845 $ 7,068 $ 7,913 $ 1,537,214 $ 1,545,127 The following table presents information on non-accrual loans at December 31, 2023 : The following table presents the recorded investment in non-accrual loans at December 31, 2022: Nonaccrual Loans Past Due 12/31/2022 12/31/2022 Residential one-to-four family $ 7,498 $ — Multifamily 182 — Non-residential — — Construction and land — — Junior liens 52 — Commercial and industrial (1) 35 61 Total $ 7,767 $ 61 (1) Loans 90 days past due and accruing were comprised of PPP loans which carry the federal guarantee of the SBA. The Company had no loans held-for-sale at December 31, 2023 and December 31, 2022. Gains and losses on sales of loans are specifically identified and accounted for in accordance with U.S. GAAP. Impaired Loans The following table presents,under previously applicable U.S. GAAP, information related to impaired loans by class of loans at and as of December 31, 2022. December 31, 2022 Twelve months December 31, ended 2022 Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Cash Basis Interest Recognized (In thousands) With no related allowance recorded: Residential one-to-four family $ 7,368 $ 7,669 $ — $ 7,711 $ 119 $ 116 Multifamily 516 516 — 652 17 15 Non-residential 2,834 2,671 — 3,168 118 108 Construction and land — — — — — — Junior liens 52 52 — 54 3 3 Commercial and industrial — — — — — — 10,770 10,908 — 11,585 257 242 With an allowance recorded: Residential one-to-four family 743 749 27 546 29 26 Multifamily — — — — — — Non-residential — — — — — — Construction and land — — — — — — Commercial and industrial — — — — — — Consumer and other — — — — — — 743 749 27 546 29 26 Total $ 11,513 $ 11,657 $ 27 $ 12,131 $ 286 $ 268 The recorded investment in loans includes deferred fees, costs and discounts. For purposes of this disclosure, the unpaid principal balance would not be reduced for partial charge-offs. The Company adopted ASU 2022-02 on January 1, 2023. Modifications made to borrowers experiencing financial difficulty may include principal forgiveness, interest rate reductions, other than insignificant payment delays, terms extensions or a combination thereof. The Company did not reclassify comparative financial periods and has presented those disclosures under previously-applied U.S. GAAP. The following table presents loan modifications made during 2023 to borrowers experiencing financial difficulty, by type of modification. Year Ended December 31, 2023 Payment Delays Term Extensions Total Principal % of Total Class of Loans (Dollars in thousands) Residential one-to-four family $ 2,431 $ 374 $ 2,805 0.51 % Multifamily — 2,595 2,595 0.38 Construction — 3,525 3,525 5.83 Total $ 2,431 $ 6,494 $ 8,925 0.57 % Types of Modifications Residential one-to-four family Term extensions of 240 months Amortize past due balances over the remaining life of the loans Multifamily Term extensions of 90 to 180 days Construction Term extension of 180 days The following table presents loan modifications made during 2023 by payment status as of December 31, 2023. Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Non-Accrual Total (In thousands) Residential one-to-four family $ 1,400 $ — $ — $ — $ 1,405 $ 2,805 Multifamily 2,595 — — — — 2,595 Construction 3,525 — — — — 3,525 Total $ 7,520 $ — $ — $ — $ 1,405 $ 8,925 There were no loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023, that subsequently defaulted. Prior to the adoption of ASU 2022-02, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty were modified in accordance with ASC 310-40. The total recorded investment of loans whose terms have been modified in TDRs was $4.8 million as of December 31, 2022. The Company allocated $27 thousand of specific reserves to TDR loans as of December 31, 2022. The modification of the terms of TDR loans may have included one or a combination of the following: a reduction of the stated interest rate of the loan, short-term deferral of payment, or an extension of the maturity date. A TDR loan was considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no TDRs for which there was a payment default within twelve months following the modification during the period ended December 31, 2022. The Company had $4.0 million and $4.5 million in consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process at December 31, 2023 and 2022, respectively. At December 31, 2023, the Company had one one-to-four family loan with a carrying value of $593 thousand in real estate owned. There was no real estate owned at December 31, 2022. |