Loans Held for Investment

6 Months Ended

Dec. 31, 2022

Loans Held for Investment

Loans Held for Investment

Note 5: Loans Held for Investment

Loans held for investment, net of fair value adjustments, consisted of the following:

	December 31,		June 30,
(In Thousands)	2022		2022
Mortgage loans:
Single-family	$	479,730	$	378,234
Multi-family		465,350		464,676
Commercial real estate		88,200		90,429
Construction		2,388		3,216
Other		112		123
Commercial business loans		1,358		1,206
Consumer loans		75		86
Total loans held for investment, gross		1,037,213		937,970
Advance payments of escrows		176		47
Deferred loan costs, net		8,778		7,539
Allowance for loan losses		(5,830)		(5,564)
Total loans held for investment, net	$	1,040,337	$	939,992

The following table sets forth information at December 31, 2022 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans. Fixed-rate loans comprised 11 percent of loans held for investment at both December 31, 2022 and June 30, 2022. Adjustable rate loans having no stated repricing dates that reprice when the index they are tied to reprices (e.g. prime rate

index) and checking account overdrafts are reported as repricing within one year. The table does not include any estimate of prepayments which may cause the Corporation’s actual repricing experience to differ materially from that shown.

	Adjustable Rate
			After		After		After
		Within	One Year		3 Years		5 Years
(In Thousands)	One Year		Through 3 Years		Through 5 Years		Through 10 Years		Fixed Rate		Total
Mortgage loans:
Single-family	$	50,448	$	21,760	$	45,263	$	252,713	$	109,546	$	479,730
Multi-family		134,058		131,757		148,714		50,672		149		465,350
Commercial real estate		40,491		16,720		29,679		—		1,310		88,200
Construction		494		174		—		—		1,720		2,388
Other		—		—		—		—		112		112
Commercial business loans		1,291		—		—		—		67		1,358
Consumer loans		75		—		—		—		—		75
Total loans held for investment, gross	$	226,857	$	170,411	$	223,656	$	303,385	$	112,904	$	1,037,213

The Corporation has developed an internal loan grading system to evaluate and quantify the Bank’s loans held for investment portfolio with respect to quality and risk. Management continually evaluates the credit quality of the Corporation’s loan portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using quantitative and qualitative methods. The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss. The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances. Quantitative loan loss factors are developed by determining the historical loss experience, expected future cash flows, discount rates and collateral fair values, among others. Qualitative loan loss factors are developed by assessing general economic indicators such as gross domestic product, retail sales, unemployment rates, employment growth, California home sales and median California home prices. The Corporation assigns individual factors for the quantitative and qualitative methods for each loan category and each internal risk rating.

The Corporation categorizes all of the loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:

● Pass - These loans range from minimal credit risk to average, but still acceptable, credit risk. The likelihood of loss is considered remote.

● Special Mention - A special mention loan has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the bank is currently protected and loss is considered unlikely and not imminent.

● Substandard - A substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

● Doubtful - A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

● Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted.

The following tables summarize gross loans held for investment, net of fair value adjustments, by loan types and risk category at the dates indicated:

	December 31, 2022
					Commercial				Other		Commercial
(In Thousands)	Single-family		Multi-family		Real Estate		Construction		Mortgage		Business		Consumer		Total
Pass	$	478,691	$	464,836	$	87,648	$	2,388	$	112	$	1,358	$	75	$	1,035,108
Special Mention		—		514		—		—		—		—		—		514
Substandard		1,039		—		552		—		—		—		—		1,591
Total loans held for investment, gross	$	479,730	$	465,350	$	88,200	$	2,388	$	112	$	1,358	$	75	$	1,037,213

	June 30, 2022
					Commercial					Other	Commercial
(In Thousands)	Single-family		Multi-family		Real Estate		Construction			Mortgage	Business		Consumer		Total
Pass	$	376,502	$	464,676	$	90,429	$	3,216	$	123	$	1,206	$	86	$	936,238
Special Mention		224		—		—		—		—		—		—		224
Substandard		1,508		—		—		—		—		—		—		1,508
Total loans held for investment, gross	$	378,234	$	464,676	$	90,429	$	3,216	$	123	$	1,206	$	86	$	937,970

The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management’s continuing analysis of the factors underlying the quality of the loans held for investment. These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans. The provision (recovery) for (from) the allowance for loan losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the allowance at appropriate levels. Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Corporation’s loans held for investment, will not request a significant increase in its allowance for loan losses. Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control.

Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans. For loans that were modified from their original terms, were re-underwritten and identified in the Corporation’s asset quality reports as troubled debt restructurings (“restructured loans”), the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent. The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the allowance for loan losses. The allowance for loan losses for non-performing loans is determined by applying ASC 310, “Receivables.”  For restructured loans that are less than 90 days delinquent, the allowance for loan losses are segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their restructuring period, classified lower than pass, and  containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method. For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for restructured loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required.

The following table is provided to disclose additional details for the periods indicated on the Corporation’s allowance for loan losses:

	For the Quarter Ended						For the Six Months Ended
	December 31,						December 31,
(Dollars in Thousands)	2022			2021			2022			2021
Allowance at beginning of period	$	5,638		$	7,413		$	5,564		$	7,587
Provision (recovery) for loan losses		191			(1,067)			261			(1,406)
Recoveries:
Mortgage loans:
Single-family		1			262			5			427
Total recoveries		1			262			5			427
Total charge-offs		—			—			—			—
Net recoveries (charge-offs)		1			262			5			427
Balance at end of period	$	5,830		$	6,608		$	5,830		$	6,608
Allowance for loan losses as a percentage of gross loans held for investment at the end of the period		0.56	%		0.77	%		0.56	%		0.77	%
Net (recoveries) charge-offs as a percentage of average loans receivable, net, during the period (annualized)		(0.00)	%		(0.12)	%		(0.00)	%		(0.10)	%
Allowance for loan losses as a percentage of gross non-performing loans at the end of the period		561.12	%		196.20	%		561.12	%		196.20	%

The following tables denote the past due status of the Corporation's gross loans held for investment, net of fair value adjustments, at the dates indicated.

	December 31, 2022
			30-89 Days Past				Total Loans Held for
(In Thousands)	Current		Due		Non-Accrual(1)		Investment, Gross
Mortgage loans:
Single-family	$	478,691	$	—	$	1,039	$	479,730
Multi-family		465,350		—		—		465,350
Commercial real estate		88,200		—		—		88,200
Construction		2,388		—		—		2,388
Other		112		—		—		112
Commercial business loans		1,358		—		—		1,358
Consumer loans		71		4		—		75
Total loans held for investment, gross	$	1,036,170	$	4	$	1,039	$	1,037,213

(1) All loans 90 days or greater past due are placed on non-accrual status.

	June 30, 2022
			30-89 Days Past				Total Loans Held for
(In Thousands)	Current		Due		Non-Accrual(1)		Investment, Gross
Mortgage loans:
Single-family	$	376,726	$	—	$	1,508	$	378,234
Multi-family		464,676		—		—		464,676
Commercial real estate		90,429		—		—		90,429
Construction		3,216		—		—		3,216
Other		123		—		—		123
Commercial business loans		1,206		—		—		1,206
Consumer loans		83		3		—		86
Total loans held for investment, gross	$	936,459	$	3	$	1,508	$	937,970

(1) All loans 90 days or greater past due are placed on non-accrual status.

The following tables summarize the Corporation’s allowance for loan losses and recorded investment in gross loans, by portfolio type, at the dates and for the periods indicated.

	Quarter Ended December 31, 2022
	Single-			Multi-			Commercial									Commercial
(In Thousands)	family			family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	1,450		$	3,305		$	806		$	22		$	3		$	48		$	4		$	5,638
Provision (recovery) for loan losses		149			(5)			41			(5)			—			10			1			191
Recoveries		1			—			—			—			—			—			—			1
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,600		$	3,300		$	847		$	17		$	3		$	58		$	5		$	5,830
Allowance for loan losses:
Individually evaluated for impairment	$	38		$	—		$	—		$	—		$	—		$	—		$	—		$	38
Collectively evaluated for impairment		1,562			3,300			847			17			3			58			5			5,792
Allowance for loan losses, end of period	$	1,600		$	3,300		$	847		$	17		$	3		$	58		$	5		$	5,830
Loans held for investment:
Individually evaluated for impairment	$	810		$	—		$	—		$	—		$	—		$	—		$	—		$	810
Collectively evaluated for impairment		478,920			465,350			88,200			2,388			112			1,358			75			1,036,403
Total loans held for investment, gross	$	479,730		$	465,350		$	88,200		$	2,388		$	112		$	1,358		$	75		$	1,037,213
Allowance for loan losses as a percentage of gross loans held for investment		0.33	%		0.71	%		0.96	%		0.71	%		2.68	%		4.27	%		6.67	%		0.56	%
Net (recoveries) charge-offs to average loans receivable, net during the period		(0.00)	%		—	%		—	%		—	%		—	%		—	%		—	%		(0.00)	%

	Quarter Ended December 31, 2021
	Single-			Multi-			Commercial									Commercial
(In Thousands)	family			family			Real Estate			Construction				Other		Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	1,827		$	4,525		$	967		$	49		$	3		$	37		$	5		$	7,413
(Recovery) provision for loan losses		(693)			(306)			(52)			6			—			(22)			—			(1,067)
Recoveries		262			—			—			—			—			—			—			262
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,396		$	4,219		$	915		$	55		$	3		$	15		$	5		$	6,608
Allowance for loan losses:
Individually evaluated for impairment	$	52		$	—		$	—		$	—		$	—		$	—		$	—		$	52
Collectively evaluated for impairment		1,344			4,219			915			55			3			15			5			6,556
Allowance for loan losses, end of period	$	1,396		$	4,219		$	915		$	55		$	3		$	15		$	5		$	6,608
Loans held for investment:
Individually evaluated for impairment	$	1,583		$	—		$	—		$	—		$	—		$	—		$	—		$	1,583
Collectively evaluated for impairment		288,662			466,467			91,236			3,501			134			362			78			850,440
Total loans held for investment, gross	$	290,245		$	466,467		$	91,236		$	3,501		$	134		$	362		$	78		$	852,023
Allowance for loan losses as a percentage of gross loans held for investment		0.48	%		0.90	%		1.00	%		1.57	%		2.24	%		4.14	%		6.41	%		0.77	%
Net (recoveries) charge-offs to average loans receivable, net during the period		(0.37)	%		—	%		—	%		—	%		—	%		—	%		—	%		(0.12)	%

	Six Months Ended December 31, 2022
							Commercial									Commercial
(In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	1,383		$	3,282		$	816		$	23		$	3		$	52		$	5		$	5,564
Provision (recovery) for loan losses		212			18			31			(6)			—			6			—			261
Recoveries		5			—			—			—			—			—			—			5
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,600		$	3,300		$	847		$	17		$	3		$	58		$	5		$	5,830
Allowance for loan losses:
Individually evaluated for impairment	$	38		$	—		$	—		$	—		$	—		$	—		$	—		$	38
Collectively evaluated for impairment		1,562			3,300			847			17			3			58			5			5,792
Allowance for loan losses, end of period	$	1,600		$	3,300		$	847		$	17		$	3		$	58		$	5		$	5,830
Loans held for investment:
Individually evaluated for impairment	$	810		$	—		$	—		$	—		$	—		$	—		$	—		$	810
Collectively evaluated for impairment		478,920			465,350			88,200			2,388			112			1,358			75			1,036,403
Total loans held for investment, gross	$	479,730		$	465,350		$	88,200		$	2,388		$	112		$	1,358		$	75		$	1,037,213
Allowance for loan losses as a percentage of gross loans held for investment		0.33	%		0.71	%		0.96	%		0.71	%		2.68	%		4.27	%		6.67	%		0.56	%
Net (recoveries) charge-offs to average loans receivable, net during the period		(0.00)	%		—	%		—	%		—	%		—	%		—	%		—	%		(0.00)	%

	Six Months Ended December 31, 2021
							Commercial									Commercial
(In Thousands)	Single-family			Multi-family			Real Estate			Construction			Other			Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,000		$	4,485		$	1,006		$	51		$	3		$	36		$	6		$	7,587
(Recovery) provision for loan losses		(1,031)			(266)			(91)			4			—			(21)			(1)			(1,406)
Recoveries		427			—			—			—			—			—			—			427
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	1,396		$	4,219		$	915		$	55		$	3		$	15		$	5		$	6,608
Allowance for loan losses:
Individually evaluated for impairment	$	52		$	—		$	—		$	—		$	—		$	—		$	—		$	52
Collectively evaluated for impairment		1,344			4,219			915			55			3			15			5			6,556
Allowance for loan losses, end of period	$	1,396		$	4,219		$	915		$	55		$	3		$	15		$	5		$	6,608
Loans held for investment:
Individually evaluated for impairment	$	1,583		$	—		$	—		$	—		$	—		$	—		$	—		$	1,583
Collectively evaluated for impairment		288,662			466,467			91,236			3,501			134			362			78			850,440
Total loans held for investment, gross	$	290,245		$	466,467		$	91,236		$	3,501		$	134		$	362		$	78		$	852,023
Allowance for loan losses as a percentage of gross loans held for investment		0.48	%		0.90	%		1.00	%		1.57	%		2.24	%		4.14	%		6.41	%		0.77	%
Net (recoveries) charge-offs to average loans receivable, net during the period		(0.31)	%		—	%		—	%		—	%		—	%		—	%		—	%		(0.10)	%

The following tables identify the Corporation’s total recorded investment in non-performing loans by type at the dates and for the periods indicated. Generally, a loan is placed on non-accrual status when it becomes 90 days past due as to principal or interest or if the loan is deemed impaired, after considering economic and business conditions and collection efforts, where the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. In addition, interest income is not recognized on any loan where management has determined that collection is not reasonably assured. A non-performing loan may be restored to accrual status when delinquent principal and interest payments are brought current, the borrower(s) has demonstrated sustained payment performance and future monthly principal and interest payments are expected to be collected on a timely basis. Loans with a related allowance reserve have been individually evaluated for impairment using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals less costs to sell, to establish realizable value. This analysis may identify a specific impairment amount needed or may conclude that no reserve is needed. Loans that are not individually evaluated for impairment are included in pools of homogeneous loans for evaluation of related allowance reserves.

	At December 31, 2022
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance(1)		Investment
Mortgage loans:
Single-family:
With a related allowance	$	981	$	—	$	981	$	(83)	$	898
Without a related allowance(2)		86		(28)		58		—		58
Total single-family loans		1,067		(28)		1,039		(83)		956
Total non-performing loans	$	1,067	$	(28)	$	1,039	$	(83)	$	956

(1) Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2) There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

	At June 30, 2022
	Unpaid		Related						Net
	Principal		Charge-offs		Recorded				Recorded
(In Thousands)	Balance		Related		Investment		Allowance(1)		Investment
Mortgage loans:
Single-family:
With a related allowance	$	993	$	—	$	993	$	(85)	$	908
Without a related allowance(2)		548		(33)		515		—		515
Total single-family loans		1,541		(33)		1,508		(85)		1,423
Total non-performing loans	$	1,541	$	(33)	$	1,508	$	(85)	$	1,423

(1) Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2) There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

At December 31, 2022, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

For the quarters ended December 31, 2022 and 2021, the Corporation’s average recorded investment in non-performing loans was $1.0 million and $4.2 million, respectively. The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status. For the quarter ended December 31, 2022, the Bank received $16,000 in interest payments from non-performing loans, of which $15,000 was recognized as interest income and the remaining $1,000 was applied to reduce the loan balances under the cost recovery method. In comparison, for the quarter ended December 31, 2021, the Bank received $138,000 in interest payments from non-performing loans, of which $131,000 was recognized as interest income and the remaining $7,000 was applied to reduce the loan balances under the cost recovery method.

For the six months ended December 31, 2022 and 2021, the Corporation’s average recorded investment in non-performing loans was $1.1 million and $6.0 million, respectively. For the six months ended December 31, 2022, the Bank received $23,000 in interest payments from non-performing loans, of which $20,000 was recognized as interest income and the remaining $3,000 was applied to reduce the loan balances under the cost recovery method. In comparison, for the six months ended December 31, 2021, the Bank received $349,000 in interest payments from non-performing loans, of which $333,000 was recognized as interest income and the remaining $16,000 was applied to reduce the loan balances under the cost recovery method.

The following tables present the average recorded investment in non-performing loans and the related interest income recognized for the quarters and six months ended December 31, 2022 and 2021:

		Quarter Ended December 31,
	2022				2021
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related allowances:
Mortgage loans:
Single-family	$	59	$	—	$	667	$	91
		59		—		667		91
With related allowances:
Mortgage loans:
Single-family		984		15		2,283		24
Multi-family		—		—		1,253		16
		984		15		3,536		40
Total	$	1,043	$	15	$	4,203	$	131

	Six Months Ended December 31,
	2022				2021
		Average	Interest		Average		Interest
		Recorded	Income		Recorded		Income
(In Thousands)		Investment	Recognized		Investment		Recognized
Without related allowances:
Mortgage loans:
Single-family	$	93	$	—	$	742	$	231
		93		—		742		231
With related allowances:
Mortgage loans:
Single-family		987		20		4,055		71
Multi-family		—		—		1,183		31
		987		20		5,238		102
Total	$	1,080	$	20	$	5,980	$	333

For the quarter ended December 31, 2022, no loans were restructured, while seven loans were upgraded to the pass category. For the quarter ended December 31, 2021, 10 loans were upgraded to the pass category, while three restructured loans were paid off. During both quarters ended December 31, 2022 and 2021, no restructured loans were in default within a 12-month period subsequent to their original restructuring.

For the six months ended December 31, 2022, no loans were restructured, 10 loans were upgraded to the pass category, while one restructured loan was paid off. For the six months ended December 31, 2021, 14 loans were upgraded to the pass category, while four restructured loans paid off. During both six months ended December 31, 2022 and 2021, no restructured loans were in default within a 12-month period subsequent to their original restructuring.

As of December 31, 2022, the Corporation held two restructured loans with a net outstanding balance of $972,000, of which one loan totaling $714,000 was classified as substandard and on non-accrual status. As of June 30, 2022, the Corporation held 13 restructured loans with a net outstanding balance of $4.5 million, of which one loan totaling $722,000 was classified as substandard on non-accrual status. As of December 31, 2022 and June 30, 2022, all of the restructured loans were current with respect to their modified payment terms at both dates.

The Corporation upgrades restructured single-family loans to the pass category if the borrower has demonstrated satisfactory contractual payments for at least six consecutive months; 12 months for those loans that were restructured more than once; and if the borrower has demonstrated satisfactory contractual payments beyond 12 consecutive months, the loan is no longer categorized as a restructured loan. In addition to the payment history described above, multi-family, commercial real estate, construction and commercial business loans must also demonstrate a combination of the following characteristics to be upgraded: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others.

To qualify for restructuring, a borrower must provide evidence of their creditworthiness such as, current financial statements, their most recent income tax returns, current paystubs, current W-2s, and most recent bank statements, among other documents, which are then verified by the Corporation. The Corporation re-underwrites the loan with the borrower’s updated financial information, new credit report, current loan balance, new interest rate, remaining loan term, updated property value and modified payment schedule, among other considerations, to determine if the borrower qualifies.

The following table summarizes at the dates indicated the restructured loan balances, net of allowance for loan losses, by loan type:

	At		At
(In Thousands)	December 31, 2022		June 30, 2022
Restructured loans on non-accrual status:
Mortgage loans:
Single-family	$	714	$	722
Total		714		722
Restructured loans on accrual status:
Mortgage loans:
Single-family		258		3,748
Total		258		3,748
Total restructured loans	$	972	$	4,470

The following tables identify the Corporation’s total recorded investment in restructured loans by type at the dates and for the periods indicated.

	At December 31, 2022
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance(1)		Investment
Mortgage loans:
Single-family:
With a related allowance	$	752	$	—	$	752	$	(38)	$	714
Without a related allowance(2)		258		—		258		—		258
Total single-family		1,010		—		1,010		(38)		972
Total restructured loans	$	1,010	$	—	$	1,010	$	(38)	$	972

(1) Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2) There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

	At June 30, 2022
	Unpaid								Net
	Principal		Related		Recorded				Recorded
(In Thousands)	Balance		Charge-offs		Investment		Allowance(1)		Investment
Mortgage loans:
Single-family:
With a related allowance	$	760	$	—	$	760	$	(38)	$	722
Without a related allowance(2)		3,748		—		3,748		—		3,748
Total single-family		4,508		—		4,508		(38)		4,470
Total restructured loans	$	4,508	$	—	$	4,508	$	(38)	$	4,470

(1) Consists of collectively and individually evaluated allowances, specifically assigned to the individual loan.

(2) There was no related allowance for loan losses because the loans have been charged-off to their fair value or the fair value of the collateral is higher than the loan balance.

During the quarters and six months ended December 31, 2022 and 2021, no properties were acquired in the settlement of loans and no previously foreclosed upon properties were sold. As of both December 31, 2022 and June 30, 2022, there was no real estate owned property. A new appraisal is obtained on each of the properties at the time of foreclosure and fair value is derived by using the lower of the appraised value or the listing price of the property, net of selling costs. Any initial loss is recorded as a charge to the allowance for loan losses before being transferred to real estate owned. Subsequent to transfer to real estate owned, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the condensed consolidated statements of operations.  In addition, the Corporation records costs to carry real estate owned as real estate owned operating expenses as incurred.